Skift Take

Online travel agencies, like many other sectors of the travel industry, have been hard hit by the effects of Covid-19. In this preview for our upcoming Skift Online Travel Summit on July 23rd, we speak with Criteo’s Lisardo Ruiz about the surprising role that smart advertising strategies will play in helping put OTAs on the path to recovery.

This sponsored content was created in collaboration with a Skift partner.

As countries rush to contain the Covid-19 crisis, online travel companies are facing a perfect storm: soaring customer service demands, newly remote teams, and unpredictable shifts in demand for travel products. Yet in spite of the hurdles created by the crisis, online travel agencies (OTAs) will also play a crucial role in helping instill confidence in the market and kickstarting recovery for other travel partners as demand starts to return.

It is with these themes in mind that Skift is launching its first-ever Online Travel Summit on July 23rd with the goal of understanding the current and future state of the online travel sector in the new era of Covid-19.

One topic that will be discussed during the session is the evolving role of advertising in OTAs’ recovery strategies. Advertising has long been an essential part of the OTA and travel industry business model, helping to efficiently convert consumer demand into supplier bookings. But this unprecedented moment is also offering OTA executives an unexpected opportunity to rethink the role of advertising in the recovery, using new strategies to better predict when consumer demand will return, and to engage would-be travelers earlier in their dreaming and planning process.

To help understand how the role of advertising will evolve for OTAs as a result of Covid-19, Skift spoke with Lisardo Ruiz, head of travel UK for Criteo, a leading provider of advertising technology solutions for the travel industry.

SkiftX: Covid-19 has created this very unusual moment for consumers and the travel industry in general. What role will advertising play as OTAs, and the industry, start to recover?

Ruiz: These have certainly been very challenging times for both consumers and travel marketers. The lockdown and border shutdowns triggered an unprecedented volume of cancellations and requests to change travel dates. As the strict measures begin to ease across countries, consumers are starting to check destinations for their next holiday while keeping an eye on new outbreaks and new restrictions that may come into place.

Transparency around cancellation policies and conditional booking changes is imperative. Clear guidelines on potential refunds and cleanliness-based messaging at the property or carrier level are both areas where an OTA can bring value to their consumer base.

Establishing a clear and consistent communication strategy for users should be the top priority for all industry players during their journey to recovery. Effective cross-channel advertising can allow brands and OTA’s to do just that.

Lastly, due to the potential for change in terms of travel bans and restrictions, travel marketers must continue to advise consumers throughout their booking experience. Advertising can be a useful conduit to reflect these measures and other changes to help simplify the consumer experience.

What changes, if any, have you seen in consumer booking habits in response to Covid-19 travel shutdowns and recovery plans?

Criteo has observed significant changes in booking habits across the world. For instance in the US market, we have seen that more than 50 percent of hotel bookings (OTAs + suppliers) placed in June 2020 have come right before a trip (3 days before traveling). This is almost twice the percentage of last-minute bookings in June 2019 (30 percent).

This change is explained by the fluid environment, which makes advanced travel planning more challenging for travelers. It also helps paint the picture as to why it’s so important for marketers to understand the nuances of each market, which has been a key focus of ours when working through the pandemic.

Using the Criteo Travel Insights Finder we identified a significant change in interest in different travel seasons in the UK. When looking at the volume of searches in May and June 2020 we saw the interest in traveling during Q4 has grown significantly year-on-year (from 18 percent to 26 percent).

This contrasts with a lower interest in traveling during summer (comparing 62 percent of searches in 2019 to 52 percent in 2020), is not surprising, considering the mandatory quarantine set on June 8th for visitors or travelers coming back to the UK.

As a result of these findings, we expect staycations and domestic travel to account for a majority of last-minute bookings in the UK this summer, while plans to travel to traditional summer destinations (Spain, Greece, Italy, Portugal) will be postponed until later months in the year and early 2021.

Advertising campaigns are often built around pre-existing assumptions or habits (examples: summer travel, school holidays). What tools and strategies should OTAs be using when planning advertising given the uncertain and changing nature of current consumer behavior? 

Previous assumptions towards travel seasonality trends are less reliable in the current environment than they have ever been. As a result, it’s crucial to use real-time data as a compass for business decisions. It’s equally important to monitor and assess the impact of these decisions and work closely with marketing partners that can adjust in real-time and are capable of pivoting a strategy in short notice if necessary.

For instance, the easing of travel restrictions in countries like Italy or Spain has triggered travelers to browse those destinations over the last few weeks. OTAs must take this into consideration when planning advertising campaigns and working with their tourism and brand partners as well.

It will be a long road to recovery, and it is uncertain when the volume of bookings will reach the same levels of before the pandemic. Therefore, it becomes very important to tap into other revenue streams. Travel marketers have seen a stable increase in ancillary revenue—especially for airlines—over the last few years. OTAs’ booking lead time enables them to maximize revenue by upselling products. For example, add-on insurance policies will be in higher demand given the focus on health at present and can be an asset to OTAs and brands looking to maximize revenue per user.

Historically, a lot of OTA marketing campaigns were designed to maximize conversion. Do you think Covid-19 creates an opportunity for OTA marketers to run more advertising targeting a broader range of moments (examples: dreaming, planning) in the traveler purchase cycle?

Traveling triggers a wide-spectrum of emotions. OTAs certainly have a good opportunity to stay top-of-mind by targeting this special range of moments and remind customers of the feelings they experience when traveling. Now, more than ever, the sentiment for travel has changed from dreaming about the perfect vacation to prioritizing safety features and personal well-being when planning their trip. Travelers are looking for guidance and assurance when planning travel and OTA’s have a great opportunity to educate and inform users earlier on in their planning experience.

Running a campaign that is not designed to drive immediate conversions or bookings doesn’t mean that it should not be pertinently measured. OTAs must consider their typically performance-driven attribution attribution methodologies to more accurately measure the efforts on building brand loyalty and awareness while keeping an eye on the conversions that will come in the future as a result of such campaigns.

How might Covid-19 change OTAs’ customer engagement strategies?

Over the last few years AI-driven Chatbots have helped OTAs to improve customer support. However, the Covid-19 crisis has tested travel marketers’ customer service teams with the unprecedented volume of customers’ requests to either cancel or postpone their travel plans.

build customer engagement without satisfaction. Managing expectations and providing a greater level of transparency on guidelines—including refund options—or providing realistic ETAs on when to expect an answer from customer service departments will play a key role in improving clients’ satisfaction of the support received.

>Covid-19 also causes us to spend more time on our phones. Travel apps are a very useful tool to build customer engagement and create brand loyalty. The in-app booking process must be seamless, to reduce any potential areas of friction with consumers.

OTAs have significantly improved on this, however they are concerned about the low user retention on travel apps. In our 2020 UK App User Behavior study, we found some interesting insights: Sixty-four percent of UK app users only enable notifications for “important” apps. Using app notifications to promote non-timely, untailored destinations will not help to position the app as relevant or important. To be considered important by travelers two key elements need to be included: personalization and creativity.

Let’s imagine an app that sends notifications about real-time travel updates, interesting events happening at a traveler’s next destination, or shares a link to a music playlist for that special city just visited. We must bring added value to the traveler to keep them engaged.

We have also seen younger generations, like Gen-Z and millennials, prefer using apps than older generations (they download almost twice the volume of apps downloaded by Gen-X). This highlights the importance of a solid app advertising strategy to drive engagement with the new generation of travelers.

What are the top OTA advertising trends we can expect to see in the remainder of 2020 and beyond?

One trend we expect to pick up in online travel is a more comprehensive cross-sell strategy, offering travelers deals to add-on more pieces of their trip under the same travel agent. Knowing how ‘promiscuous’ travelers can be across the OTA and meta sites, offering promotional deals and emphasizing the importance of flexibility under one partner is a strategy we think will be more prevalent moving forward.

Second is the reality of missing out. With Covid-19 we have discovered a new reality that starkly contrasts with life as we previously knew it. We couldn’t go out to a restaurant for dinner, attend a party or travel. We all have a city that we want to visit, a culture that we want to explore or places where we wouldn’t mind getting lost. Add to this the simple fact that traveling has been ‘forbidden’ for months and this creates a perfect storm where people are now dreaming up and planning to embark on their long-awaited travel plans as soon as possible.

OTAs can help consumers fulfil the desire to travel by using highly personalized marketing ads which tailor recommendations, according to ‘bucket list destinations’ or by suggesting new, refreshing destinations to explore after the strict lockdown period.

Last but not least is safe and hygienic travels. Travel suppliers have already updated their hygiene and safety brand guidelines post Covid-19, to protect consumers and make them feel as safe as possible on their trips. OTAs have a good opportunity to prioritize hotels and accommodation partners with strong reviews or cleanliness ratings. It’s important to recognize that recommendations and reviews are largely viewed as trustworthy and, as a result, such reviews can greatly influence the decision-making process.

This content was created collaboratively by Criteo and Skift’s branded content studio, SkiftX. To learn more about OTA advertising strategies in the era of Covid-19, make sure to register for Criteo’s conversation with Skift during the July 23rd Online Travel Summit.

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Tags: advertising, covid-19, criteo, otas

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