Skift Research Virtual Roundtable: Ad Tech’s Role in Travel

by Haixia Wang + Skift Team - Jan 2020

Skift Research Take

Ad tech has revolutionized the advertising space. Yet challenges abound in its promise to help cut ad waste and drive sales. A focus on results is key in vetting ad tech stack for travel companies.

Report Overview

The ad tech (advertising technology) industry and one of its key users, the travel industry, are at a crossroads. While continuing to shape the way advertising gets delivered and measured, ad tech is undergoing a tremendous shakeup due to rising issues connected with redundancy, transparency, and data privacy. How are travel companies using ad tech? What is changing? What are the new developments in the ad tech space? Is the line between ad tech and mar tech (marketing technology) blurring? How will tightened data regulation change ad tech players and usage? Skift Research interviewed executives from travel companies, agencies, and ad tech providers to gain their perspectives on these questions.

Executives Interviewed

  • Gaurav Kumar, Head of Product Commercialization & Strategy (APAC), LiveRamp.
  • Sunil Suresh, Group Chief Marketing Officer, MakeMyTrip
  • Burhanuddin Pithawala, Vice President (Growth & Conversions), Oyo Hotels & Homes
  • Prantik Mazumdar, Managing Partner, Happy Marketer, a digital marketing agency and part of the Dentsu Aegis Network.
  • Floor Bleeker, Chief Information Officer (Middle East & Africa and Global Accor Strategic Programs), Accor Hotels.
  • Amro Khoudeir, Director of Digital and Distribution, Mövenpick Hotels & Resorts Mövenpick Hotels & Resorts.
  • Liviu Nedef, Senior Vice President for Marketing and Communications, RedDoorz

How is ad tech relevant for travel companies?

MakeMyTrip: With the kind of segmented marketing needed for a customer centric online travel company like ours, ad tech has always been very relevant. MakeMyTrip has always been ahead of the curve in adopting the latest that ad tech has to offer. For example, we were globally the first OTA [online travel agency] to adopt Google’s app remarketing product and the first one in APAC to adopt Facebook’s travel-centric “Dynamic Ads for Travel” product.

Oyo Hotels & Homes: We offer standardized and trusted accommodation offerings at extraordinarily affordable and predictable prices across segments including corporate stays, millennial-friendly stays, housing rentals, workspaces, vacation homes, and more across the world. With such a wide array of use cases, targeting the right customer is extremely important and essential for us. This is where ad tech comes into the picture. It enables us to do the right targeting based on specific consumer needs.

Accor: Ad tech is significant advantage for a company the size of Mövenpick due to what it offers in terms of scale, connections, data, and functionality. When you factor in our centralized approach to digital advertising, it becomes a must to maximize efficiency and reduce overlap across campaigns.

Mövenpick started using the Google ad tech stack by the end of 2016 by plugging our campaign on Facebook, FMP, Google DoubleClick stack, and using LemonPi as our dynamic banners platform. This enabled us to move from a siloed campaign management approach to an almost omnichannel one in all our global campaigns and to divert hotel-level digital investments (tactical campaigns) through the same platforms.

Happy Marketer: If you want to drive promotion, the more personalized and relevant an ad is, the more clicks and revenue it can generate. Ad tech helps personalization with a scale that is otherwise not possible. Ad tech makes it scalable at a very low cost.

How has the usage of ad tech changed/evolved in the last couple of years?

MakeMyTrip: Over the years, our efforts have gone into sharpening consumer segments and user cohorts through a combination of in-house work on user segmentation as well as riding on innovations by platforms such as Facebook.

LiveRamp: Post GDPR changes focus on maximizing the opportunities for using consent-based data, and the ad tech ecosystem is gearing up with technologies that leverage privacy by design.

Consolidation of technologies will keep on accelerating due to demand for “centralized” technology systems and “one-for-all” solutions.

Artificial intelligence is seeing more and more adoption in ad tech and ad tech companies are emerging to be intelligence companies rather than just black-box activations.

Header bidding and private marketplaces are driving the ecosystem to be much more open and necessitating the need for all the players in the ecosystem to streamline real-time bidding with open identifiers.

How is the relationship between different players in the ad tech ecosystem evolving?

MakeMyTrip: Today, all our performance campaigns are run completely in-house and we have a very talented team with specialized skills that is continually learning — this means we work and innovate directly with the end platforms.

LiveRamp: With the ecosystem embracing the use of a neutral open ID and with shared ambitions of reducing the fragmentations, the different players in ad tech are pushing forward for a fair value exchange.

Publishers are having handshakes with new innovative ad tech players in order to build the right capabilities. DSPs [demand-side platforms] and SSPs [supply-side platforms] are exercising merit-based relationships due to changes such as header bidding and ad exchanges are tightening their relationships with technology players/DMPs [data management platforms] that help improve the efficiency.

RedDoorz: A couple of years ago advertising was mostly controlled by players in the large digital ecosystem. We now see the emergence of smaller, specialized ad tech players.

How is ad tech helping travel companies boost revenue?

MakeMyTrip: At the kind of scale we operate at, ad tech is very important in ensuring proper segmentation and relevant communication. The impact is apparent in the improved conversion rates and the absolute conversions.

LiveRamp: Driving direct business — Ad tech companies help enable the customers to see the ads contextualized to their experience across the search-to-book journey. Right from the point a consumer starts to search for a brand or a destination, ad tech solutions play a big role in stitching together consumer interests, profile, and triggers for booking their travel. The right orchestration of ad tech systems is critical in order to target consumers in their moment of truth and do that at scale.

Maximizing the value from loyal customers — A holistic understanding of loyal customers’ profile and their behavior across touch points enables higher engagement and incremental revenue from the marketing dollars travel companies spend on the loyal customers. Integrated personalized experiences across touchpoints help reduce churn and lost revenues.

Reducing inefficiencies in digital advertising – The cost of marketing/advertising and measurement of ROI is one of the biggest concerns for travel advertisers. Ad tech companies, when coordinated, ensure precision targeting to reduce spill overs and provide with the right measurements in order to optimize the advertising spends

Oyo Hotels & Homes: Ad tech companies help bring in efficiency in ad spend through the right targeting rather than doing mass promotions. We have done a few lift studies which help us quantify their results to a large extent.

Accor: Different ad tech platforms (Google Marketing Platform, Smartly, Google Analytics 360) allowed us to create our own cost-efficient data lake and enabled cross-channel/campaign tracking, which in turn enables us to get a single de-duplicated performance report and explore different built-in attribution models. This means that we can track each transaction and across different touchpoints and thus provide the basis for a robust attribution model and efficient budget allocation.

RedDoorz: We use ad tech and benefit from it by acquiring customers efficiently with a cost. We use it for brand advertising and messaging to a large audience digitally. It is allowing us to reach the right target customer at the right time. It allows us to measure effectiveness and behavior of users across platforms and the medium of the advertisement.

Are travel companies able to personalize advertisements for target audience with the use of ad tech?

MakeMyTrip: Yes. The remarketing ads shown to user on platforms such as Google and Facebook are highly personalized with, for example, the details of their last dropped off behavior in the creative.

LiveRamp: With price wars between hotel companies and the need for driving more and more direct business, the right technology has always come across as an advantage for online travel aggregators/agents, while brands have been chasing in the game. Lately, travel brands have been focusing a lot on personalizing the ad experience across the touch points and that has led to solutions like Dynamic Travel Ads. Brands need strong data asset, machine learning technologies and 360 views of the customers, enabled by the right level of technology. Ad tech companies specializing in data management and integrating consumers’ journeys across touch points are enabling brands to understand historical preferences and help predict future actions, which leads to designing hyper-personalized travel ads, based on behavioral and context data.

Oyo Hotels & Homes: Yes, at Oyo we have developed data-science-led algorithms which help in using clickstream data and customer preferences to make ads more contextual and increase the conversion rate.

Accor: Mövenpick switched to dynamic banners at the end of 2016 to help reduce the cost of creating prospecting/tactical campaign banners and fully dynamic retargeting banners that are user driven. For that we use the LemonPi platform. Current personalization triggers are browser language, time of day, user behavior (for retargeting) including page visited, room viewed, and dates checked.

In your opinion, is the line between ad tech and mar tech getting blurred? If yes, how and why?

MakeMyTrip: Yes, it is. While ad tech allows us to efficiently target users in the ad ecosystem, the relevance of communication is based on their past behavior and actionable cohorts based on both first-party and second-party data. The creation of first-party cohorts usually relies on internal mar tech tools which we have developed. The automation of reporting and API-led advertising all rides on both internal and external mar tech tools. Simply put, reaching out to new users is led by ad tech tools, while targeting and personalizing messages to our large number of existing customers needs both ad tech and mar tech. In essence, ad tech and mar tech need to work together to deliver positive business impact.

LiveRamp: Ad tech and mar tech keep on merging with brands making efforts to reduce the gap between acquisition and post-acquisition customer engagement that demands tightly coupled technology systems.

CRM and media value proposition for organizations are changing with a single view of customers and first-party, data-based acquisitions efforts. Consumer marketing technology and ad tech technologies are merging to form a holistic technology system. This is critical, especially in travel, to enhance the value proposition for the huge reliance on loyalty data. With mar tech in place, not only the engagement with existing loyal customers can be enhanced, acquisitions of look-alike customers and tapping the share of wallet from new customers becomes a reality.

Oyo Hotels & Homes: Yes, absolutely. With the ad tech platforms developing targeted solutions, ad tech is becoming an extension to mar tech in some sense, going beyond the owned media for CRM. At the heart of this change lies customer centricity, which is becoming the key theme, moving away from the platform centricity of the past.

Accor: While keeping in mind that the ad tech stack is essentially part of the paradigm of the mar tech stack, both are getting more closely related/integrated overtime, especially when it comes to sharing data across platforms. It is not hard to imagine the two merging together in single solutions. We think that the distinction still applies depending on the business requirements and objectives that define what platform/solution to use.

Happy Marketer: Travel is a mature industry. Companies have massive budgets and OTAs are doing a great job. Overlap between ad tech and mar tech will only keep increasing. The end goal is to get scale through personalization and expand revenue.

Is it economically viable to use ad tech?

MakeMyTrip: When used well, ad tech makes our performance marketing far more efficient and so it does make business sense. It essentially helps in weeding out potential non-converting audiences, and this saves us advertising money on that segment. A typical use case is not targeting users who have already traveled in the recent past.

Oyo Hotels & Homes: At Oyo Hotels and Homes we believe that marketing has to deliver business and consumer objectives, and therefore the strategies are designed to make it financially viable from day one.

Accor: When we signed our new contracts with the agency who manages our ad tech stack, we negotiated the rates based on our estimated budgets. This provided us with preferential rates and the cost of the tech stack itself is covered by the improvement in campaign performance/production.

The cost in this case though is largely dependent on scale. It might not be as cost efficient for a smaller company.

How is blockchain reshaping ad tech in the travel industry?

LiveRamp: Blockchain decentralizes the data security controls and hence is enabling higher data security, transparency, reduced risk of ad frauds, and reduction in redundant intermediaries. With the rise in ad fraud, brand safety has become a huge concern for travel companies. There have been reported cases where company ads have been displayed on unethical or illegal websites and that harms the brand’s image. Blockchain is coming as an answer to this. With a decentralized technology approach, the accountability has passed on to the ecosystem for creating a safe environment for everyone.

Blockchain is also integrating with consent data and bringing a consumer-centric perspective to data privacy and security concerns. Publishers work with blockchain in order to create unique identities that can be matched with ad tech players, enabling a safe exchange. In particular, the travel industry is benefiting from this considering the broad targeting options advertisers have and the multitude of content that the target consumer consumes across categories.

Can ad tech companies do without sale of ad space to become pure tech businesses?

LiveRamp: There have been significant changes in the ecosystem over the last few years. GDPR, limitations of third-party cookies, and the increasing power of walled gardens have enforced brands to build their own first-party-centered data assets and solutions to target customers in the most personalized way. This needs to be catered to by technological innovations and creative ad tech models that are more than just bridging the demand-supply gap. Ad tech firms have an opportunity to build capabilities for brands and hence not just survive, but enhance their value proposition in the changing landscape.

How is the ad tech industry handling privacy issues and security breaches?

LiveRamp: There is a very high level of awareness and interest right now in terms of compliance and maximizing the value of consumers’ data that’s consent driven. Almost all the key players in ad tech are either building or partnering to ensure that they are consent driven in terms of capturing or processing consumers’ data.

An ad tech ecosystem built on transparent data and security practices will be enforced soon by ad tech companies adopting privacy by design. Technologies like blockchain are already in action, addressing the security and privacy concerns.

Happy Marketer: The customer database is getting smaller by the day. The collection of data is also a challenge. Some may have given consent previously, but revoked it later. The whole game is prepositioned on the strength of the data layer and how relevant the data is.

Earlier ad tech and mar tech service providers could own and control customer data. Now brands want their own data inventory to avoid any risks. Data is valuable and it impacts the valuation of a company.

RedDoorz: Fraud is a big systemic issue affecting the industry. We control the first-party data and do not share it with anyone. We work with specific ad tech companies to ensure that any sensitive data is not exposed to a third party. Brand safety is a challenge. The ecosystem of advertisers and the industry together need to tackle these frauds. We demand full visibility in placement and payment from ad tech partners.