YouTube’s Huge Recent Ad Gains Pose Challenge for Travel’s TV Advertisers

In the olden days — perhaps eight or so years ago — you could tell when online travel companies would enter a new geography because there might be an advertising blitz on TV to introduce the brand.

But as Philipp Schindler, the chief business offer at Google parent Alphabet argued earlier this week in talking up its YouTube video division, the traditional ways of reaching audiences on scheduled broadcast television, or so-called linear TV, “don’t really work anymore.”

Schindler could be overstating the case.

But in the first quarter, YouTube saw revenue leap 48 percent to more than $6 billion. Schindler called out “truly exceptional” growth on YouTube because of a revamped direct response feature, which mostly has to do with retailers like Calvin Klein placing clickable product ads beneath YouTube videos.

Still, most marketers inside and outside of the travel industry understand the changing dynamic regarding broadcast TV and online video.  Schindler said “more 18- to 49-year olds are actually watching YouTube than all linear TV combined.”

Vrbo Turns to YouTube, Trivago Doesn’t

That’s undoubtedly one of the reasons why Expedia’s main vacation rental brand, Vrbo, spent $82.6 million on online video, or 91 percent of its advertising of its U.S. expenditures, in January and February, according to data from Kantar Media.

Asked recently about Vrbo’s YouTube forays, an Expedia Group spokesperson said: ““Our marketing strategies are specific to the brand and geography, and while we can’t share specifics, we are seeing positive growth across all of our alternative accommodation brands in our top performing markets. In the coming weeks, we’re launching new marketing initiatives aimed at continuing to attract hosts to our platforms. These initiatives will roll out across a variety of mediums.”

Still YouTube, which is mostly about expanding brand awareness for travel businesses, isn’t the answer for all companies at this juncture with businesses looking for efficient spend, and many geographies still under Covid lockdowns.

In that two-month period, the latest statistics available, lodging search company Trivago spent virtually all of its marketing money in the U.S., $18.3 million, on search, and none on TV and video, Kantar Media found. Expedia, a Vrbo and Trivago sister brand, spent $33.2 million on search, and $4.6 million on TV in the U.S. — and apparently almost nothing on video.

In late February, Airbnb began a TV campaign, as well as YouTube, globally, and the Expedia brand more recently did likewise.

Free Listings Showing ‘Positive Results’

Google is doing just fine these days despite the advertising slump early in the pandemic. Alphabet’s net income rose 162 percent in the first quarter to $17.9 billion compared with the year earlier period. Revenue jumped 34 percent to $55.3 billion.

In other travel news from the earnings call, Schindler said the company is “already seeing positive results across the board” from its new feature that gives advertisers free links below paid ads in its hotel metasearch business, Google Hotels.

“For advertisers, it means paid campaigns can be augmented with free listings,” he said.

Schindler also mentioned that American Airlines has been using a new data insights tool Google created to enable airlines “to anticipate demand on untapped routes.”

“These newly prioritized routes had a signficantly higher booking rate in search this quarter compared to last quarter,” Pichai said.