Differentiate with digital

Retail

Online travel agencies, the economy and Velveeta

Forrester
November 13, 2008

To say Q3 was a tough one for online travel agencies would be an understatement. Expedia and Priceline shares lost more than 50 percent each since the beginning of the third quarter, while Orbitz is down 40 percent in that period.

During Q3, it became abundantly clear that the economic slowdown was driving a serious contraction in demand.

At that time, there was an opportunity to come forward with a fresh and responsive marketing message to acknowledge the new financial reality.

Look to retail. Target has a stylish and amusing television campaign based on their “Brand new day” theme that shows how their products can help people save money as a substitute for activities they are likely to give up due to cost (i.e. a coffee maker instead of going to a coffee shop, an exercise ball to replace gym fees). Walmart has a more direct savings-focused television ad demonstrating that replacing cereal for take-out breakfast can save $900 per year.

Economy-relevant advertising in not restricted to retailers. For example, Velveeta cheese has addressed its customers’ new economic reality with a television ad showing a woman sawing groceries in half to save money but keeping a full block of Velveeta in her cart, along with a web promotion based on Velveeta helping consumers stretch their dinner budgets.

Over the last few months, online travel agencies have taken a different tack. Most didn’t change their destination marketing strategies to focus on more affordable locations, offer shorter vacation packages or alternative accommodation. Fare alerts remained largely buried. Social media wasn’t leveraged. Instead, there were co-promotions: the last installment of the Raiders of the Lost Ark series and The Amazing Race occupied key homepage real estate for Expedia and Travelocity. More recently, Orbitz has partnered with the latest James Bond movie, focusing on Vienna, Tuscany and Brazil. Not that these aren’t creative joint promotions. They would have been great brand awareness campaigns in 2007. But this is 2008 and the world is very different.

Vouchers for future travel when savings are required now or discounts on luxury hotels are ignoring the elephant in the room. Suppliers or other marketers offering joint promotion in exchange for travel agency homepage exposure can be a major distraction from what travelers what to hear:

I understand that you want to travel and that you need to save money. I will help you.

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