Empowered by the explosion of data companies own or have access to about their existing customers as well as prospective customers, travel CMOs and their teams are on a mission to drive and transform business. Yet, more opportunities and promises mean more complexities in technological offerings and skill and function demands. It is within this context that marketing operations has risen as an important discipline in the past few years.
As a result, marketing operations is often tasked to manage channel and campaign processes and performance evaluation, select and manage technology partners, plan budget, and coordinate inter- and cross-team communications. Yet, core questions remain: Should there be a separate marketing operations specialist/team? What are the responsibilities and decision-making powers of the marketing operations function? In addition, there are broader questions that are related to operations and crucial to marketing success, including how marketing teams should be structured, what functions should report under marketing, and how budgets should be set.
To help travel marketing executives see how they stack up in the industry in these areas and set up strategies to optimize, Skift Research conducted a survey of senior executives and marketing professionals in various travel sectors on their practices and attitudes related to these questions. We will release the survey findings in a series of reports, each focusing on one specific sector. Our first two reports presented findings for hotels (see Marketing Operations in the Travel Industry Benchmarks: Hotels for more details) and for destination organizations (see Marketing Operations in the Travel Industry Benchmarks: Destinations for more details). This report focuses on data for the tours and activities sector, including tour operators and wholesalers and tourist attractions.
Total sample size for this sector is 51. Please see the Appendix for more detailed sample demographics.
What You'll Learn From This Report
- 2019 marketing priorities for tours and activities companies
- Prevalence of dedicated marketing operations functions in tours and activities companies
- Responsibilities and effectiveness of marketing operations functions in tours and activities companies
- How travel activity marketing teams are structured and the effectiveness of each structure
- Ideal marketing team structures in delivering marketing success
- Functions that report under marketing in tours and activities companies
- How travel activity marketers set up marketing budgets and the effectiveness of each budgeting approach
- How outperforming tours and activities companies stand out in key marketing operations areas
2019 Marketing Priorities
Most tour and activity marketing leaders have clear mandates on what to deliver for 2019. As a sector known for its fragmented nature compared to other travel sectors, getting customers to know their brands is often a top challenge. It’s not surprising that acquiring new customers and building brand awareness are the top priorities for the marketing teams of tours and activities companies.
Designated Marketing Operations Function
A separate marketing operations function is on its way to becoming an industry standard for the tours and activities sector. Seventy-one percent of tours and activities companies surveyed already have a designated marketing operations function, including 33% that have a team rather than one person handling operations.
Travel activities marketers recognize the importance of having a designated operations function, but size and business nature matter
For the 30% of tours and activities companies that either disperse operations responsibilities across various teams or don’t have specific operations functions, 73% state it’s necessary to have a designated operations function and 27% have a neutral attitude about having a designated operations function. While this lack of interest could be justified by the small size of some companies, as marketing gains importance in driving business with sophisticated channels and analytics tools, an efficient operations function or system is crucial for marketing optimization.
Responsibilities of Marketing Operations Function
Marketing operations in the travel activities sector are taking on a variety of responsibilities to help navigate complex marketing activities and processes. The operations team is responsible for marketing campaign operations and tracking for all the companies surveyed. Cross-functional communications, budget setting and tracking, and tech development and platform selection are the other top responsibilities of the operations team.
Marketing operations plays decision-making roles in budget setting and tech development and deployment
As marketing teams get more complex with marketing and advertising channels and tech capabilities, decision making often requires the involvement of many stakeholders and prolonged processes. This can also create ambiguity and tension as to who should make the final decisions. Marketing operations in the tours and activities sector is tasked with crucial roles in these two areas. About 80% of marketing operations in activities companies have decision power in budget setting and 64% have decision power in tech deployment. Within that, 8% of marketing operations functions are sole decision makers for budget and 9% of them are sole decision makers for tech deployment.
Measuring Success of Marketing Operations
Ninety-two percent of activities marketers surveyed say they measure the success of their marketing operations. Congruent with the responsibilities that marketing operations are taking on in marketing campaign management, cross-functional coordination and budget and tech management, increased efficiency and clarity of success measures of other marketing functions are the most used metrics to measure success.
Roles of Marketing Operations in Delivering Marketing Priorities for 2019
There is still work to do for marketing operations in the activities sector to deliver success. While 35% of respondents believe operations is crucial in delivering marketing priorities, only 21% state operations is very effective in executing its outcomes.
Marketing Team Structure
Over 60% of surveyed marketers in the activities sector base team structure on functions. And close to 81% of those who use this structuring approach think it’s effective. This is likely the result of the relatively small size and simple business models of companies in the sector. What’s worth noting is that 16% of the companies surveyed build their marketing team by geography and among them, only 38% think it’s effective, the lowest among all the approaches.
Despite the overall feeling that their current team structure is effective, travel activities marketers are thinking about alternatives
Across all travel sectors surveyed, we see an increasing interest in a customer-centric approach to marketing. The tours and activities sector is no exception. While only 4% structure their marketing teams by customer segment, 26% select it as the ideal team structure for marketing success. In addition, none of the companies surveyed build their marketing teams by marketing channels, but 16% select it as the ideal team structure.
Functions That Report Under Marketing
Among all the evolutionary changes in modern marketing, the controversy and lack of so-called industry standards over what functions report under marketing are probably the most prominent. We see this trend across all travel sectors we surveyed. For tours and activities companies in our survey, in addition to the traditional core capacities of marketing, we see customer insights, e-commerce, customer loyalty, and research and development reporting under marketing at various rates.
Tours and activities marketers believe more functions should be integrated into the marketing team to deliver best outcomes
Functions with the biggest gaps between reality and desired inclusion are customer loyalty, research and development, customer insights, and lead generation.
Marketing Budget Approaches
Traditionally, marketing budgets are set once a year by using the previous year’s budget as a base and assigning a percentage increase/decrease as a reflection of revenue growth projection. As marketing gets more dynamic with data and measurement tools, this approach may make it difficult to adjust budgets based on results and thus create inefficiency. Yet 18% of activities marketers are still using this incremental approach in budget setting, while others are adopting more flexible approaches based on activities and regular evaluations. A combined approach, which is characterized by setting budgets once a year but evaluating and adjusting regularly, is adopted by 33% of tours and activities marketers surveyed. Among those who adopt a combined approach, 82% think it’s effective, the highest among all budget approaches.
Travel activities marketers believe budgeting approaches that are based on clear goals and allow for regular evaluations and adjustments are crucial for delivering marketing success
When asked the ideal budget approaches for marketing success, there is big convergence on combined and activity-based approaches, with 88% believing either is important for achieving marketing goals.
Functions That Head of Marketing Reports To
The central role that marketing plays in tours and activities’ businesses is clear. For nearly three-quarters of the companies surveyed, the head of the marketing team reports directly to the CEO.
Highlights of Outperforming Tours and Activities Companies
In the survey, we asked the respondents to report their companies’ financial performance. Of the 51 tours and activities respondents who completed the survey, 31% say their companies are more profitable than their competitors, 53% say their profitability is about average in the activities industry and another 16% say they are less profitable than their competitors. We’ve found that the companies that are more profitable (outperformers) do stand out in the key areas we’ve discussed above.
They are more likely to have established a separate marketing operations role or team.
Their marketing operations functions are more likely to take on cross-functional communications, project management and vendor management responsibilities.
Their marketing operations functions are more likely to have decision power in budget setting, but play a more assisting role in tech decisions.
Yet, they are less likely to have set up metrics to track operations success.
They are more likely to use increased efficiency and clarity on success measures of other marketing functions as operations success metrics.
They are more likely to structure marketing teams by team function.
Their team structure is more effective.
They are more likely to have customer insights, lead generation, customer loyalty, and research and development reporting under marketing.
They are more likely to adopt combined budget approaches.
Their budgeting approach works.
Their head of marketing is more likely to report to the CEO.
Their marketing teams are focusing more on retaining existing customers, increasing customer loyalty, and building data and analytics capacity.
They are more likely to recognize the crucial role of marketing operations in marketing success.
Their marketing operations is more effective in delivering marketing priorities.
Appendix: Tours and Activities Sector Survey Respondent Demographics