Friday, April 6, 2001

Airline Websites Pose Threats to Travel Agencies

Jupiter Media Metrix, the global leader in market intelligence, today reports that airline sites are growing faster than travel sites overall and are even narrowing the lead of online travel agencies. According to Media Metrix ratings data from February 2000 and February 2001, unique visitors to all travel sites increased 23.5 percent, from 24.4 million to 30.1 million. Unique visitors to airline Web sites increased 26.1 percent, from 8.2 million to 10.4 million, while visitors to online travel agencies increased seven percent, from 14.4 million to 15.4 million.

"Media Metrix began measuring online behavior when airline and travel sites frequently served as mere online corporate brochures," said Doug McFarland, president, Media Metrix, a Jupiter Media Metrix unit. "While the online travel agencies made the first aggressive push to accumulate audience share through both information and transaction services, the airline sites have made significant inroads over the past year, and the data are testimony to that."

"Jupiter estimated last year that in 2001 online agencies would cede online market share to traditional travel suppliers, resulting in a 51 to 49 percent bookings share with suppliers gaining ground going forward," said Heidi Kim, Jupiter analyst. "The Media Metrix ratings show that airlines' aggressive online initiatives have expanded their audience and therefore raised the stakes for online agencies who are clamoring for customers in order to reach profitability. To maintain their lead and increase revenues, online agencies must prioritize strategies that engender both accelerated conversion and customer retention."

Travel highlights:

- According to Media Metrix ratings data, the top airline sites were Southwest Airlines with 2.9 million unique visitors in February 2001, followed by United Airlines and American Airlines with 2.5 million and 2.4 million unique visitors. From February 2000 to February 2001 these sites had traffic increases of 19.8 percent, 40.6 percent and 126.2 percent, respectively.

- In contrast, the top online travel agencies were Travelocity with 6.9 million unique visitors in February 2001, followed by Expedia Travel and Priceline with 6.8 million and 3.0 million unique visitors. Compared to February 2000, Travelocity was down three percent, Expedia was up 10.2 percent and Priceline was down 21.9 percent.

- Travel agencies, which accounted for 90 percent of the online ad impressions served by the travel industry in February 2000, decreased their share of impressions to 63 percent in February 2001, according to AdRelevance, a division of Jupiter Media Metrix. Suppliers in the airline, destination and lodging industries, meanwhile increased their share of online ad impressions from 10 percent to 22 percent.

Offline & Online Ad Campaign Intergration Challenges
Net-based advertising will grow to €6 billion, or 5% of all advertising spend in 2005, but to exploit this potential, marketers must redefine their own goals and organization, according to a new Report by Forrester Research B.V. Net-based advertisers will steer agencies and media to integrative scenarios and new metrics for ads that mirror consumer behavior through multiple devices.

"The challenge of integrating offline and online campaigns will be compounded by the emergence of new interactive devices like mobile phones and iDTV set-top boxes -- vying for the same consumers' attention and advertisers' budgets," said Forrester analyst Diana Janssen. "Marketers must embrace the more ambitious, integrative framework of digital marketing -- redefining their goals, their roles, and their metrics around interactive scenarios designed to create end-to-end, cross-channel consumer experiences. To exploit the full potential of interactivity, marketers must drop traditional one-way, one-time, one-size-fits-all advertising campaigns. Instead, executives must use interactive scenarios in fitting with interactive media."

To create an integrated consumer experience, interactive scenarios require teams to cooperate within the firm across the departmental boundaries of communications, direct marketing, sales, and customer service. Executives must use the Net's tracking capacity to measure advertising effectiveness across all stages of interactive scenarios -- from awareness creation to customer service. Instead of zooming in on the distribution metrics that determine ad prices, marketers must develop action and diagnostic metrics.

Forrester advises that marketers should not only negotiate CPMs but also question their measurement and require access to login and traffic audits from third parties like the UK ABC. They should judge their performance-based deals through new, more pointed result measures than just click-through rates and sales. Marcom managers will then sit down with media planners to reproduce the winning placement and scenario combinations.

"Marketers should assign specific tasks to best- of-breed suppliers and entrust the creative process to dedicated shops, while allocating production, distribution, and technology deployment to traditional and online ad agencies," Janssen added. "To keep the overall process manageable, firms will force their partners to collaborate in eBusiness networks linking independent business units in real time.

"Marketers will turn to creative shops for scenarios that will optimize the media mix to target consumer cohorts and define the rules that adapt campaigns on the fly when customer response drops. Large agencies will coordinate the production and distribution of scenarios to eBusiness ad networks spanning devices and regions. Finally, online ad networks will cooperate with marketers to serve ads in multiple formats. Entering a deeper relationship with media, planners will look beyond sheer traffic and audience quality -- requiring quality context and accountability for their message. Marketers will favor media able to feed scenario designers with in-depth knowledge about their content and their visitors, and firms will choose media for their metrics."

For the Report "Rewriting Online Ads," Forrester spoke with 31 leading advertisers -- 17 large clicks-and-mortar companies and 14 dot-coms. We also spoke with 28 suppliers -- online media and ad agencies.