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Advertising at a Crossroads

07/29/2008



At AXSES, we have been musing about the Internet advertising business, wondering how it will evolve. With Google losing ground to other choices such as Social Networking, Meta search, bookings and interactive services, it will not be long before they morph their business to give travellers what they want. For now, Google has decided not go the bookings route. They did not buy Expedia, as had been rumoured. Google opted to move more into social networking; see Google Travel Plans. MSN in contrast is moving to interactive shopping, with its purchase of Farecast.

In our view, the days of static ads and lists that link to websites are limited. We expect to see this change even on the search engines. Travellers need to be able to compare options and get fully-costed holidays at a click. Google is retiring its AdSense referral program, that allowed almost any website to display Google static ads and get paid per click. In its place is the Google Affiliate Network, which pays based on a purchase.

Hitwise, the Internet statistics company, recently noted a significant shift in searchers favouring Branded searches. "I looked at the top 300 search terms sending visits to Travel websites and found that more than three-quarters (77 percent) of visits from these queries were from branded search terms such as Hilton hotels or Expedia in the four weeks ending April 26, 2008", reported Heather Hopkins, VP Research, Hitwise UK.

Simply put, the Hitwise findings mean searchers are now looking more for names they know and not relying as much on generic terms. If the trend continues, it will mean that we can't rely on the search engines to help people discover our hotels for the first time. We can't rely on a middleman to market us! Marketing ourselves is something we can't avoid.

In light of the trends to buy direct, it is interesting that Expedia is a top of mind search term. Yet, Expedia reports unofficially, that 70% of visitors to their site use their list to find resorts matching a budget, and then go directly to the resort website to make a contact and book. Ninety-five percent of Expedia visitors do not buy from Expedia.

Aware of this trend, Expedia introduced a Cost per Click (CPC) advertising option, similar to Google. Interesting indeed! Has Expedia seen the writing on the wall? Perhaps they got the idea that they were the new search engine for travel. So now, instead of paying 25-30% in commission, advertisers are paying 30-40% and don't have any control over their brand.

The Cost per Click (CPC), is the cost to deliver a single customer to a website as a result of a paid listing or advertisement on a medium such as Google or Barbados.org.

In a recent study of advertising costs, AXSES revealed that the Cost per Click on Barbados.org is now often less than 20 percent of costs on sites such as Google.

Barbados.org advertisements, up until now, have been static ads that link travellers to the advertiser's website. In addition, Barbados.org offers a free listing for every resort in the destination of Barbados - all of them, not just advertisers.

This will not be so for long. Our next release will make these ads interactive and link directly to dynamic quotation, reserve and book options. Of course, all links go directly to the advertisers.

What this means is that Barbados.org advertisers will have interactive advertisements that allow travellers to get an immediate quote and to reserve or book a holiday package, including air, online, on almost every advertisement and listing on Barbados.org. Travellers will now be able to click a button on the advertisement itself and make a booking directly with the hotel right there and then, and this is right across all media, even on Google Maps. Pretty powerful, when you consider that Barbados.org Maps are on the Google website: (Google Maps) as well as on Barbados.org Map pages (http://barbadosbymap.com)

This facility significantly enhances the Direct e-commerce bookings that have been a feature of the Barbados.org suite of websites for the past three years.

Typically, marketing services that include quotes and booking are available via middlemen channels, such as Expedia, which take 18-30% of every sale.

The trend is clear: the Internet is revolutionizing marketing with more and more travellers choosing to go to the supplier's website and book direct rather than through a middleman. Travellers say they feel they have more control working with the supplier directly, but they expect rates and services to be comparable.

Couple low CPC advertising with bookable ads and the supplier-centered technologies now in place with arcRes Suites, AXSES travel platform and other supplier-centered features, and you get a powerful direct marketing solution.

Enhancing supplier's brand and delivering commission free business directly to the tourism operator.

Giving control back to the supplier.

We look forward to hearing from. Do you agree, do you have a point of view? Please let us know what you know!

Ian R. Clayton, AXSES -------------------------

See PowerPoint concept and rational: http://axses.com/Axses-bookable-ads.ppt. http://www.barbados.org/stlaw-accommodation.htm - example of classification list
http://www.barbados.org/hotsites.htm - - feature http://www.barbados.org/surfing.htm - - - banner/body text box

- bookable maps


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