Changing advertising models

By Charlie Funk
Charlie FunkIn a recent column ["The distraction of direct bookings," Aug. 20] I mentioned that if traditional travel agents wish to thrive, they need to focus on getting in front of -- and staying in front of -- prospects and bringing value to the travel reservation process. In the email and feedback I received agreeing with the premise, several asked for advice on methods and techniques that could be used to make clients aware of their agency and its capabilities. 

How the business has changed! Twenty-five years ago, referrals and word of mouth were key business drivers, especially for smaller agencies.

Larger agencies ran ads in various cruise and travel magazines. Cruise lines ran newspaper ads, and local agencies placed a one-inch "tag" ad at the bottom with contact information.

The cruise lines wanted agencies to tag their ads because the retailer was their only channel except for a tiny number of direct bookings (well under 1%, according to cruise line executives of the period). Agencies were partners, respected to the point that if an agency tagged an ad, the cruise line didn't put its own phone number in the main body of the ad.

In the '90s, larger agencies ran full-page ads in the local Sunday paper's travel section, sometimes featuring nine or 10 cruise lines (there were more than 30 at the time). Cruise lines contributed substantial co-op ad funds.

Direct mail pieces had been used for years, but they became much more sophisticated in the early '90s as some cruise lines and a few retail agencies began using database segmentation to mail only to those most likely to respond.

With the arrival of the Internet, travel suppliers introduced websites with attractive, inviting content. Agencies with the resources countered with well-designed websites that offered detailed information on itineraries and ships, plus the ability to book the cruise. Smaller agencies did without or subscribed to content providers that offered boilerplate website designs.

Attracting visitors to the websites became a science that took on a costly life of its own. Google capitalized on its powerful search engine by selling "keywords" that users were likely to use as search terms. Advertisers, primarily large online travel agencies (OTAs), that wanted their site to appear in a higher position on the results page bid ever higher purchase prices for each click to ensure they showed up either first or second any time a search contained the words Royal Caribbean, Carnival or just cruise.

Because these searches worked, cruise lines willingly paid 50% or more of the $2-or-so cost of each click. The dilemma was that as the OTAs bid up search terms, keywords that cost $2.18 in 2007 were fetching more than $5 by early 2010. Cruise lines' co-op ad costs continued to escalate.

That's the main reason that in late 2009, cruise lines put a stop to allowing agencies to purchase keywords and phrases containing their trademarks -- that and the fact that the prohibition also improved the likelihood that the searcher would find his or her way to the cruise line's own website and book direct.

Concurrent with the growth of Internet advertising, the effectiveness of print advertising declined, leading two major cruise lines to cancel co-op ad contracts, sometimes leaving agencies to sort out with newspapers the consequences of failing to fulfill their purchase commitments.

Which brings us to today.

At every turn, we are assured that this search engine or that service provider is the best way to go to market. Advertising audiences have become so fragmented that retailers face dozens of choices about where to spend ad money.

The cost for a viewer response seems inexpensive on the surface. By some estimates, the click-to-book ratio for Google vacation ads is 30-to-1. That means that if the cost per click for an ad is $3, the advertiser has $90 invested in the booking before any cost for data entry or reservation administration is incurred. The click-to-book ratio for Facebook is even higher, at about 200-to-1.

Whether it is Facebook, Twitter, Google or a dozen other Internet entities or electronic media, agencies face the likelihood of making the wrong decision. It is far beyond this column to discuss optimum ad media or ways to go to market.

Let's move ahead with the assumption that we know how to find prospective clients and look at ways even smaller agencies can have a successful Web presence. A quick check on Google for "travel agency websites" returned several million potential sites starting at "free." Two of those mentioned, Passport Online (hosts for Nexcite and Travelport) and Online Agency, have been around for several years. They are used by thousands of agencies and are well respected in the industry. For about $500 a year, even the smallest agency can have a website with graphics and content rivaling those of the largest agencies.

For those that want a custom-designed website, any number of sources are available, but selecting a company with travel experience and knowledge will serve far better in the long run. Cruise and travel industry veteran Adam Lapsevich's SpoonDrawer Media Group offers everything from a "clean piece of paper" site to a turnkey site.

Another enhancement to consider would be professionally produced video content that entertains while informing visitors about destinations all over the world. SpoonDrawer has a Monthly Video Club that includes content to use on your existing site including destinations (Dublin, Scotland and more) as well as suppliers (Avalon Waterways, Celebrity, etc.).

Another excellent choice is World Vacation Group, under the aegis of Tom Kratsch, another seasoned cruise and travel veteran offering exceptional additional content to use on an existing site as well as co-branded sites that focus on the luxury side of the business.

And don't ever completely shut the door on marketing ideas that worked in the past. Ask suppliers that support you for guidance about exploring advertising methods that were discontinued. Sometimes that which was old becomes new again. In fact, one of the cruise lines that decided newspaper print advertising wasn't effective four years ago recently resumed newspaper advertising in selected markets.

The major difference now is that travel retailers are not allowed to tag the ads, and travel agents are mentioned nowhere in the copy.

Charlie and Sherrie Funk own Just Cruisin' Plus in Brentwood, Tenn., and have provided agent and agency-owner training throughout North America on every facet of travel agency operations. They are the authors of several books, including "A Recipe for Travel Agency Success," "Creating a Blueprint for Growing Your Agency" and "You're Invited," a complete guide to hosting consumer travel events. 
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