Employing a growing paradigm known as “programmatic advertising,” suppliers are bidding against each other for the opportunity to follow their customers across the Internet, and the results could forever change how travel is marketed and sold directly to consumers.
That’s because as they follow their customers around the Web and social media services, suppliers are mixing and matching data about those customers’ browsing, searching and spending habits with their own company data to present consumers with highly individualized, real-time ads that personalize everything from product features to price and value add-ons.
For example, a traveler might begin a search for a ticket on an airline’s website, then either buy it or leave without completing the purchase, moving on to another site. By being able to follow the customer to the next and subsequent sites, the airline can continue targeting that individual with an ad offering a seat upgrade if they bought the ticket or a slightly discounted fare if they did not.
This type of marketing is made possible by combining existing models of online advertising and adding in two new elements to create a potent data stew.
First, suppliers are joining two data sets: the company’s own data from loyalty programs and customers’ purchase histories with contextual data derived from tracking their Web browsing in real time, a mix familiar to users of Google.
To that data blend, they are adding two elements to create programmatic advertising.
The first is the supplier’s own revenue management data, which enables them to adjust pricing for airline seats, hotel rooms, etc., using yield management systems that instantly calculate the pace and margins of sales.
The second new element is real-time bidding exchanges, which enable Web-based services to auction to the highest bidder a chance for suppliers to follow their customers across the Internet, pitching them ads and marketing messages all along the way.
The model can replace broad-based sales to fill seats, beds, cars or berths with finely targeted one-to-one messaging.
Brad King, vice president of sales for Sojern, a major player in programmatic advertising, said the model is upending the old marketing credo that 50% of advertising goes to the wrong customer — and you never know which half that 50% is.
“We are cracking the code on getting to relevant audiences,” King said.
To avoid privacy and security concerns, all customer data is anonymized; basically, the service knows everything about the customer except details such as name and date of birth.
Direct-to-consumer marketers work with airlines, hotels, car rental companies, cruise lines, convention and visitors bureaus, Broadway theaters and other types of suppliers, bidding on their behalf for consumers’ eyeballs and the chance to create ads tailor-made for each individual.
Brian Ferrario, vice president of marketing for Sociomantic Labs, another major player in programmatic advertising, said that after a customer leaves a supplier’s website for other sites, “we know where they are. … No matter where you went, we see that.”
Though privacy advocates might consider that kind of detailed intelligence to be a form of digital stalking, it enables the supplier to continue a conversation with the customer even after he or she has moved off the supplier’s site.
Sociomantic CEO Jason Kelly put it this way: “Say you’re on CNN.com or WSJ.com. Once we see you engaged online, we can get an ad to you in real time.”
Even while a page to which the customer has moved is still loading, Sociomantic engages in real-time bidding for that customer’s eyeballs.
It all happens in milliseconds, said Bernie Yu, senior vice president of marketing for Adara, another programmatic advertising player, which claims more than 150 travel clients.
Real-time bidding exchanges automate the purchase of online ad inventory. Generally, suppliers have clear objectives for what they want to accomplish, and they set their bidding parameters accordingly, Yu said.
Sojern’s King said that a key mechanism for setting parameters is yield-management data.
“The point here is that our technology is so good and our targeting capability so strong, we can focus our efforts on ‘need’ markets,” King said. Sojern distributes its clients offers across the Web and Facebook.
There could be hundreds or thousands of advertisers waiting in the wings to bid, for example, when a consumer points a browser to Weather.com or NYTimes.com. Sojern alone might have 500 advertisers interested in a particular customer, King said.
But a customer flying to Atlanta might be particularly valuable to an Atlanta hotel with rooms to fill, he said. And, advertisers can see other useful information — number of people traveling, the length of stay, etc. — to help tailor their offers.
Moreover, offers can change over time. Travelers are likely to be more interested in a hotel early in the planning process and interested in entertainment or restaurant offers closer to their departure date.
Typically, pricing is set on cost-per-thousand-impressions basis, which could range from as little as 25 cents to $7 or $8, said Adara’s Yu. A company whose data suggest that a particular customer would be very likely to buy will bid very high to win a chance to display an ad to that person.
Since the whole process is digital, suppliers are easily able to measure the return on their ads, which can be very high. Sixty-two percent of consumers who saw Sojern’s ads for Visit Salt Lake booked travel to Salt Lake City for six nights or more, according to a Sojern case study about the campaign. What’s more, the study suggested that travelers exposed to the Salt Lake message were 22% more likely to visit the destination. For every $1 Salt Lake spent on the campaign, it figures it took in $57.70 in tourism spend. Returns on programmatic advertising have been known to run as high as 100 times the investment, King said.
Programmatic advertising is also more likely to be affordable to smaller players, King said, noting that a small destination-management company could get into the game for tens of thousands of dollars.
Almost all programmatic ad services are multidevice. Adara’s platform, for example, extends to mobile phones, tablets, email and video.
Sociomantic’s Kelly said that companies are melding all this data in new ways. Traditionally, he said, data describing loyalty programs, for example, and revenue management were maintained separately within an airline.
“Those two worlds were very siloed,” said Kelly, whose career has included positions at Virgin America, Frontier Airlines, Independence Air and Time Inc. Digital. “There was no way to connect those data sets.”
Now, there is. And that fact, coupled with real-time bidding capabilities, means that online publishers can essentially say to marketers: Here’s a person on my website. Who would like to bid for the opportunity to engage this person?
While anonymized data does not include personal names or dates of birth, it does record and rely on past purchase histories and other information that travel companies have about their customers’ purchases and preferences. What’s more, other third-party data can be added to the mix to help inform age, geographic location and income range, all of which can be crucial to defining a market target.
In all, Sociomantic says it currently works with 600 companies globally.
In another programmatic advertising effort, ShermansTravel Media is working with the Lotame audience management company to target its readers for ads when they are on other websites.
Nancy Telliho, the company’s chief revenue officer, said,“We are taking the data and then going out to advertisers and saying, ‘Hey, I have data about this traveler and can reach them on the Web through real-time bidding.’”
The model used by ShermansTravel is slightly different from what Adara, Sociomantic and Sojern do because it is using data derived from the reader’s behavior online, not from their purchase history.
So if a reader has been reading about a certain destination or type of cruise, ShermansTravel follows that reader to other sites and makes the reader available to highest-bidding travel suppliers. It can also reach out to clients on behalf of travel advertisers.
Telliho said that in the past, only Google had the ability to run such ads when customers were on other sites. But the advent of real-time bidding exchanges and improved data collection technologies means that nonmedia companies now can do the same thing.
ShermansTravel began beta-testing its program in October with eight advertisers. One, an airline, has just reupped for another six weeks, she said.
A third model, embraced by Adara, works with Twitter, using customer data from companies like Delta Air Lines, United Airlines, Marriott and others.
“We bring their [anonymized] customer data onto our platform,” Yu said. “So if a hotel advertiser wanted to target folks who had just booked an airline ticket, we could send them a sponsored tweet about a New York hotel.”
This has implications for GDSs and other companies in the travel industry.
“Companies like Amadeus, Sabre and Travelport could take [a company’s own data] and could drive sales for their travel partners,” Kelly said.
Sociomantic, which has partnered with Revenue Management Systems, a supplier of revenue optimization software, is working with several major airlines around the world as well as with a number of hotels and OTAs.
While in one form or another, programmatic advertising has been around awhile, King said it has really taken off only in the past two years, growing in popularity especially among travel suppliers.
Follow Kate Rice on Twitter @krtravelweekly.