Travelzoo Sticks to What Works as Recession Alters Flight Plans

VP-Marketing Craig Calder Prefers Word of Mouth, Geotargeted Ads to Sexier Digital Strategies

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NEW YORK (AdAge.com) -- Craig Calder is the first to admit that his company's marketing is far from flashy. But in Travelzoo's case, flashy marketing doesn't ring the cash register. That's because the travel-deals publisher has found success with very simple strategies: word of mouth and targeted online campaigns.

Craig Calder
Craig Calder
"We haven't been tempted by the latest fads that have come through; we're almost the model for the next generation of online marketing, because I think that a lot of brands could benefit from taking a similar approach," said the company's VP-marketing. "It's not sexy, but it's very effective and profitable."

Mr. Calder is a veteran of New York Times Digital, where he was VP-marketing and part of the team that developed the "Surround Sessions" ad-serving concept. He's also been senior VP-marketing at The Street.com and senior director-marketing and programming for Nickelodeon Online.

Travel has been hard-hit by the recession, with consumers and business travelers shying away from expensive trips. But that reality seems to have benefited Travelzoo, which vets and ranks the best deals on flights, hotel stays, entertainment and vacation packages, then distributes those deals via e-newsletter to its subscribers.

"We make our money with the Top 20 newsletter -- it's a publishing model," said Mr. Calder, who joined Travelzoo in January. "Travel partners come to us and pay us to share their deal with our subscribers. We also have a cost-per-click model where we work with travel partners to list their deals on our website and on our ad network. And then we also have our SuperSearch product, a booking engine. Where we generate revenue is in the text ads that we're able to serve on a geotargeted basis. It's really the opportunity to create targeted cost-per-click campaigns, which historically are the best performing."

As far as annual marketing spending, "On the subscription side, it's multiple millions and on the trade side it's less than that," Mr. Calder said. "Especially in this economy, we're trying to make every dollar work as hard as it can. We've actually invested in our subscriber-marketing budget because we felt this was an opportunity to grab market share. There's a lot of value right now in terms of the media, but there are also a lot of people looking for deals right now on the travel side."

In the second quarter of this year, the company added 1.6 million subscribers, hitting more than 17 million in total, the largest increase in its 10-year history.

In a recent interview with Ad Age, Mr. Calder talked about growing during a recession, Twitter's real value and why he's sticking to marketing basics.

Ad Age: What strategies are you leveraging right now to grow your subscriber base?

Mr. Calder: What we're really doing is basic direct-marketing online subscriber campaigns. At the end of the day, for us, it's all about ROI. But the one thing I've learned is, in online marketing, what's working for you today might not be working for you as well tomorrow. So you need to be testing on an ongoing basis. We really are aggressive but stick to basics, and for us it's all about the metrics and hitting our CPA.

We also leverage social media in terms of driving word of mouth. We're very aggressive on Twitter; we tweet out 10-to-15 deals a day. We also do online Q&As with our on-air personality. He answers questions for two hours once a week. We find lots of our tweets are retweeted, extending our brand to people who might not know Travelzoo. Obviously, it doesn't drive the same amount of subscriptions, but compared to the amount of money we need to spend, it's a great value.

Ad Age: How do you cultivate and then harness the passion subscribers have for your brand and make it work for you?

Mr. Calder: We have a VIP program where if you're a loyal subscriber and we see that you've been active for a period of time, we'll offer you the opportunity to become a VIP by recommending two new subscribers, and you get the Top 20 deals e-mail earlier than the average subscriber. We put those people at the head of the queue and give them first crack at the deals; we also give limited offers, and they tend to be entertainment deals -- tickets to concerts, professional sports.

Then I go back to Twitter. That's really where we're focusing our efforts in terms of giving people the opportunity to give us feedback, to ask us questions. They become our best ambassadors for the brand.

Ad Age: What are you doing from a business and marketing standpoint to regain or maintain footing amid recessionary constraints, including less consumer travel and fewer partners willing to pay to have their deals placed in your e-newsletter?

Mr. Calder: We're focused on the needs of our travel partners, and their needs have changed because of recessionary constraints. What it means is helping them move the inventory in the most efficient way. We create programs that fit their needs.

For example, the airlines have figured out that it helps them in recessionary times to pre-book flights. They work with us to promote an airfare one or two months in advance to pre-book the flight. We've also been working with partners who don't want to discount their price; we help them create extra value, for example, an extra night free. And we help some partners to participate in the deal space even though they're an ultra-premium brand.

Ad Age: What value proposition do you offer over your competitors, and how do you use it to stand out in a crowded category?

Mr. Calder: It's really the expertise that Travelzoo's developed over 10 years and that every one of our Top 20 deals is tested. We become a filter, and consumers know they can look at our Top 20 e-mail and know that every one of those deals has been researched and tested. The core of our business is based on our expertise and our 120 producers around the globe, who work with travel partners based on their expertise in how to pull the deal together so it performs the best. After they do that, they write up the review that explains to our subscribers why it meets our criteria as a value.

Ad Age: How do you see travel-booking evolving post-recession, and how are you working now to capitalize on what might be permanent changes in consumers' approach to spending on and booking travel?

Mr. Calder: We haven't really changed our model in 10 years, and I don't see us changing it any time soon, because we're confident that our strategy is evergreen, and that is finding the highest-quality travel deals that deliver value and providing them to our subscribers in a simple and immediate way. I do think we'll become more active in social media, but our plan is to take it slow and invest sweat equity and learn what works, sticking to the basics.

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