We take the pulse of the "adtech" sector, look exclusively at its newest player, and find out how hoteliers and other travel suppliers are approaching online advertising at a time of acute labor shortages and regulatory changes.
Travel Tech Briefing
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Hotels and hospitality brands face labor shortages as they emerge from the pandemic. So many are automating more of their online advertising.
To take the sector’s pulse, I spoke with a handful of U.S. players who focus on helping travel brands manage their ads and marketing. Many vendors worldwide serve the space, of course. But these three companies shared some insights that will help give you a sense of overall trends. I spoke with:
- Equeco, an advertising vendor that helps hospitality brands and online resellers automate their use of Google Ads, Google Hotel Search, and Facebook Ads. The company is coming out of stealth mode after a year when it has signed Ayenda Hoteles, the largest hotel brand in Colombia; Kiwi.com, an online travel agency backed by private equity firm General Atlantic; City Express, a hotel chain in Mexico; Findhotel, a long-time price-comparison service; and Voyage Privé, the French tour operator and packager leader.
- Koddi, a seller of adtech products to large hospitality suppliers. The company said it had regained its pre-pandemic annualized revenue levels and on track to return to its previous trajectory as one of the U.S.’s fastest-growing private companies.
- Sojern, the giant travel advertising company, which acts like a Swiss Army knife for digital marketing. The best-funded of the travel adtech players, Sojern has marquee clients from across travel segments.
New technologies can help level the playing field for mid-size companies. Some suppliers and resellers are gaining some of the automation that, until recently, only the platform tech giants had.
While Booking.com will seemingly always have better tech than you, a travel company can narrow the gap between itself and smaller, mid-size competitors in the ad game.
- Consider the case of Google Ads. Travel companies want to expose users of Google search to their ads based on users’ search terms. But there’s a gap between the reality of how people actually search on Google and the keywords any given person might guess.
- Giants like Booking Holdings can use sophisticated techniques to predict the best keywords to bid on in Google’s auctions. Everyone else is left with a basic Google tool for partners, Search Ads 360, that is only partially informative.
- Enter, Equeco.
- “We don’t try to guess how a person might search for a hotel — which is often is more than just a hotel’s official name,” said Equeco co-founder and former Expedia search engine marketing director Luc Guilhamon. “Today, many companies essentially create a spreadsheet with overly-specific best guesses, like “Madrid” or “Madrid hotels.” Instead, our approach discovers how people are actually searching, and then sees what’s a good match with an advertiser’s hotel or flight landing page.”
- “We delivered 30 percent incremental growth within three months to one mature advertiser by supplementing their campaigns with our approach,” Guilhamon said.
- Some backstory: Equeco is a subsidiary spinoff from travel price-comparison company Viajala, which described itself as a close rival of Google’s — and well ahead of other global players — in hotel metasearch in Colombia.
- “For a hotel, say, it’s effectively like having an expert at digital marketing for each of your landing pages active all the time, only instead it’s a machine doing the work,” Guilhamon said.
- Equeco also has some tools for ad optimization, managing Google Hotel Center as a marketing channel, and help for powering display banner ads.
Koddi works mostly with travel suppliers to help them grow revenue through advertising, and it has seen many hoteliers, in particular, change their marketing approach.
- “If you look at our top 10 customers today compared with pre-pandemic, they’re all still there, but the order is completely different,” said Nicholas Ward, president and co-founder. “The types of programs that we run for them are different, too. There’s been a rewrite in the approach across the board.”
- Hotel companies have noticeably adjusted their approach.
- “If you take a customer spending $10,000 a month with us three years ago, the composition of that $10,000 a month looks radically different today,” Ward said.
- “We’ve been talking with GMs [general managers] because what they tell us about their business from their perspective on the ground can differ from what we hear from the brands,” Ward said. “We’ve been hearing input that they want to turn off all their advertising on OTAs [online travel agencies] for, say, a month.”
- That’s shocking.
- “What’s behind that is the labor crisis,” Ward said. “They say, ‘Our occupancy is pretty good right now, our rates are down, but we’re having labor issues, and we’re finding that the expectations of the guests coming from the [giant online travel agency brands] are often too high.'”
- “Some hoteliers say, ‘If we bring our occupancy down a bit, it would be better for our teams and healthier for our businesses — especially if we avoid a really low ADR [average daily rate] booking from a non-repeat customer,'” Ward said. “They say, ‘Even if we can get an extra booking and the top-line number looks good, maybe we don’t want to get it because it hides a lack of profit on our bottom line.'”
- Rather than stop taking reservations from the Booking.coms of the world, Koddi strives to help hoteliers get the types of guests that are more likely to meet a hotel’s needs through more targeted online activities.
- In 2019, a typical hotel might have taken any customer as long as the cost of sale stayed below 15 percent after all commissions and fees. Today, that same hotel might accept a higher cost of sale to gain a certain type of booking that might prove more profitable overall, such as a family staying for longer than a solo traveler visiting just one night.
- “The challenge for us at Koddi is to repeat that at scale, and we’ve developed some interesting solutions,” Ward said.
- Koddi offers three main products. About 20 to 25 percent of the company’s business is bid automation for buying ads on metasearch brands such as Google and Kayak.
- A second product helps clients decide how much of their budgets to allot to different types of demand generation opportunities, such as branded paid search ads and advertising on social platforms, by analyzing data sets to find out which channel mix would be most productive at any given moment.
- “The third part of our business is on the private market side, focusing on individual hotels,” Ward said. “Essentially, we allow brands or publishers to set up co-ops and advertising ecosystems, allowing their partners to think strategically and optimally about how to spend each additional dollar of budget.”
- “We analyze data to help our clients figure out which guests to go after,” Ward said. “Someone searching on desktop or mobile? Someone looking for a three-night stay or a one-night stay?”
Sojern has focused on helping travel advertisers tap into non-invasive and regulatorily acceptable ways to track customers across their journey and provide them with relevant messages.
- Sojern has been finessing integrations with widely used hotel booking engines and property management systems.
- That may sound dull. But it’s critical work to enable the company to make its products even more widely and heavily used.
- “We’re becoming something a hotel can switch on through third-party systems, such as Sabre’s SynXis booking engine and SiteMinder’s channel management platform,” said Josh Beckwith. He leads Sojern’s global strategic accounts and partnerships team.
- “So rather than sending our pixel to the hotel, who then sends it to the booking engine, who then sends it to the webmaster, we’ll just integrate one-off access,” Beckwith said.
- “We’ll have an always-on pixel and then we can pick the property code when implementing a campaign to remove some friction for hotels in setting campaigns up,” Beckwith told me when he and I chatted last week at Skift Forum Europe.
- Sojern has also been upgrading its mechanisms to comply with emerging ways of knitting together customer behavior.
- “We’ve got tens of thousands of tracking pixels out in the world, and most need upgrading so that all of our products can be legally, technically, and commercially viable after third-party cookies stop becoming widely used,” Beckwith said.
- Sojern is also trying to help companies use first-party data, such as personal information a customer may voluntarily supply to a company, in preparation for the long prophesized but never materializing death of third-party tracking cookies. Both advertisers and ad servers have to switch to using “unique identifiers, such as ones derived from hashed, or semi-anonymized, email addresses, rather than cookies.
- “We have few hundred data partnerships at the enterprise level, integrating with airlines, hotel chains, metasearch sites, and online travel agencies,” Beckwith said.
- “We’re building a platform to help our enterprise clients manage demand by activating their first-party data through Sojern as the conduit,” Beckwith said. “You can plug in your CRM [customer relationship managmeent], CDP [customer data platform], or other warehouses for offline and offline customer data.”
- “We can either repurpose your audiences or blend them with our own to expand your first-party data with our second-party data for matching, attribution, retargeting, or upsells,” Beckwith said.
My take: Travel suppliers are still constrained on costs and staffing. They need to be more selective about the types of customers they go after in their marketing and more efficient in their workflows for advertising across the internet. Expect to see more ferment and a return to fast growth among these vendors as a group.
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