Travelocity Offers Hope in Evolution of Display Advertising

Targeted Audience and Real-Time Campaign Updates Put Brand's Efficiency Ahead of the Industry Curve

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SAN FRANCISCO ( -- Display advertising players are searching the search-ad space for lessons, in hope of making online-advertising more relevant to consumers and advertisers -- and capturing some of the value search has been able to command in the space.

Chip Hall, senior VP of sales and marketing, Teracent
Chip Hall, senior VP of sales and marketing, Teracent
An early sign of hope for the channel comes from Travelocity, whose best-performing online ad campaigns came after the No. 2 online travel agency sought to deliver customized messages based on its visitors' site search history.

Last year, the travel site dumped the old way of online display ads, such as serving up generic messages like "Find low fares on Travelocity. Book now." Its messages are now targeted in real-time based on visitors' most recent search activities.

"We're providing timely, relevant ads based on what the user is in the market for," said Kyle Sawai, principal at Click Here, Travelocity's digital agency of record. "We're taking what's worked so well in search advertising and using the digital medium as intended, which is a one-to-one -- and not a mass -- communications medium."

Travelocity's targeted approach has yielded big improvements over its previous online campaigns; new campaigns require fewer ad impressions to convert site visitors to purchasers, driving Travelocity's cost-per-transaction down 79%. It also saw a 230% increase in bookings; click-through rates jumped 651%.

That's a significant boost for a channel so often praised for its interactivity but whose average CTR has fallen to 0.1%, per ComScore, and where users are bombarded by more than 1,800 web ads daily, a jump of more than 250% since 2004, according to Forrester Research.

"We have to evolve the notion of online media to be dynamic and data-driven," said Chip Hall, senior VP of sales and marketing at Teracent, the ad-optimization technology provider behind Travelocity's online display campaigns. "To get the most out of online, you have to make sure you use all the data assets and turn them into actionable media."

With the static and mass messages kaput, gone too are Travelocity's fixed sets of campaign creative. In the new world, engines like Teracent's sit on top of the campaigns, matching the messaging to the audience and, on the fly, sewing together creative assets with messages based on a host of dynamic parameters, such as search intent and how far down users drilled into a particular category. So, for example, if a user clicked on the area that ranks hotels by star ratings, this person would only see ads from Travelocity that promote luxury hotels.

Click Here developed a single creative template for each business line, such as air travel and car rental, leaving Teracent's engine to fill in the blanks and obey rules like frequency caps that govern how many times users should see Travelocity ads, or when to remove them from its re-marketing bucket when they haven't taken action by a certain time.

A number of players offer similar capabilities -- Yahoo has its SmartAds program and Tumri and Dapper are startups often mentioned in the space -- and more-established ad networks are starting to offer dynamic creative capabilities.

Easily customizable
Unlike traditional online display ad campaigns bound by a beginning and end date, Travelocity's campaign is continuous -- much in the same way that marketers never turn off their search campaigns. Travelocity never has to take a campaign down for redesign; it merely has to feed the engine new creative and messaging. This customization approach allows the Texas-based travel site to gain efficiency by tweaking its campaigns in real-time based on their performance. If a message is performing well for spa packages, for example, Travelocity can immediately deploy other similar messages for other packages.

"It's not 'let's pause and take the learnings and redevelop a new campaign,'" said Mr. Sawai. "We can take immediate action."

For Mr. Hall, the stakes are even higher. "Display has to change, otherwise it's headed for failure. If advertisers don't recognize online is more challenged with the old approaches and needs to be incredibly hyper-targeted, they're going to fail."

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