AdTech Evolution | Visitor Economics 101

August 22nd, 2018

 
 
Take one down pass it around, 21 bottles of beer on the wall.
— LB

Thanks for tuning in.

This week. We put out a white paper.  A Case For Points-Driven Destination-Loyalty Networks. Here's a crazy idea. A network of destination-branded travel loyalty programs. What would that look like? Perhaps something like this:

 
 LUFT

LUFT

 

Why bother? Because the business of point loyalty is lucrative. Airlines and hotels do it because it works. If run with purpose, then destination-led programs could drive meaningful revenue for tourism offices, too.

How? By issuing points and then selling them at mark-up to hotels and local businesses - perhaps even the global hotel chains. We ran some preliminary numbers. They're looking pretty good. What would your DMO do with an extra million?

Something else to consider. The global travel industry is changing. Here is what it used to look like. The colorful circles represent destinations. The timing belt is the global value chain. Airlines and travel agents on the outside. Locally owned and run hoteliers, restaurants, shops, and tour operators on the inside.

The Network Model

 
 
 LUFT

LUFT

 

This is what the global travel industry is starting to look like. The overlapping circles represent the platforms on which we all now operate. Google, Facebook, Amazon - Expedia, Booking Holdings, Marriott, and Accor want to be platforms. Why? Because owning and operating real assets is expensive. Better to push local businesses into long-term franchise agreements, inject your propriety technology, employ locals, and voilà. Mailbox money.

The Platform Model

 
 LUFT

LUFT

 

Smart destinations should be in the business of defining and preserving place diversity. Smart tourism offices should be experimenting with new ways to stay relevant. Points-driven destination loyalty programs could work towards both objectives. Read the paper for more context. 

- Just one more graph.  

Local Economic Impact For Every $100 Spent

 
 LUFT rendering; Data: Main Center For Economic Policy. 

LUFT rendering; Data: Main Center For Economic Policy. 

 

The economic multiplier effect. Spending with local businesses is good for local economies. Why? Because revenue and profit like to travel up the value chain. Perhaps through the Cayman Islands before ending up in Omaha. Textbook stuff.

What if tourism offices could help channel that visitor spend toward local businesses, and then cash in on the margin to fund their agency needs? All while creating value for residents and locals. 

Doable? Yes. Hard? Perhaps not. Worth a shot? Why not. 

Stop by and learn about Destination-as-a-Platform. It's our latest strategic research initiative focused on empowering communities through travel. Why strategic? Because we want to see things get done. This is not fake research (more on that later). This is technology agnostic in your face research.

More to come. Thank you.

The AdTech Evolution



"Roads? Where we're going we don't need roads." - Doc

AdTech Evolution No. 7 | Beyond The Travel Bubble

August 16th, 2018

Inspire, Inform, Entertain. In that order.
— LB

Thanks for tuning in:

A few words about this weekly newsletter - before the feed.

Is this a travel industry newsletter?

YES. The AdTech Evolution is my response to the insularity that the travel industry finds itself in.  Some accuse the industry of fearing change. My spin: Keeping up with change is exhausting - especially in travel. This is a big and interconnected ecosystem. One could spend a lifetime inside the snow globe of industry conferences, meetings, updates, developments etc. We all have lives. Those busy running teams and companies sometimes lack the luxury to ponder on the bigger picture.

Beyond the bubble.

There are plenty of newsy publications that will keep you up on what's happening inside the bubble.

If you're looking for breaking news about hotel loyalty programs, online travel, direct hotel booking share, airline merchandising, GDS acquisitions, failed startups (god rest their souls), conference highlights - pretty much anything directly related to travel - then go elsewhere.

If you're still here, then you see vast forces pushing their way in. Immense companies, powerful channels, new formats and trends shaping the immediate and distant future of travel.

Be the John Snow of travel.

It’s hard to keep up. Think of me as your travel insider taking time out to bring you updates from beyond the wall. You are busy. Be your best John Snow. I have a three-point litmus test when deciding what to include:

  • Does it inspire? Is it innovative, forward thinking, well thought out?
  • Does it inform? Is it accurate. Is it reputable. You will not find click bait here. Only substance.
  • Does it entertain? Feel free to wait until after lunch to read this. You will not fall asleep.

Bring in new material and fresh perspective to you next meeting.

Why AdTech

The business of travel often comes down to how it's packaged and sold.  Advertising is still part art and part science. Bad creative should be avoided at all costs. Ad formats and channels are in constant flux. The AdTech Evolution is all about reaching audiences in new and creative ways.

Original screen grab format.

There is order to the madness.  The feed is a curated stream specifically designed for busy travel leaders and investors looking for insights in a digestible format. Click the image and click off to the full read.

Thanks for sticking with me.

The AdTech Evolution



A strategic research consultancy helping travel brands navigate change.

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AdTech Evolution | The Multi-Tools Of Online Travel

 
 
Sharp blade crappy can opener. Being good at everything is hard.
— LB

Convergence. The indiscriminate force of nature shaping online travel, like the river that shapes a canyon. Booking.com, Expedia, TripAdvisor, Airbnb, and Google. They all do a bunch of stuff. Booking probably does hotels better. Expedia does flights better. TripAdvisor does reviews and activities better. Google does most of those things pretty good. They are the multi-tools of online travel.

Convergence is a well-studied law of technological evolution. Smartphones smashed voice, email, web, banking, and video into one awesome multi-tool. What happened to the alarm clock, home phone, DVD player, CD player, and bank teller? Poof.

Why is Booking scrambling to get into rentals, transport, and activities? Why is Expedia Group unifying its brand portfolio? Why is TripAdvisor building moats around its activities business? Why is Trivago dead in the water? Will Airbnb ever do flights? 

Competing as a multi-tool is hard. Having the sharpest blade is probably the most important. But who wants a crappy corkscrew? If you can't be good at everything that you do, then take care when competing as a multi-tool.

Google is an exception. It has the reach to be good at some things and crappy at others. Unlucky for the rest, Google is pretty good at everything.

Hotel Tonight has the right formula. Hotel Tonight is the best, sharpest tool in the shed for same-day bookings.

The problem with the rest is that you only really need one good multi-tool. TripAdvisor is the closest thing. Google is on another level. Booking and Expedia are more like assorted tool boxes. That will change.

Definition of convergence: Merriam-Webster

1: the act of converging and especially moving toward union or uniformity | the convergence of the three rivers; especially : coordinated movement of the two eyes so that the image of a single point is formed on corresponding retinal areas

2: the state or property of being convergent

3: independent development of similar characters (as of bodily structure of unrelated organisms or cultural traits) often associated with similarity of habits or environment

4: the merging of distinct technologies, industries, or devices into a unified whole

  • … offers a variety of services related to the convergence of the Internet and mobile phones - Rob Walker

The Four Dimensions of Travel

 LUFT

LUFT

TripAdvisor's transformation by the numbers

The AdTech Evolution


The weekly round-up for savvy travel leaders.

 
 

AdTech Evolution No.5 | The Brand Death Conspiracy

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“You Are The Product. You Feel Something. That’s What Sells.”
— Draper

Thanks for tuning in.

This week - “the death of advertising” and why the notion is utter nonsense.

Push the product. Forget the brand. Feed the beast. Focus on clicks. Stand by watching as margins wither and Google and Facebook get richer. Those choosing impressions over brand have stopped caring about what they sell. Bad creative on a good product is like smearing lipstick on a prince. Lipstick on a pig never really fooled anyone - not for long at least.

Glut of brands.

Anyone who tells you advertising is dead might work for Google or Facebook. Google generated $28 billion in ad revenue in Q2, up 23.9 percent year-over-year. Facebook grew Q1 revenues by 46 percent. 

They love it when brands compete with mediocre creative. The crappier and less differentiated the brand, the more it spends on performance marketing. When many crappy brands compete for the same customer, more money filters back to Google and Facebook. The claim [that advertising is dead] validates spend on clicks over content.

Performance marketing creates a glut of brands. Why not carve out another toilet paper label - or hotel logo for that matter? Google and Facebook will put it in front of the customer. Your margin, my opportunity. Just make sure to pay Zuckerberg and Bezos their due and proper.

The proverbial race to the bottom ends with Amazon or Google or Facebook wringing out the last remaining margins, right before they reverse engineer your product to squeeze you out on market share.

Tesla has zero ad budget. Why? Because it has no competition - not because advertising is dead. Let’s see how they do once Mercedes and BMW finally wake up.

Brand is as much about quality as it is about association. People actually care about how they spend their money. It reflects on them. They want purpose. A cause. Individuality. All of that is still true. Brand X is nice because it invokes conversation. Where did you get that?

Travel is a hard sell.

It’s infrequent, irregular, expensive, amorphous. When is the right time the perfect time for ad exposure? No one really knows. Sometimes I'm Jekyll sometimes I'm Hyde. Are you selling travel as the service or as the product? Pitching it as a service has gotten some in trouble. Find the cheapest flight. Get their faster. Find the best deal. Best to bake all of that benefit into the product. Southwest is the product. Abercrombie & Kent is the product. Airbnb is the product. Stop selling travel like toilet paper. Start selling dreams. Make them real.

Thanks for listening, 

Luke

Roundup on the brands and tech that move us.

 
 
 

Learn about our client work.

Assessing fresh concepts in hospitality.

LUFT worked with a private equity group managing approximately 3 billion in capital to assess an opportunity to invest in a niche luxury accommodations concept. The asset in question was a small portfolio of independently branded beach-front properties, catering to an upper-income clientele base with a passion for water sports. The buying team found existing cash flow and economics favorable, but wanted third-party validation of the concept to ensure long-run potential for growth and alignment with market trends.

The AdTech Evolution No. 4: Owl Vision

Thanks for tuning in. This is our weekly update on the people, technologies, and brands that move us.

Steve Kaufer could very well be the original TripAdvisor owl. No one knows for sure, but roomer has it the iconic brand mascot was actually modeled after him and his ability to spot distant opportunity. Steve co-founded Trip and has since been at the helm of its bold transition from travel review site into a full-service e-commerce platform.

  Steve Kaufer , CEO of TripAdvisor; original photograph by Tom Stockill; transformed by LUFT.

Steve Kaufer, CEO of TripAdvisor; original photograph by Tom Stockill; transformed by LUFT.

The company pivoted and acquired a couple of key assets in 2014. Investors ditched the stock as profitability slipped year over year. Those investments are starting to pay dividends. Wall Street likes Trip again. Read all about it here.

 Data Source: Company filings; Report:  2020 Outlook on TripAdvisor

Data Source: Company filings; Report: 2020 Outlook on TripAdvisor

Owl Vision

Last year, when Trip announced that it would launch a TV campaign to support its hotel product, we immediately thought - OWL VISION. 

Imagine: The travel shopper starts at home on the TripAdvisor app. Suddenly, he gets sucked in through his device into a magical land. The destination of his dreams. Waiting on the other side is a new world (enter soundtrack) where "owl vision" sets in. Owl eyes appear everywhere, layered over everything. Spinning on the rims of cars and bikes passing by, at the bottom of beer glasses, on swim suits, on volley balls, etc. Last few moments of the commercial. Traveler gets whisked back to living room and swipes "book". You get the idea. 

Needless to say, Trip's creative team went a different direction. A neutral albeit cute owl lounging around in a bathrobe in hotel rooms touting travel planning tips. Not bad. Do I need travel advise from an owl? Hotel booking sites are dime a dozen. Utility and trust. Is that what travel shoppers want? Are we selling hotel rooms or promises or both? TripAdvisor is all about the brand. We say spice it up. Go big. Go bold. Go lifestyle.

Anyway. TripAdvisor had a couple of encouraging quarters. Hotel profitability stabilized with top line gains from its non-hotel segment pushing consolidated revenues up 2% over the previous quarter. Bookable Experiences inventory grew 86%. Projected outward at roughly 12K new bookable experiences per quarter, TripAdvisor inventory could double by Q2 of 2020.   

This week in AdTech


The AdTech Evolution No. 3

 
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Thanks for tuning in to our weekly roundup on the brands and platforms that move us.

This week: Amazon hits bumps with Prime Day, Priceline and TripAdvisor both announce new stake investments, WeWork goes meatless, Facebook's creative ad tools go mobile, Apple has a new map app strategy, China’s rural e-commerce transformation, Google Hotel Ads supplant AdWords on search and much more.

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Independent insights on the brands and trends that move us.

Introducing: The AD TECH Evolution Report

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Because you only get one shot at fame.

Welcome to our AD TECH Evolution Report

The Ad Tech Evolution Report is our dedicated weekly newsletter highlighting the latest, most critical developments in the space of digital marketing and advertising.

It's our director’s cut of headlines & insights specifically curated for the travel & tourism industry professional. 

Stay informed on the latest exciting roll-outs and strategic shifts happening with the big publishing platforms, new contenders, content strategy, devices, connectivity, emerging markets, consumer trends, and much more.

Digital is a big and growing space. Learn how the ecosystem functions. Look beyond the usual suspects to find inspiration on the future of advertising in travel.

Fame is the new water.

Everyone wants it. Everyone needs it.  People will go where they can find it. Facebook, Instagram, YouTube, Shop at Amazon. Always be publishing. Always be marketing.

 
 
 

Communicate with color, flare, imagination, creativity, originality, and purpose.

THE LATEST

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