According to my web guide for dummies, web 2.0 means that consumers now rule the web and that user generated web content is the key to increasing traffic and so increasing sales. It’s been along time since a headline about Ryanair selling 98%…
According to my web guide for dummies, web 2.0 means that consumers now rule the web and that user generated web content is the key to increasing traffic and so increasing sales. It’s been along time since a headline about Ryanair selling 98% of its seats direct made the news but top travel suppliers are still striving to sell direct and bring down their distribution costs. Google’s huge profits and expansion seems to indicate that suppliers have simply swapped travel agent commission costs for expensive CPC rates.
So where do the travel suppliers go now to drive traffic, increase direct sales and decrease costs?
Undeniably the social media phenomena are revolutionising the way travel is marketed and sold. The generated content sites such as TripAdvisor and YouTube are the fastest growing sites in the world, engaging consumers and bringing in millions of unique viewers daily. Visits to TripAdvisor’s global site reached 11,829,372 so far this week alone and their UK site saw a growth in visits of 37% year on year (Hitwise February 2006). Last year YouTube saw visits saw to over 34 million per month (Nielsen/NetRatings, Sept 2006). Having seen the success of such sites many travel suppliers are daring to offer consumers the chance to voice their opinions and share their home videos but to what avail?
It takes a brave hotelier or airline to allow negative comments on his site. After all how many hotels would admit that they have a building site right next door or a grumpy receptionist? The power of social media stems through unbiased opinion and the ability to share experiences. It is here that travel suppliers lose out to 3rd party intermediaries.
The travel consumer is becoming increasingly sophisticated and will research multiple sites before purchasing their travel product. Many OTA’s offer the consumer a wide selection of products as well as unbiased consumer reviews. Whilst a visit to an online travel agent is no guarantee of a subsequent sale, the value of qualified traffic certainly serves to build brand awareness and influence the purchasing decision.
In 2004, a PhocusWright study comparing OTA’s and supplier sites on several criteria found suppliers to be closing in on OTA’s on all fronts – except price guarantee (which arguably hotels in particular have subsequently improved upon with best rate guarantee schemes). However what with the recent surge in consumer empowerment through social media on the web, new figures may see suppliers lose out in their inability to provided unbiased, wide ranging consumer driven content.
So what can suppliers do?
One solution may be to stop ploughing money into ambitious social media marketing schemes and concentrate on simple consumer retention. After all it is an accepted industry norm that retaining consumers is a lot more cost effective than finding new ones. Suppliers focusing on excellent CRM strategies throughout their processes – from the website to the actual product experience – will develop loyal customers who will have no reason to search multiple sites to find their next holiday.
Whilst OTA’s might also practise excellent CRM policies online, they simply cannot be involved in the customer experience from research, purchase and consumption. Germanwings, Delta Airlines, Cheapflights, Octopustravel, Starwood among others will be speaking about CRM and consumer retention at EyeforTravel’s CRM in Travel conference in London in May.
Another solution is to use CPA (cost per acquisition); as long as you pay for traffic you pay that actually purchases it’s very effective. In the UK £2 billion of products were sold to CPA driven traffic in 2006 and at last October’s Eyefortravel Sales and Marketing in Travel Conference the Hedwig Wassig, CEO of Euro Relais – a major European distributor of holiday homes reported that up to 50% of his products are distributed and sold via affiliates.
However Google’s dominance in the online marketing industry will effect the growth of affiliates and the CPA model. First Choice, My Travel, Marriott and others will be debating this topic at the Affiliate Marketing for the Travel Industry Conference this May 23rd.
All in all it would appear that the so-called battle between OTA’s and suppliers selling direct is becoming increasingly intense. Is their space for both parties in the market? Will changing consumer communication channels influence purchasing habits and tip the balance?
TravelDailyNews International is the Media Partner of the EyeforTravel`s Travel Distribution Summit Europe 2007. For more information on this event please click here or visit http://www.eyefortravel.com/tds2007/conference
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
