Earlier this year, United claimed an airline industry first with the launch of its media network, jumping into the commerce media space where online travel brands, hotel groups and ride-hailing companies already play.
Travel commerce media, seen widely as an evolution of retail media, sees companies monetize traffic from websites and other channels by allowing brand advertisers to tap into their first-party customer data and serve up targeted advertising.
Travel companies including Expedia, Booking.com and sister brands Agoda and Priceline, Marriott International and Uber have all established media networks in recent years and are earning significant revenue from them.
Koddi, which helps some of the companies monetize their on-site traffic through these commerce media networks, has seen the trend grow in travel in recent years.
Eric Brackmann, vice president of commerce media at the ad technology specialist, said it's been an evolution in targeting from the early days of display advertising to then enhancements facilitated by search data from Google and then further refinement with demographic data from Facebook.
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“Now we're in this of era of using commerce data to do really good targeting and put together better experiences for consumer and travelers. It’s a little more privacy first, has dramatically better results and unlocks a whole new revenue stream for operators in the space,” he said.
Brackmann believes it’s a win-win for travel companies with better margin on advertising and ultimately improved profitability. He is excited about the potential for commerce media in travel because of the prevalence and proliferation of loyalty programs and related data, the increasingly digital nature of the industry and because of how good travel brands already are at content creation.
Uber’s ad network unveiled just two years ago is now a $1 billion business. More widely, according to Brackmann, one-in-five media dollars will be spent in commerce media this year.
Consumer experience
Koddi's Brackmann shared an example from the traveler perspective. Ads “that are generally relevant to who you are as a consumer,” such as a restaurant or activity in the city you’ve just landed in, can be served to the user at the bottom of the Uber app when they go to book a ride.
Then different content might be served up once the ride is booked, targeted to who the traveler is, where they are and whether they are on a business or personal trip.
“There’s also interesting unlocks for say, an Uber and a Marriott where they have a deep partnership. You might land late at night and you’re on the way to a Marriott and Uber can set you up with something from Uber Eats from a restaurant down the street. And it is available for you in one click,” Brackmann said.
“Trips start to feel more natural, more organic, more end-to-end. What we generally find from the data is that consumers are delighted by these experiences. It gives Uber an opportunity to monetize and gives that restaurant an opportunity to get an order at a time when they wouldn’t normally, so it’s a true win-win scenario.”
Marriott launched its own media network in 2022, originally partnering with Yahoo before transitioning to Google. As guests go through the booking journey they are served relevant offers and promotions based on their data.
Using Marriott as an example, Brackmann said, “They’ve got some context around who you are as a traveler, what type of hotels you book, sort of what your potential spend is. Maybe you’re going on a beach vacation and, as an example, they might start to thread in some swimwear brands that might make sense.”
Meanwhile, Expedia has seen recent success with its media network and destination marketing organizations. The online travel giant has had an advertising business for more than a decade and unveiled its travel-focused retail media business earlier this year. It worked with Destination Canada recently on its “Where to Canada” campaign.
“A lot of DMOs don't have something to sell per se on their sites,” said Rob Torres, senior vice president of Expedia Group Media Solutions.
“Really their job is to get more people to choose their destination over another. We worked with their brand team to create this amazing content that allowed them to target bookings, along with inspiration.”
Expedia measured the results in terms of bookings and found the DMO saw an 18% increase.
Core strengths
But with Uber making $1 billion from its network and Expedia earning $145 million in revenue in the first quarter of 2024 for display advertising across its approximately 200 sites, could travel companies make more from media networks than their core business?
Torres said advertising is not the core business of most of these commerce media networks.
“Their primary business, even our primary business, is running a retail travel store, that’s what we do,” he said.
“Walmart, Amazon sell products off their shelves. Their primary business is, and should be, that retail element. What's happened is people are seeing the value, and I go back to this data they haven’t really used for much in the past. So, it is really amplifying, augmenting what they’re doing on the retail side and of course the margins are so high on this side, whereas they’re not necessarily [high] in retail.”
Expedia, with its wealth of customer data, can help travel businesses find customers and make the most of the opportunity, but he said, “I don’t think we’re looking at this taking over. Certainly it might take over in terms of margin dollars because it’s very valuable. We work very closely in developing these media networks and it’s really about amplifying the data they already have, utilizing it and getting value out of it. They have been collecting this data forever but nobody has put a strategy against using it until today.”
Expedia is also doing some tests with United and Torres said he is surprised more airlines are not doing something similar.
“They’ve seen the value, and I’m actually shocked other airlines have not jumped into this. I haven’t heard of any others that have actually paid any attention to this. They have so much data about their customers, so many members of loyalty programs, so much robust data. Arguably, they've got other issues to deal with right now.”
Brackmann is also excited about the potential travel loyalty programs bring to the commerce media space.
“Travel has a heritage of loyalty data. Loyalty programs in the space are phenomenal. They have great penetration and longitudinal data [gathered] over decades,” he said.
But despite the potential for improving returns and the promise of a better experience for customers, there are pitfalls for travel companies to keep in mind.
Toby Korner, senior vice president of digital marketing at Priceline, said his general advice was for companies to constantly evolve their commerce media strategies.
“We must continually test, iterate and innovate to bring new opportunities, insights and value to our partners, as well as choice to our customers to continue to grow and evolve as a network,” he said.
Resourcing, data challenges
More specifically, Brackmann believes getting the enterprise on board is the top challenge and reiterated the point Torres had made about it being a non-core product.
“It’s a different operating model,” he said.
“A lot of brands have spent a time, money, and energy optimizing the path to purchase, optimizing the booking experience and making sure that it works. So, saying ‘Hey, I'm going to put this other thing next to it,’ especially for some of the merchandizing folks can cause headache.”
Finding the right skillset is also important because teams good at selling travel might not have that same affinity when it comes to selling media, according to Brackmann. In addition, there’s a talent war and it is not just specific to travel, creating an additional challenge for companies looking to set up a commerce media network.
Danil Dachkevitch, associate vice president of travel distribution and media solutions at Agoda, also said having the right team with the skills to stay on top of technology developments is important.
“Building a strong team of professionals—sales experts, campaign managers, designers, and analysts—is essential,” he said.
“While great campaign performance is important, clients often return because of the support they receive at every stage, from sales to reporting and invoicing, not to mention the flexibility and responsiveness of the team.”
While Torres also noted that the resourcing issue is a concern for some companies, he flagged data protection and building the technology as two further areas where companies need to tread carefully.
He said companies need to be prepared to adapt to the latest regulations and ensure a “robust strategy to maintain your data in a privacy protected way” is in place.
“Because what I have is this data is so valued, so I need to make sure that my customers feel protected and my advertisers really feel confident that if they engage with us, we’re not going to do something with this data that actually undermines what they're trying to do or gets us in trouble. That's number one,” Torres said.
And, if all that wasn’t enough to get to grips with, there’s also the potential impact of artificial intelligence on commerce media. On that front at least, experts across online travel are united in their excitement.
Brackmann said he is super excited how the combination of generative AI and commerce media might play out.
“There are a few thing we’re working on to bring to market that I think will really add to it. The ability to customize a trip itinerary around a set of experiences, a hotel, a set of restaurants, works really really well with generative AI. There is a ton of content we can make very bespoke, natural, organic, very individual and monetized which is really the vision for what we’re doing here.”