Advertising on Facebook is an expanding strategic opportunity for travel brands. That's why travel marketing-tech startup Sojern is nabbing Adphorus, a travel specialist ad tech company in Turkey, as a bridgehead for growth.
If there’s one entity outside of Madison Avenue that should be happy about Facebook’s ramping up of targeted advertising products, it’s the travel industry. That’s because the launch of new products enables marketers at travel companies like Fairmont Hotels and online travel companies such as MakeMyTrip and Kayak to spend their budgets a bit more efficiently.
The companies did not disclose terms of the deal. Adphorus has raised $1 million in funding, according to Crunchbase. The 45-employee business, based in Istanbul, will continue to operate independently.
The news shows the value of ad tech to travel brands. On the same day, TechCrunch reported that Airbnb has acquired ad tech startup AdBasis, which offers tools to companies for ad testing and optimization.
Sojern’s deal represents its first acquisition. The San Francisco company with 400 employees that has just been named for the fifth year as one of Deloitte’s 500 fastest growing technology companies in the U.S.
Sojern had already worked with companies on its own to take advantage of Facebook’s potential. For example, it helped Fairmont Hotels receive 20 percent more revenue with the same expenditure by using technology to optimize an ad campaign that drove thousands of bookings from Facebook to Fairmont’s website, according to Sojern.
But Adphorus’s expertise and client list, including brands such as Expedia and Kayak, will complement its efforts, said Sojern CEO Mark Rabe.
“If you’re a travel brand just spending on paid Google search, or just on display advertisements, or just on Facebook, you’re missing an opportunity to amplify your message with a coordinated campaign as the customer moves across all of those channels,” said Jackie Lamping, vice president of marketing at Sojern. “Facebook’s value prop is that it supplements the other efforts.”
The Facebook Effect
As Skift has reported, Facebook has been ramping up its products that will have particular appeal to travel marketers. Last year, Marriott and Trivago launched a book-via-Instagram effort. That was followed by InterContinental Hotels Group, Marriott, and Trivago being launch testers of a Dynamic Ads for Travel product that aimed to help them retarget consumers browsing Instagram and Facebook when the consumers show an interest in planning upcoming travel.
Earlier this year, Facebook head of travel, Christine Warner, said hotels are using the company’s platforms to achieve their objectives in reaching mobile consumers, as were other brands like Celebrity Cruises.
Facebook’s access to customers at all stages of trip planning and its new retargeting capacities enable companies like Sojern and Adphorus to help brands be more effective in reaching travelers than they could in the past.
For example, they can help brands target audiences on Facebook based on customer intent at any given moment. A customer who appears to be in the inspiration stage will receive a different message than one ready to book a specific trip.
Placing a Bet
Sojern’s bet isn’t a sure thing. Can independent ad tech companies compete with the larger ad tech players?
The overall ad tech sector has been talked down in the past few years by investors, who have knocked significant share price off of some ad tech companies that went public since 2012. Ad tech overall appears to be going through a boom-bust, gold rush cycle. Eventually, the dust will settle and many players will filter into a few winners.
Sojern hopes to be a winner. But time may be ticking. It has raised $42.5 million in venture capital funding since its founding a decade ago. Presumably, its investors will want a return in due course that’s a multiple on their investment.
Sojern has focused on travel and runs digital marketing campaigns for brands including Hyatt, Fairmont, and Singapore Airlines.
Yet can it and other independent ad companies hold their own against bigger players?
Specialization in travel, which is a more complex and high-value product than most other online goods that are sold, is Sojern’s effort at building a defensive moat around its business model.
“The exciting part is being able to help companies figure out where to spend their next incremental marketing dollar most efficiently to drive their goals — which if you’re a hotel, might be a greater occupancy or average daily rate or if you’re an online travel agency, might be lowering one’s overall cost of acquiring a customer,” said Rabe.
Where there’s opportunity, there is competition. The list of official Facebook and Instagram marketing partners is long, though only a couple of other companies have significant travel practices.
The most competitive of the independents is Koddi, a 35-employee hotel ad and metasearch optimization company based in Texas.
While the company’s Facebook marketing work represents less than 10 percent of its overall revenue, it believes that the potential growth of Facebook as a channel could enable it to convert many brands that use it to optimize bids in metasearch ad placements to do coordinated efforts with their Facebook and Instagram efforts as well.
Koddi has developed a multi-source funding technology that, it says, allows it to hit a travel brand’s marketing goals for the type of bookings it needs at any given time with the strategic budgets associated with those in as automated a way as possible. Facebook’s dynamic advertising products could layer into the campaigns. A message on Facebook could be targeted to be relevant to different audiences and tie into the overall marketing and strategic goals of a brand.
In the near term, one thing is all-but-certain. The deal is likely a decent outcome for Adphorus CEO Volkan Çağsal and his fellow co-founders. Turkey has experienced difficult economic times in recent years, and its tech scene remains nascent.
So Adphorus — meant to be a pun on ads and Bosphorus, the famous waterway off Turkey’s northwestern coast — is likely a fruitful exit by those measures.
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Photo Credit: Members of the Adphorous team in Istanbul have reason to celebrate with their acquisition by a better-funded startup in San Francisco. Adphorus