By: Beth Vendice, President, Mercury Media Boston
My article, “Direct Response TV: Stimulus Funds for the Travel Comeback” was featured today on HotelExecutive.com. It is the first of a series of six, so stay tuned for future articles on how you can use DRTV to boost your travel business! See my complete article below, also available by subscription only at HotelExecutive.com.
If only the travel industry were like the banks, or the biofuels business. Then it would have this huge stimulus fund to research and develop product, attract new customers and access the capital necessary to grow without the burden of huge debt. However, the travel industry does find itself in a good position presently. It is in the midst of a comeback. But economic comebacks have a flaw, being that access to ready capital. It is time for marketing innovation, a stimulus fund if you will. That stimulus program for the travel business has come in the form of direct response innovation.
Before we talk about those innovations, let’s establish the signs of this economic comeback. International travel rebounded in January, boosted by more passengers in premium class cabins, according to the latest data released by the International Air Transport Association.Total passenger numbers on international travel markets rose 5.7% in January compared to a year ago. In January 2009, international travel showed a 3.7% decline compared to January 2008.
Underscoring the depth to which premium traffic fell last year, first and business class travel rose 9.4% in January from the lowest point in 2009, but would still need to increase by 16% to reach the peak recorded in early 2008, IATA says. So travel supply executives need to understand that the ditch was deep and the opportunity to dig out is urgent.
Here’s more evidence. According to the U.S. Travel Association for example, 53 percent of all adults plan on booking at least one overnight trip before April. One company, hotel.info, recently declared “crisis-hit 2009 is over.” It researched its 210,000 international hotel accounts, for which it handles online booking, and found some amazing results. Almost half of hotels (46.08%) are approaching the new year with cautious optimism, and, according to hotel.info, expect a moderate, albeit slow, recovery. Nevertheless, 24.44% are more optimistic in their outlook, and believe they will be doing significantly more business very soon and will be operating at higher capacity. In contrast, just 6% anticipate a rise in hotel rates this year. Deutsche Bank, normally conservative, believes hotel occupancy rates will rise more than two percent this year.
Oil prices have kept air fares and cruise rates level, although no one can truly predict such a volatile piece of this puzzle. But while the signs of the comeback are all there, the revenue necessary to forge an ad campaign to reach and drive leads for the “in market” customer hasn’t gone down. Internet ad rates are expected to increase 10 percent, according to JP Morgan Chase, and travel magazines are holding their rates, if they haven’t gone out of business.
The answer is direct response media. We believe that innovating around the direct response model can allow travel suppliers and destinations to not only cross the bridge of reaching more customers, but it can provide compelling incentives for them to take action, and enable travel companies to access that elusive budget to do so. Mercury Media has several reasons to investigate and test direct response TV in this climate.
- CPA for TV: Some travel companies and destinations are searching for partners and budgets that would almost be sure fire bets if they had access. Mercury has created a product called CPA for TV that allows us to partner on several levels with a perspective client. First, we have media buying capacities in-house that afford direct response customers the ability to test their products and determine the right media mix that will deliver maximum ROI. That’s part of this effort. On the next level the clients can then pay for that media based on different performance metrics. Mercury has set up revenue share models with several clients based on customer data generated, leads generated, and total sales revenue.
- Data and testing: As the market returns, few past trends are reliable. The most successful campaigns are real time data driven. For example, travel data firm Compete reports that the number of consumers interested in vacations in Mexico is up 26 percent compared to last year. That’s why it’s so important to test, and DRTV is among the most measurable media before and after the campaign is executed. Maybe it’s the media, the daypart, or the price point, but direct response TV will be able to determine what works for a travel destination or audience. In today’s market a good media test budget will run between $35 and $50,000. The creative component is much more variable. But a direct campaign test can deliver statistically significant data.
- Creative approach: Direct response is the most creative media approach in today’s market because it is not limited to the 30 second spot. Direct response TV can match the creative to the supplier or destination. Maybe a new family tour company needs a five minute or even 3 minute spot to introduce itself. Maybe an established cruise line can generate qualified leads and purchases in a one minute spot. Maybe a new ski destination needs an informercial. Direct response creates the physical value of the brand and the revenue value of direct sales at the same time.
IT’s also important to consider the importance of TV, which continues to grow as print media shrinks. TV as your driving vehicle for the various destinations allows the message to be delivered to the target audience. The old “Travel Section” of Newspapers is not the answer in today’s marketing model. It is too general, contains too many competitive offers and the readership of newspapers is dropping every day. With the use of TV we can direct the ad to travelers who are uniquely defined. Families that travel to Orlando are very different than those who travel to Mexico. Those who cruise fall into many different age and family demographics. Vacationers who travel to Arizona reside in the Midwest and those who travel to Florida can be found in the east. With TV, we can zero in on your target audience.
This recovery will change its form and the winners will be the brands that act the fastest. Direct response, especially with the innovative new pricing models, allows brands to seize the opportunity. It is immediate, and riveting. Direct response says “this is the place, this is the time, act now, and act right now.”
Beth is President of Mercury Media Boston and is responsible for leading the strategic direction and day-to-day operations of the national short-form practice. Since joining Mercury in 2001 she has led the firm to significant year-over-year growth by attracting clients that include Mandalay Bay Resorts Group, LifeLock, Boost Mobile, Conair and Vegas.com.
Beth can be reached at email@example.com