In-depth: The travel business is fiercely so knowing where, what and how to advertise in order to reach the right consumer is a very tricky business. EyeforTravel’s Ritesh Gupta pulls out some highlights from some recent research to help travel firms make sense of the confusion.

As an early mover in ecommerce, the US travel industry is a major investor in online advertising. This year it will invest $3.16 billion in online paid advertising alone and that is expected to rise to nearly $5.6 billion by 2016.. But on what will the money be spent?

According to eMarketer’s latest reportUS Leisure Travel: Digital Ad Spending Forecast and Key Trends the total growth rate will fluctuate from year-to-year based on economic conditions and unique advertising campaigns. Take for example American Airlines’ push to promote its direct connect system - this contributed considerably to the increase in ad spend last year. The report also says that in the first half of 2011, American Airlines increased its digital ad spending by a significant 539% on the previous year, even while in a contract dispute with Expedia and Orbitz. This included a 605% year-on-year increase in display ad spending and a 492% increase in Google paid search.

“Overall, industry spending will see a healthy 16.8% compound annual growth rate through 2016. This will result in online leisure travel rising from an 8% share of total online spending today to 9% by 2015,” says Dan Marcec, a travel analyst at eMarketer.

While travel ecommerce sales are expected to hit $119 billion in 2012, the market has matured. Even as post-recession demand returns, hotels and resorts, airlines, car rental companies, cruise liners, travel agencies and other providers find themselves locked in a battle for a finite amount of business. The ad spend in this competitive market will be shaped by an increasingly complex search environment, more mobile opportunities and suppliers’ continued push for direct-to-consumer distribution, according to the company.

eMarketer’s forecast numbers don’t break out leisure travel advertising by format. But the company projects that online paid media spending in the leisure travel industry will remain weighted toward search, targeted display and other digital direct-response tactics, says Marcec. Within these formats, social, local and mobile advertising will grow quickly from a small base.

And now to the highlights…

Search marketing is increasingly complex: Heightened competition for keywords, ongoing tweaks to Google’s algorithm and changes in consumer search behaviour are keeping marketers on their toes. To rise above the clutter, they are fine-tuning organic and paid investments. Around 60% of travel marketers ranked search as the No. 1 way to drive traffic, according to EyeforTravel’s September 2011 ‘Travel Distribution & Marketing Barometer’ report. The study also found that three in 10 marketers say search engine marketing was their biggest recent success story.

Travellers’ search behaviour is evolving too. When they conduct a search, they expect to find more detailed and engaging content than ever before, including articles, ratings, reviews, photos, videos and special offers—and at lower points in the purchase funnel.

What is more it highlights how Google is changing the rules. Major changes by Google have created both challenges and opportunities for marketers, with the net effect of driving up paid search spending. On one hand, the search engine’s ‘Panda’ and ‘Penguin’ algorithm updates assign less organic search priority to travel aggregator

sites with duplicate listings. Similarly, Google’s flight and hotel search offerings, which can potentially return search results that compete with existing travel aggregators and suppliers, and its’ Google Places and +1 functionality can deliver social content that appears above other companies’ organic listings.

Travel marketers admit that Google has been making so many setting updates and extension upgrades that it can get confusing.

From an SEO perspective, Andrew Smith, head of SEO for UK, Cheapflights Media, says although there have been a lot of algorithm updates and changes impacting search-engine optimisation of late, these changes still centre on what has always been best practice. For example: removing duplicate content issues, creating strong unique content, gaining external links ethically and so on. “So when it comes to making the most of your SEO budgets it’s essential to ensure that spend, whether it’s development time, agency budget or internal team effort is focused on fixing the areas which are not up to scratch before working on the changes purely about growth,” he says. “By fixing the issues and making the defensive changes upfront it’s much more likely the site will benefit from algorithm changes instead of being hurt by them.”

Retargeting transforms ‘lookers’ into ‘bookers’: Faced with a long purchase funnel and less predictable search results, travel marketers are successfully using retargeting campaigns to find and secure prospective customers closer to booking, and at lower cost. Retargeting exploits an ad network’s ability to serve a text, image, rich media or video display ad to someone who clicks on a specified search result or visits a brand website without converting. The ad then ‘follows’ the visitor as he or she searches across the web.

Social network ads are a gateway to owned and earned content: Social networks can serve as effective springboards to owned and earned content that aids booking decisions. Marketers are beefing up these online assets and investing in social-network ad campaigns that make their content more discoverable.

Targeted advertising on social networks is also poised to grow over eMarketer’s forecast period. This is mainly because the number of potential travel customers who use Facebook and Twitter has reached critical mass. “As far as social networks go, travel marketers do advertise on them, but they also take advantage of their use as a customer service tool. Twitter is one of the best ways for brands to interact with consumers and provide them with help in a quick and tailored fashion,” says Marcec.

Mobile advertising will help drive incremental sales: Travel consumers’ growing use of smartphones and tablets gives marketers additional venue for converting buyers. More sophisticated behavioural and location-based targeting will make direct-response more effective.

New York-based Margaret Mastrogiacomo, manager, new media & creative strategy, HeBS digital says to make the most out of the mobile channel, marketers should invest at least 10% of the online marketing budget to mobile initiatives. The mobile marketing budget should include a mobile website and mobile site enhancements, mobile SEO, mobile link building to the mobile site from mobile directories, mobile SEM campaigns, mobile banner advertising, and mobile interactive SMS campaigns.  “When developing a mobile strategy, think local,” she says, adding that all mobile initiatives should include relevant, local information. There is good reason for this: consumers perform more than 3 billion local searches each month and one in three mobile searches have local intent.

She also says mobile marketing plays an integral role in boosting the performance of multi-channel online marketing campaigns. In 2011, over 4.7% of hotel website visits and over 3% of online bookings came from mobile devices across HeBS Digital’s hotel client portfolio. “Yet, this doesn’t mean that the impact of the mobile channel stops there. Mobile plays a key role in the performance of our social campaigns, email marketing, and other interactive initiatives,” says Mastrogiacomo.

Mastrogiacomo says many marketers haven’t fully realised the impact of mobile on other online marketing channels. With 50% of US adults and 80% of business travellers using smartphones, the line between mobile and other marketing channels is blurring. Mobile devices have become the portal to consumers’ everyday lives as they use their mobile phone to search the web, check email, update their social media profiles and so on.  This is why it is so important to have mobile-friendly email marketing campaigns, mobile SEM campaigns with copy tailored specifically for the mobile channel, and mobile-friendly interactive and social campaigns, she says.

An integrated approach works best: The days of using ‘silo’ tactics and ‘one off’ promotions are numbered. Today’s leading travel marketers are getting smarter about integrating campaigns across formats and channels.

Increased investment in search, retargeting, social and mobile will be among the top drivers of online leisure travel ad spending over the five-year eMarketer forecast period. But there is general consensus that these tactics work best as part of integrated campaigns that include a mix of paid and organic online and offline media.

As travel advertisers become savvier about digital marketing, they are finding new and better ways to coordinate digital ad tactics as part of larger initiatives. For example, Hannah Kimuyu, director of paid search at digital marketing agency Greenlight, told EyeforTravel in April 2011 that typical travel clients often choose a paid marketing mix that includes traditional pay-per-click advertising, targeted display, retargeting and ads on Facebook. Such an integration-savvy approach should still work today.