John Wanamaker famously said, “We know that 50% of our advertising is wasted, we just don’t know which 50%.” Today, you could easily replace that figure with 98%, when it comes to online marketing.

Since the 1970s, data driven marketing has brought us to a new level of precision. Thanks in large part to Search Engine Marketing (SEM), we can now confidently detail the percentage of marketing spend that is performing, and that which is not yielding a result. While SEM is undeniably an essential component of brand marketing today, the next generation of real-time, intelligent personalization technologies is what will help retailers acquire and retain customers.

Despite common assumptions, travel brands haven’t improved much when it comes to successfully servicing their audience online. If anything, the industry has gone backwards – and this is particularly true for travel retail!

For every hundred people who go to a travel website to book a holiday, the typical conversion rate in the industry varies between 0.4% and 2%. And worse than that, retailers are not even sure that the small percentage who do end up booking are directly influenced by the money spent on Search Engine Marketing.

The very nature of SEM means that, especially for online travel, a huge portion of the expenditure will be wasted. Having followed the industry for 20+ years, I see three main reasons for this:

1. SEM is marketing and not sales
2. Travel Shopping is a subjective process, not a keyword driven search
3. Travel sites are much too passive in relating to customers

1. SEM is Marketing and not sales
Search Engine Marketing does what it says on the tin. It allows you to market your product on search engines, finding people who are actively searching for a set of words. But optimizing a site to be found on a search engine in no way implies optimizing the site for the customer who is arriving. Selling, on the other hand, implies a two way interaction with the consumer. A seller listens and then proposes and refines. And in fact, the higher the price of a product or service, the more essential a personal interaction becomes. There are very good reasons why cars are still sold by people and not so easily by a pure online service. Chances are, if you brought 100 people to a car showroom and left them alone, at least 99% of people would walk out without buying. Buying travel is in no way different.

2. Travel shopping is a discovery process
People looking for vacations rarely know what they want when they start searching. They may well begin looking for a club holiday in Cyprus and end up with a villa in Crete. So the keywords used at the start of a search process may be dramatically different from those used at the end of a process. In marketing language, in the example above, if you buy the keywords for Club Holiday in Cyprus then your money was potentially wasted. Sites are not optimized for the travel shopping process, they are optimized for content to be found on search engines.
Part of the marketing resources that online travel portals spend does yield returns, but search engines are still making a disproportionate ROI out of an overall broken sales system, as customers keep jumping between sites to find their dream holiday. The worse the look to book ratio, the better the ROI for the search engines.

3. Travel sites are much too passive in relating to customers
Online travel platforms today are essentially electric brochures. Go to any travel site and you will see their latest offers. Go back a little while later and you will see the same offers, regardless of what you have looked at before or found attractive or discarded. Yes, there are many filtering options, which help, but the consumer has to do all the work. Even worse: He has to enter his desired filters over and over again with every new search – the main reason that very few visitors use them.
In a physical retail shop someone helps you find what you are looking for. Products are chosen and put in front of you, marketing the good, the better and the best option for you specifically. There are assistants to assist customers. This is miles away from what most online travel platforms offer their customers today.

The way forward
So why are travel retailers not able to reflect this level of service online, and what can they do to reach that level? The low and flat conversion rates the industry has been experiencing for the past years are a sign that customers are begging for a shift to a more sophisticated and personalized experience. Improving customer satisfaction is the only way to break the solid wall of 1% or 2% conversion and the good news is, technology can help with that.

Where SEM falls short, there are now solutions available to help online travel retailers better understand what every individual users want and to improve their shopping experience – and ultimately convert them. These new technologies provide brands with real-time metrics, tools and approaches to understand their visitors and personalize their shopping experience.

It’s early days, but this approach is already showing very positive results, and stands as a viable complement to SEM spending. More importantly these new technologies have the potential to break the cycle of increased spend on customer acquisition, paired with decreased customer satisfaction. Travel retailers are a giant step closer to converting a satisfied customer every time predictive personalisation technology can help cater the right product or service to their visitors.

Drop us a comment below if you have any thoughts or questions. We’d love to hear from you.

Andy Owen-Jones, CEO and co-Founder