Despite jitters about the global economy and warnings of a recession, Sojern, a technology company that offers digital marketing solutions to travel companies, maintains that travel advertising budgets in Asia-Pacific are holding up although “slight” declines could be seen in markets such Australia and Hong Kong.
Australia’s economic growth has slowed sharply and is expected to remain sluggish for 2019. Meanwhile the tourism sector in Hong Kong has been battered by pro-democracy protests, which the city’s chief executive, Carrie Lam, has cited as having a more severe economic impact than the Severe Acute Respiratory Syndrome (SARS) crisis in 2003.
But Sojern maintains that overall there is still so much growth in Asia-Pacific, where it says it has more than 100 clients including Onyx Hospitality Group, Scoot, and Marina Bay Sands. That’s because the region continues to be the fastest-growing travel market in the world, and its travel marketers are the biggest fans of digital ad solutions compared to their counterparts in other regions, it says.
Following a $120 million fundraising in November last year, one of the first moves Sojern did was hire Masahiro (Max) Ueno to lead the region’s expansion as vice president Asia-Pacific, based in Singapore.
Ueno joined in March from BuzzFeed Japan, a joint venture between BuzzFeed and Yahoo! Japan, where he was CEO. He was also from a Sojern competitor, Criteo, where it was said he grew Criteo’s Asia-Pacific business from four employees to 250 across six regional offices representing 20 percent of Criteo’s global revenue.
Sojern Chief Revenue Officer Stephen Taylor told Skift in Singapore that in recessionary periods, airlines still need people on seats, and hotels still need heads on beds, so budgets aren’t cut, just shifted. Performance-driven advertising and paid search marketing become the preferred channels, he said.
“The things that stop are the general stuff such as big print budgets and big TV budgets,” said Taylor. “Expedia boomed because of a recession, when everyone was looking around on how to fill rooms efficiently and said, ‘OK, I will pay 15 percent for every booking and stop my TV and magazine advertising, because I can see the correlation between the money I spend and the booking I get.’
“It’s the same with paid search. In difficult economic times, search marketing gets stronger because it is specific — ‘I’m targeting this person, for this price, for this response.’ And that’s the game we’re in.”
Recession or not, travel advertising dollars will continue to move to digital from TV, print, out of home and radio, according to a Sojern survey of 600 travel marketers globally from airlines, hotels, national tourist boards, attractions, car rentals and cruises, done in November.
Last year, travel advertisers globally placed 47 percent of their budget on digital, with the percentage for Asia-Pacific being highest compared with other regions at 52 percent, according to the survey.
Marketers in Asia-Pacific also showed the highest eagerness to increase digital ad spending in 2019 (72 percent) after their counterparts in Latin America (77 percent), making these two regions a priority for companies such as Sojern that provide digital solutions.
Among digital channels, Facebook/Instagram and paid search took the cake in 2018, with 23 percent and 19 percent of ad spend respectively going to these channels globally. Asia-Pacific showed similar results.
Interestingly, online travel agencies and metasearch were digital channels that got the lowest ad spend (6 and 5 percent respectively) globally last year, but a reliance on OTA advertising was stronger in Asia-Pacific, with 11 percent of the ad dollars going to the channel.
When asked why, Ueno said “within the diverse APAC region, there are some markets that are not as well versed in digital advertising as others, and some markets and [hotels] still need some education on the importance and benefits of driving direct bookings. As a result, these travel marketers tend to rely heavily on OTAs as they support them in driving brand awareness, especially if you are able to pay the additional ad spend to increase eyeballs to your property.”
A chunk of the survey was devoted to Facebook and lnstagram — after all, Sojern owns Adphorus, which helps travel brands advertise on the Zuckerberg-owned channels.
One of the messages Sojern is sending out is that travel marketers are liking Facebook/Instagram a lot. The reasons, it said, include social media’s size of some three billion users this year; the ability of these channels to offer visually engaging ads; and new advertising opportunities from Facebook in the past year. Aside from Facebook Ads, there’s Facebook Dynamic Ads for Travel, Facebook Stories, Instagram Ads and Instagram Stories.
The top channels where global marketers intend to increase spend in 2019 are Facebook/Instagram (55 percent) and paid search (45 percent). Video and mobile spend, each of which took 9 percent digital ad spend last year, are also set to grow this year, according to its study.
Marketers find Facebook/Instagram most effective for targeting new audiences, building brand awareness and personalizing messages and offers. Over half of them (55 percent) said they planned to spend more on social this year, said the report.
The figure is even higher in Asia-Pacific. More than 65 percent of respondents in the region said they planned to use Facebook Ads and Instagram Ads, and more than 55 percent planned to use Facebook Dynamic Ads for Travel, Instagram Stories and Facebook Stories, the survey shows.
Spending on online travel agencies by Asia-Pacific marketer therefore will reduce this year, Ueno said.
With Asian players putting more money on digital, Sojern is eyeing growth from the region, although it is not alone in the game. Apart from Criteo, its competitors include Expedia Media Solutions and Adara. And effective October 10, Amadeus has expanded its Travel Audience advertising platform, which it acquired in 2013, in Asia-Pacific.
Like Taylor, Ueno said overall travel advertising budgets are stable and that he’s confident the budgets will steadily rise in the next decade as travel continues to grow.
Though Sojern has expanded rapidly in Asia-Pacific, it still has no footprint key markets such as Japan and mainland China. Since joining, Ueno has opened a Sojern presence in South Korea, comprising a sales person and an account manager.