Statistics say the customer will continue to rule as travel marketing and purchasing online grow (second of two parts).

In part one we looked at how online forever has changed the face of travel marketing. Now let us turn our attention to some trends toward the future.

One question I hear often from marketers, whether they sell toothpaste, movies or travel, is about the relationship of consumers' ages and their receptivity to online advertising. Since teenagers have limited influence in spending travel dollars, this is a metric of particular importance to travel marketers.

Let us take a look at what Dynamic Logic's MarketNorms data show. As you can see in the chart below, the 35 to 49 age group was quite heavily influenced by online media compared to the 18 to 34 group. In ad awareness and purchase intent, they are slightly more influenced than younger users -- this could be due to site selection as well as natural responsiveness.

It is also remarkable that awareness metrics for consumers over age 50 were also affected almost as much as the 18 to 34 age group. As you might expect, intent metrics for older consumers are relatively unmoved by online advertising. I expect older consumers to become more responsive to advertising as content sites become more relevant, and as travel advertisers and agencies get smarter about appealing to this demographic with the highest disposable income.

Source: Dynamic Logic MarketNorms Q4/03; Airline Campaigns n=23,710

Source: Dynamic Logic MarketNorms Q4/03; Airline Campaigns n=23,710

Until a few years ago, online media buyers often placed frequency caps of four or fewer exposures per consumer for a given campaign. Normative data for airline advertising seems to indicate much higher frequency responses before burnout in branding is visible.

Looking at purchase intent, it is clear that frequencies up to seven or eight have an accretive effect on persuasion with a brand lift of 5.3 points. Declines at nine and higher might be the result of a different profile of heavy Internet users or nature of sites chosen for the advertising. I expect that as advertisers become more sophisticated about reaching the right prospects and as behavioral targeting techniques mature, that frequencies of 12 or higher will continue to produce brand lifts.

How has online helped?

Bala Subramanian, Hilton's senior VP of distribution and brand integration, is a fan of the online medium as far as return on investment metrics. "We have substantially lowered our total distribution costs per booking. Already, bookings through our Web sites are starting to rival bookings through our toll-free 800 numbers."

Looking at the broader impact of online properties, Singapore Airlines' Michael Stellwag admires Orbitz, NetFlix, ESPN and Yahoo! "These brands have either leveraged the online medium to capture a market well into the business cycle (Orbitz), changed the way you consume entertainment (Netflix, ESPN) or positioned themselves as a life-engine (Yahoo!)," he says. "All of these brands have done an excellent job exploiting online in order to become a way-of-life for their respective target markets."

One CRM practice that airlines seem to have internalized into their DNA is mass customization.

Joel Chusid, former American Airlines' VP, says, "The idea is not to send out a newsletter with general information, but to target specific interests, home airports or destinations. American Airlines did this some time ago, and now it is common on other carriers' Web sites and also those of Travelocity, Orbitz and Expedia, where when you register, your interests are catalogued. So you get an email from these guys every so often, with a notice if prices in your markets of interest have changed, or an invitation for some special ski packages or of special fares from your home airport."

Leisure and business travelers

How do business travelers differ in their online behavior from recreation or leisure travelers? Subramaniam says that at Hilton, "The key difference is how customers shop and how they buy. There is less shopping on a business trip because hotel choice is dictated by location, amenities and corporate travel policies. Leisure customers shop a great deal more, but just because they shop on the Internet doesn't necessarily imply that they buy there. The goals of online marketing are different for both audiences -- with business travelers you stress confidence, and convenience, plus personalization benefits. With leisure it is more complicated."

On the airline side of the business, the experience is a little different. Singapore Airlines' Stellwag says, "Traditionally, leisure travelers have responded better to online marketing than have business travelers. Leisure travelers are rather price-sensitive and the Internet -- and online airline advertising -- has been largely price-centric. Business travelers, on the other hand, have traditionally not been as responsive to online advertising due to rather rigid managed travel policies, including pre-selected air carriers and/or corporate travel agency distribution requirement."

But change is in the air -- pun intended -- Stellwag says. "Over time, corporations are beginning to realize the great pricing transparency on the Internet, leading more business travelers to the Web. As a result, efforts to market online to the business segment are gaining in effectiveness."

The future

Change is not slowing in the travel business. Singapore Airlines sees "improvements in leisure online marketing effectiveness through improved booking technology, making it easier for someone to actually find and purchase the featured lowest fare," Stellwag says.

"Airlines are beginning to realize that price is not the only sweet spot, and that value encompasses many other variables," he says. "You are starting to see a shift in online toward branding -- attempts at crystallizing the non-price elements of value, such as service or product. The results of this shift may well be yield enhancement, rather than yield-decay, which the Internet helped cause, due to its pricing-transparency."

I agree that powerful brands like Singapore Airlines will be able to use the Internet to build more profitable companies.

Where will the new media take us? Subramaniam has some clear opinions. "The customer rules. Those brands that provide unique differentiation and customization will thrive. Personalization of services and benefits especially for high value, loyal customers will become increasingly important. So there will be more and more focus on 'creating your own ideal vacation' vs. 'are you interested in what I am selling?'"

Gunjan Bagla is a mechanical engineer and entrepreneur who has been active in marketing and media for over 15 years. He is presently responsible for Dynamic Logic's business with movie studios, automotive companies and others in the Southwest. His writing has appeared in Direct Marketing, iMarketing News, Silicon India, Channel Seven and ClickZ.