Digital Media in a Covid-19 Recovery World

By Dimitri Bistekos & Laurance Giguère

Published in

re:VERB

7 min readJun 23, 2021

Have you streamed a YouTube video, browsed around your favorite websites, done some casual searching for trip ideas, or even watched the series finale of Keeping Up with the Kardashians? Then chances are you’ve come across ads for Expedia, Airbnb and VRBO.

VERB’s research shows a surge of consumer interest in and intent to travel. With this uptick in demand comes significantly increased spends in the digital media space.

As we strategize efficient ways to use digital paid advertising (or digital media) to drive results for our travel and hospitality clients, we’re also actively tracking our findings and sharing them right here, to help others in the travel space understand the current landscape and what they need to do to compete.

In this post we’ll cover off some basics and then talk about what we’re seeing in the post-COVID-19 world. We’ll work to keep this research up-to-date.

First of all, a refresher:

What is Digital Media or Paid Digital Advertising?

Digital media, or Paid Digital Advertising, is simply digital marketing activities that you paid for. It is the act of using marketing dollars to advertise on search engines, social channels, YouTube, audio streaming services, and websites.

How Ad Spend Has Changed Over the Last 10 Years

According to Statista Inc., in 2020, digital ad spending in the US was approximately US$497 per online buyer. Ad spending per online shopper will increase to US$651 by 2025.

Part of the massive growth of digital ad spending in recent years can be attributed to social media. Each platform now has its own range of advanced advertising tools and targeting features. Brands have quickly realized paid social media tactics have become important avenues through which to reach customers beyond their existing following, as users now spend an average of three hours per day on the platforms. (eMarketer, 2021)

Also, over the past decade, smartphone usage has exploded. Today, there are 2.53 billion smartphones in the world, and 51.89% of global web traffic comes from mobile devices. (Statista, 2021) More people on phones scrolling through social media accounts, searching for information, and perusing the web means more opportunities for digital advertising.

Today, with big data, it is much easier to reach customers and track marketing results than it was even 10 years ago, when it was difficult for businesses to get much insight from their marketing efforts.

The evolution of online behaviour has made digital media more lucrative for advertisers and an avenue they can’t afford to ignore.

Revenue Models

Digital ad revenues reached US$26 billion in 2006. In the past year, they reached more than US$139.8 billion. The ROI of online advertising in the US has increased by 12.2% in 2020 over 2019, from US$124.6 billion to US$139.8 billion. (Statista, 2021)

Digital Media and the Travel Industry

Zooming in on Online Travel Agencies (OTA) and Bidding Structure

When consumers are planning and booking travel experiences, they rely on search engines to help them make decisions.

Through Google or Bing Ads, companies bid on high-value keywords and phrases, such as “flights to Spain” or “hotel in New York,” that indicate travel intent. Online Travel Agents (OTAs) only pay the search provider if a customer clicks on their link. They in turn make money by converting those clicks into purchases of flights and hotel rooms.

But OTAs aren’t the only companies that need search engines to help their travel business. Airlines, hotel chains, car rental agencies and cruise lines all depend on search engines to help them attract and convert consumers. The competing need for search traffic can create a bidding war for the highest-rated keywords, which increases the cost of purchasing these terms.

Moreover, OTAs like Expedia and Booking.com, for example, are willing to invest heavily to rank first. In 2018, Booking.com alone spent over $4.4 billion on performance marketing. Booking.com’s spending accounts for about three percent of Google’s ad revenue. (Forbes, 2020)

In addition to bidding on searches such as “fights to Spain”, brands and companies are also investing heavily in branded search. It’s crucial to bid on branded keywords (words that include the name of your company, business, or brand) to ensure that you have the keywords for people seeking your brand, instead of opening the door to competitors. In addition, branded paid terms are generally cheaper because there is less competition and less overall traffic from search volume.

Google has found that branded keywords have more than twice the conversion rates of non-branded terms. Because they are more specific terms, branded keywords allow you to direct your efforts to drive traffic to your pages so that your audience is satisfied and more likely to convert.

How Ad Spend Has Changed From Before the Pandemic to Post-Pandemic

2019 marked a major milestone in the world of advertising. For the first time, digital ad spending in the U.S. exceeded traditional ad spending. 2020 presented yet another milestone — a global pandemic that disrupted human welfare, wreaked havoc on every industry and sent shockwaves to the world’s economy. As a result, the industry saw a decline in 2020 ad spend. Prior to this, the global ad market had been growing for ten consecutive years since the 2009 financial crisis at an average of 4.5% each year. (dentsu, 2021)

As the industry is rebounding, digital ad spend will grow rapidly, by 20.4% worldwide. This spectacular rebound, however, will play out differently by format, channel, country, region and publisher. (eMarketer, 2021)

However, the pandemic took its toll on all industries including travel with a 41% drop in ad spending in 2020. A study by eMarketer shows an improvement in 2021 with an increase of +15%. Although, based on Global Ad Spend Forecasts Report, the travel and hospitality industry is set for the biggest recovery in 2021.

According to eMarketer data, the pandemic has accelerated e-commerce advertising in the U.S. to 49.8%. By the end of 2020, e-commerce ads accounted for about 12% of U.S. digital ad spending, up from 9% in 2019. Originally, it projected a 38.8% increase for e-commerce channel advertising, but almost reached 50% in 2020 (businessofapps, 2021).

Ad spend in travel and transport companies is also forecast to grow by almost 30% in 2021, driven by consumers and businesses anticipating a return to restriction-free travel. (dentsu, 2021)

In the coming months and years, it will be important to increase spending on digital advertising to stay ahead of competition. This will also allow for a better ROI. For instance, in 2021, Gap reported net sales of $4 billion in its first quarter, an 89% increase over 2020 and an 8% increase over 2019 levels before COVID. The retailer attributed the sales growth to marketing investments made in recent quarters. (marketing dive, 2021)

As the landscape continues to accelerate and evolve, we will keep on top of it, working hard to turn our research into winning tactics and sharing knowledge with our peers and clients as it becomes available.

Dimitri and Laurance are Digital Media Coordinators with VERB Interactive — a leader in digital marketing, specializing in solutions for the travel and hospitality industry. Find out more at www.verbinteractive.com.