Industry Update
Opinion Article 9 October 2019

The Power of Sponsored Listings for Travel Publishers

By Bill Chase, General Manager at Koddi

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Like so many online businesses today, travel publishers, aggregators and metasearch destinations face a challenging road when it comes to driving and maintaining strong revenue per user. At the same time, however, many travel publishers are leaving money on the table and missing out on user experience upgrades when it comes to the promotional opportunities on their sites. Let's take a look at why sponsored listings need to be playing a more prominent role in travel publishers' monetization plans going forward.

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The Benefits of Sponsored Listings

As competition for online bookings has increased, many travel publishers have sought to improve revenue per user through the addition of advertising units to their sites. For the most part, however, these units are standard display formats that are overlooked by many users. Increasingly, these formats face challenges to their sustainability as the digital world evolves. These challenges include decreasing measurability as well as the increasing presence of ad-blocking technology. In addition, given the complexity associated with creating a finely tuned yield optimization strategy in the age of header bidding, private marketplaces, and programmatic guaranteed, publishers can no longer rely on display inventory alone to increase their revenue per user. Without introducing new ad inventory that addresses these issues – rather than just adding more display impressions to each page – travel publishers will struggle to grow revenue moving forward.

Better monetization. The prominent native placement and highly effective nature of sponsored listings command a premium rate among advertisers compared to generic display advertising, making it a highly lucrative form of advertising for publishers to offer. Likewise, these placements can typically be added to a site experience, versus replacing other monetization units, thereby being entirely additive to a site's bottom line. But more importantly…

Better user experience. Thoughtfully designed sponsored listings can have an additive, rather than detrimental, effect on the user experience. After all, users are coming to your site seeking something specific, and sponsored listings quite often can surface relevant, high-quality offerings tailored to a visitor's needs. Likewise, they can also surface additional offerings that the user might have overlooked, but are in need of nonetheless. For example, sponsored listings for rental cars or hotels in Dallas, while a user is searching for Dallas-bound flights, can not only remind visitors of another necessary step in their planning, but also throw a halo around your site as being a comprehensive destination for travel planning needs.

Boosting brand recognition. In addition to surfacing relevant offerings for users, sponsored listings represent an opportunity to boost brand recognition on your site. For example, if you're a destination known for flights, it raises your credibility with users when they see corresponding hotel sponsor listings from large hotel brands.

Overcoming the Hurdles to Better Monetization

Of course, with every great opportunity comes some hurdles and barriers to entry. With sponsored listings, success depends on the execution, and the fear of getting it wrong has kept some publishers out of the game altogether. However, given the combination of a lucrative revenue opportunity with a positive user experience, it's worth investing in getting it right in the following areas.

Promote a good user experience. While sponsored listings offer a native presentation and, thus, a positive user experience when compared with other advertising formats, the devil is in the details. How much real estate can be given to sponsored listings? What size and presentation will appeal to users and drive the best ROI for advertisers? These are questions that can be answered through thoughtful testing and optimization. In this regard, keep an eye on time spent on site, pageviews and bounce rates, and refine your sponsored listings approach if these metrics swing harshly in the wrong direction.

Ensure your own bookings remain strong. Of course, for many travel publishers, bookings through their sites are their bread and butter, so it can be scary to introduce a new sponsorship offering that takes people away from your own site's experience. However, there are ways to capture sponsored listings revenue while also ensuring you're capturing the same level of on-site bookings. One way is to ensure sponsored listings are complementary rather than competitive to your own offerings. From a design perspective, it's also useful to set up link-offs from sponsored listings so that they open in a new tab and the user can easily return to their spot on your site. In addition, you can retarget visitors who leave your site via a sponsored listing and look to entice them back when their online activity shows they're ready to book.

Maintain quality. In addition to ensuring a site's own bookings remain strong, publishers must ensure the ads that appear on their sites are not detrimental to the user experience. This requires publishers to implement a quality score system through which a set of factors and constraints prevent low-quality properties from bidding themselves to the top of the auctions.

Ensure real-time performance and insights. Another hesitancy for publishers in adding sponsored listings is simply the technology implementation. To keep up with advertiser expectations, publishers must enable real-time performance-based auctions for sponsored listings that provide proper reporting back to the advertisers. Again, these capabilities are out there. Publishers simply need to ensure these requirements are met before rolling out the opportunity to their advertisers.

Sponsored listings answer a real need for travel publishers when it comes to both improved monetization and user experience. However, to capitalize on this opportunity, the executional details must be thoughtfully considered up front and continually optimized down the road. Those that get it right will find they've opened the door not just to overall revenue growth, but to sustainable improvement in driving maximum revenue per user for the long term.

Bill Chase

Bill has spent the last 15 years in eCommerce leading online/offline channel marketing, customer lifecycle, analytics and operations teams across various verticals at digital-first businesses such as Razorfish, Nutrisystem, Travelocity, and DentalPlans.com. Bill is responsible for overall growth of the Koddi hotel platform.

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