Digital Ad Spending in Travel Jumps

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While some experts ponder whether Google is ready to make an even bigger splash in the travel industry, a recent eMarketer study highlighted a big reason why the search engine giant is content with its current role.  Digital ad spending by the US travel industry will reach $4.15 billion in 2014, a sharp increase over 2013’s numbers ($3.42 billion) that reflects the improving health of the overall US economy and rising profits in the industry.

In 2014, the majority of the US travel industry’s digital ad spending will come from a handful of OTAs, most notably Priceline and Expedia.  These agencies’ focus on direct-response tactics will drive trends for the industry as a whole.

Direct-response objectives will make up 74% ($3.07 billion) of total digital ad spend, with only 26% ($1.08 billion) going to branding.

OTAs’ emphasis on direct response is a function of advertiser familiarity and the format’s effectiveness.  Direct-response advertising has proven successful in creating online bookings, and the OTAs that spend the bulk of the travel industry ad dollars have years of experience perfecting the approach.  Thanks to the model’s success and the travel market’s intense competition, there is little incentive for adjustment.

Mobile vs. Desktop Ad Spend
Although mobile ad spend continues to see growth in the travel industry, the majority of ad spending is still going to desktop and laptop operating systems.  Advertising for desktops is expected to make up 64.5% ($2.68 billion) of digital advertising in 2014, while 35.5% ($1.47 billion) of digital spending dollars will go to mobile advertising.

Back to the Google Discussion
Why would Google want to give up a large piece of this $4.15 billion pie, while also adding to their workload. Priceline and Expedia devote large numbers of field workers to ensuring they have partnerships with independent hotels, and other unique accommodations. Is this something that makes sense for Google? At this early stage of the company’s travel development, I would argue it does not. However, if Google is able to find a replacement for the revenue generated by OTA digital advertising, they could certainly be a major travel player.

To read the full eMarketer report, click here.

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