Brand Wars: The Airline Booking Battle Will Be Televised

Brand Wars: The Airline Booking Battle Will Be Televised

Online travel agencies have had a solid run over the past two years. They picked up some market share as would-be travelers were willing to poke around a little more to score cheap tickets. High rates of unemployment and under-employment and general economic uncertainty, of course, were enough to make consumers value every dollar a little more. This opened an opportunity for online travel agencies to advance in the marketplace, and chip away at the dominance of their suppliers (i.e., the airlines) on the web.

Yet, the market is turning. Next year is expected to be a strong one for the air travel industry relative to 2010, and 2010 was a vast improvement over 2009. For online travel agencies, this provides some benefit as a rising tide, but it’s likely to favor their suppliers, as customers are more likely to go with what they know over putting in some effort to find the largest discounts.

Online travel agencies will have to overcome this tendency by investing smartly and substantially in their own brands. This is what we’re seeing in the latest move by CheapOair, the one of the 10 largest online travel agencies in the sector, in its recent announcement of a marketing mix change, which teases a broader strategic shift given changing market conditions.


A Changing Travel Market
From 2008 to 2010, online travel agencies were able to chip away at the online market share of their suppliers, reducing the suppliers from owning 62 percent of the online business in 2008 to 59 percent in 2010, according to travel industry research firm PhoCusWright. Bargain hunters drove the market, which eroded the importance of brand loyalty.

From 2009 to 2010, PhoCusWright notes a “strong countercyclical performance for the OTA category.” In 2009, sales fell only 1 percent for the sector, compared to 5 percent for the total online leisure/unmanaged business travel market. And, online travel agencies have posted double-digit gains in 2010.

Stronger industry conditions, however, are better for the suppliers, and PhoCusWright observes, “With the rebound continuing, supplier websites will likely regain momentum as the OTA fight to hold on to their share gains.”

In regards to the actual travel experience, ostensibly, the airline’s brand matters most. When a passenger books through an online travel agency, the brand associated with the transaction lasts for a few minutes – or a few hours, depending on the diligence of the buyer’s search. Meanwhile, interaction with the airline’s brand starts during the search for a ticket, persists through the flight and ends sometime after the passenger hops into a town car to get to his ultimate destination. To register in the customer consciousness, online travel agencies need to develop the sort of presences that will keep them top of mind.

This runs counter to the traditional online customer acquisition models associated with the online travel agency business, which involve a combination of search engine optimization, online ads, affiliate programs and social media. These are transaction-oriented tactics, which speak directly to the brand-barrenness of big discounting.

More Than the Transaction
The largest online travel agencies have already moved past transaction myopia: everybody knows the Travelocity gnome, Priceline‘s William Shatner and the likes of “Cooper” from Expedia. For all but the top players, however, investments in mass media brand development (such as television) have generally been eschewed in favor of what’s been known to work. Speaking at Business Insider’s IGNITION conference last week, Buddy Media CEO Michael Lazerow noted that Travelocity grew to $4 billion in revenue through online means before it moved to television to get to the next level.

Yet, for the online travel agency sector to hold its ground – and even grow – in 2011, brand has to matter more, and this means casting a wider media net. This, plus the size of CheapOair relative to its competitors, is what caught my attention about its recent media diversification. The company is launching its first television ad campaign, “Get More for Less,” in an aggressive move to get out in front of the imminent online travel market shift.

The move to television is an aggressive one, and it comes a bit ahead of “schedule” for CheapOair, if you use the Travelocity number as a reference point. Expedia pulled in close to $3 billion in revenue last year, for example, and Priceline at $2.3 billion. Travelong/CheapOair generated $825 million in revenue in 2009 and has grown at a year-over-year rate of 45 percent this year, resulting in forecasted 2010 revenues of $1.2 billion.

The company’s CEO, Sam Jain, says, “TV is a new strategy for CheapOair and as we head into our 6th year we believe this is the right time to expand our marketing efforts. TV is a natural evolution from our current digital marketing and will help build awareness among a larger audience and introduce more people to the brand.” The countercyclical tendencies of the online travel agency market relative to travel as a whole reinforce this point.

Pointing to the potential for a virtuous cycle, CheapOair’s Sr. Vice President of Strategic Partnerships, Bill Miller, adds, “This new TV campaign should draw in more customers for us which in turn will bring more value to our supplier partners. Our suppliers — airlines, hotels, car rentals —- want valuable and efficient distribution partners. I believe we are all that and more and this TV campaign is just another example of how we can extend our marketing reach on the behalf of our supplier partners.”

Fashion versus Reality
It’s been fashionable among the digerati to claim the death of other forms of media, and I’m as guilty as the rest. But, the reality is that SEO and online ads (a la Google’s pay-per-click model) are becoming increasingly crowded and competitive. Since they are focused on the transaction rather than the brand, they don’t provide for a relationship with the customer that results in a gradual reduction in cost per revenue over time. It’s strictly “pay by the drink,” and that can get pricey.

With the travel market starting to tip in favor of the travel suppliers over the online travel agencies, the costs associated with traditional online marketing will become even higher, as brand brings customers back to the suppliers and online travel agencies chase a shrinking share of bargain hunters. For online travel agencies to compete effectively, they have to make their own investments in branding – a commitment that lacks the predictability of other forms of marketing.

Strangely, television may become the key to winning on the web in the travel industry in 2011. A better market translates to the amplification of the importance of brand, and commercials are still a critical aspect of this in the consumer world.

A battle of the brands is about to break out. The good news is that it’s for your benefit … and you’ll get to watch it on TV!

[photo by Do u remember via Flickr]

The Travelocity Roaming Gnome becomes a real retail celebrity

When I travel, I always expect to run into someone I never thought I’d see at my destination. But to travel, and run into not one, but three of the Travelocity Roaming Gnomes took me completely by surprise. Sadly, the little fellow wasn’t there to make sure my trip was going as planned (I had not booked through his company).

Apparently, the chubby little gnome has become quite a retail sensation, and is now on store shelves selling himself for just $34.99. Now, I’m not sure if this means you should bring your own gnome to take care of customer service issues, or whether he’s just a cute garden decoration, but I couldn’t resist and picked one up.

You want one of your own? Amazon is selling them for just $24.99. Want to take things to the next level? Order the $42 adult Travelocity Roaming Gnome outfit. I’m ordering one of these for our own Melanie Nayer for her next hotel review. I consider it the ultimate in hotel reviewer gear.

New TripAdvisor iPhone app makes finding reviews on the go a lot easier

There is no denying that TripAdvisor has become one of the go-to sources of hotel, restaurant and attraction reviews. So, if you have an iPhone (or iPod), check out the newest TripAdvisor app and get your reviews on the go.

The app is very easy to use, and makes finding reviews a beeze – based upon your location, or a manually entered location.

Best of all – you can write your own reviews right on your device, which means you no longer have to wait till you get home so post some praise (or a complaint).

Another handy feature inside the new app is a flight finder – obviously not the first on the iPhone, but I am always happy to see an app go beyond its main purpose. Flight information comes from a variety of sources – including Travelocity, Expedia and Vayama, best of all, the booking process stays right inside the TripAdvisor app.

You’ll find the new (free) app in the App store. A similar version is also available for the Palm Pre, and an Android version is “coming soon”.

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The Travelocity Gnome visits Gadling

As the summer of 2009 winds to a close, Travelocity’s Roaming Gnome is wrapping up his tour of America. He’s been across the country, visiting Pat O’Brien’s in New Orleans, the beaches of San Diego and the narrow streets of Philadelphia, bringing joy, affection and gnominess to all those around him.

There’s only one stop left: The Gadling Labs.

This weekend, the 300 year old Travelocity Gnome will be joining us in a whirlwind tour of the Midwest and Northeast. Starting tonight in Ann Arbor, Michigan, we’ll be hosting a bar crawl throughout the sleepy college town, after which you might see us anywhere between Cincinnati, St. Louis, Newark, or New York as we plow through this Labor Day weekend head on.

If you happen to be in the Wolverine State this evening, stop by Dominick’s in Ann Arbor at 8PM to join in the festivites and get your picture taken with the gnome. Otherwise, keep an eye on the @gadling, or @RoamingGnome Twitter feeds to get updates on all of the action.

We’ll be posting your photos with the gnome on Gadling and on the Roaming Gnome’s Twitter and Facebook sites early next week, so make sure that you take this opportunity to grab your slice of fame!

Amazing Race 14, recap 11: Beijing, China’s food is awesome— and awful

After last week’s cliffhanger of Amazing Race 14 when Jaime and Cara arrived first at the Pit Stop to only find Phil pulling another yellow envelope behind his back, I thought that Jaime might throw a hissy fit, but no, she handled Phil’s news like a trouper. Instead of winning a nifty trip to some exotic location, off this former cheerleader duo went in the dark of Beijing to Bai Hai Dong Men and the next clue. That doesn’t mean they were in a cheering mood for more fun and frolic with Chinese people, but they didn’t whine.

No one else did either. Perhaps they were too pooped after their swim to get mad about being duped. No rest for the weary. Instead of getting shut eye, there the four remaining teams were darting in and out of shops at Bai Hai street looking for a Travelocity gnome. This task gave glimpses into the mish mash of offerings in various shops. This one clothes. That one dried beans and peanuts. Another one, glassware. You get the picture. Shopping in Beijing is not the version where you load up a cart with everything from a vacuum cleaner to bananas to a lawn chair by the time you hit the checkout counter at a mega store.

Once teams found the Travelocity gnome, off they went with their red-hatted lawn ornament via taxi to find Gu Gong Xi Bei Jiao where they hopped on electric bicycles to glide along the streets of Beijing past Tienanmen Square and the Forbidden City.

With the early morning sunrise glinting off the buildings and the gnomes sitting in their bicycle basket perches, could the lighting have been more perfect? I think not. Even the teams, who had to have been tootling along only thanks to an adrenaline rush, were able to enjoy the architecture, the soldiers marching during the morning flag raising in the square, and the historic significance of their location. It couldn’t have been a better piece of TV work if it had been orchestrated. What timing.

At their next clue stop, the Dongdan subway station, there was a choice to head to an opera house to dress like an opera singing couple, complete with make-up they put on each other, or head to a restaurant to take food orders of a group of people sitting at a table, repeating the order to the cook, and then delivering the food to the dinners. The trick was using Mandarin, a snap, more or less, for Victor & Tammy. They did make one mistake and had to try again. The food: vegetarian noodles, fried chicken, new taste beef, golden pork spare ribs and good luck fish, reminded me of all the fantastic meals I’ve ever had in Asia. Hint: If you can’t read a menu, look at what other people in the restaurant are eating. Find what looks good and point. This method works like a charm.

Luke & Margie and Jen & Kisha showed up at the Hu Guang Hui Guan Opera House to put on the Chinese princess and gentleman attire. By this time, Margie & Luke had begun to vex each other, but Jen & Kisha were doing well, although Jen couldn’t quite believe they were still in China after their swimming terror.

Just like in the past episodes, during this episode Jaime and Cara were never able to get a break when it comes to cab drivers. Patience, dear Jaime is a virtue. Still, you have to hand it to these two. They keep soldiering on and giving lovely smiles to folks who help them when they feel understood. Jaime and Cara’s moods are like watching a see saw.

Once Jaime and Cara finally found the correct opera house, long after Victor and Tammy had served food at Hu Guang Hui Guan restaurant, and Luke & Margie quit bickering, the make-up task was a snap for these women and off they ran only to get lost and confused again for three more hours.

In the meantime, Kisha & Jen, who I like, were U-Turned by Victor and Tammy at Hu Guang Hui Guan. Instead of getting mad, there they were in their opera attire trying their darnedest to say the names of Mandarin dishes correctly. If there was any lesson to learn from watching them, it’s to write things down as they sound, and listen carefully. Also, if you can’t understand what one person is saying in a language you don’t know well, ask someone else. All native speakers don’t sound the same. Some people are just easier to understand.

After serving food or dressing up in Chinese opera regalia, it was off to a Dong Hua Men Yi Shi Street Market stall that sold snack food that would be great fare at a Halloween party. It is possible to eat deep-fried starfish, grasshoppers, larvae, and scorpions served on a stick. Andrew Zimmern of Bizarre Foods would have gotten a kick out of this part. The best thing to do in such situations is to eat fast. Jen ate little bites followed by a lot of water which led to another issue, a costly one. Victor, Cara and Margie, on the other hand, went to town scarfing the oddities down, as if they couldn’t eat enough of the crunchy critters.

It wasn’t much of a surprise to see Tammy & Victor dash to the Pit Stop at Niao Chao, the Bird’s Nest stadium of the Olympics. The tasks weren’t particularly difficult for them during this episode and they could clearly say the names of places. These two have grown on me and it’s fun to see them having a good time. They’re the type that traveling brings out the best in.

Unfortunately, Jen had to go to the bathroom before they made it to the Pit Stop so Cara and Jaime beat them. Too bad, too bad, too bad. With those flowing gowns, why not just pee and keep running? Gross, but hey, it’s a million dollars. People were running in their underwear in Siberia. Surely peeing in an opera gown isn’t the worst thing that could happen. On the otherhand, what a great way to illustrate that Beijing does have swank public toilets. Keep that in mind if you have to pee there. Head to the Bird’s Nest for some bladder relief.

So, who do I hope will win? I’m not that partial to anyone. As much as Jaime’s attitude gets on my nerves, I’m impressed Cara’s and her tenacity. They just keep on going like that battery run bunny from the commercial. If they win, I won’t be that upset. Although, they really ought to apologize to Mark & Mike for making fun of short people.

If Luke and Margie win what a great boost for women over forty and people who are deaf. They can kick butt.