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Why Affiliate Marketing is taking off for the UK travel sector

Why Affiliate Marketing is taking off for the UK travel sector

With European consumers expected to spend €15bn less on their holidays in 2010, UK travel companies are increasingly exploring the potential of performance based online channels.

For marketers this represents an ideal opportunity to explore the benefits Affiliate Marketing can offer. Travel remains the number one advertiser sector within the affiliate industry and accounts for 30% of consumer bookings through online travel websites.

That said, there are inherent challenges within Affiliate Marketing that can hamper programmes. While no one doubts the potential reach of affiliates, the complexity of the relationships and resource needed to optimise the channel can frequently lead to poorly run campaigns.

With the increased focus on driving sales in these difficult times, advertisers are investing in ROI and performance based channels. According to the European Travel Index Report from the Centre for Economics and Business Research, the internet remains a strategic driver for holiday spending and continues to be the biggest area of growth within the travel industry.

Some 54% of all web users across Europe research and book travel related services through the internet. Online travel spending has climbed from €58.4bn in 2008 to €66.9bn in 2009, and is predicted to reach €74.3bn by the end of 2010.

The report states; “Contrary to the decline experienced by the travel industry as a whole, online bookings will have risen by a recession-busting 27% since 2008 by the end of this year and by 146% since 2005.”

Anneli Ritari, Senior Travel Strategist at bigmouthmedia who manage the affiliate programme for MacDoald Hotels, offers some insight into the focus for hoteliers in 2010, "There can be little doubt that the travel industry now truly appreciates how effective affiliate marketing can be.

"Our recent travel survey showed that travel companies spend on average 10% of online marketing budgets in 2009 on affiliate marketing, but hotel suppliers spend an even larger proportion - an average of 18%”.

She adds that will only increase but this additional focus will bring heightened challenges, “80% of hoteliers are reporting they will increase budgets this year. It will therefore become increasingly important that affiliate marketing is integrated with search and other digital channels, so that strategies can be aligned allowing for maximum returns."

Another agency that has noticed a greater shift towards Affiliate Marketing is Arena Quantum, formerly BLM Quantum, who manages several travel affiliate programmes including Haven Holidays.

Rich Way, Head of Affiliates for Arena Quantum explains, “As an agency, it is encouraging that through continued focus on the affiliate channel, we are still finding huge numbers of opportunities within the travel sector including un-monetised niches and new re-numeration models - ones that we expect to provide substantial growth for our clients over the coming year.”

With this increased focus, advertisers are appreciating both the volume and value the full scope of Affiliate Marketing offers. As any advertiser fully engaged with the affiliate channel will tell you however, there’s no getting away from the basic advice that hard work and ongoing optimisation are the keys to success.

Blue Chip Vacations, one of the fastest growing accommodation providers in the UK has fully embraced the benefits of Affiliate Marketing within their business and acknowledges the investment needed.

Anthony Dodd from Blue Chip said, “We have had to work tirelessly to develop our affiliate programme and establish a highly motivated affiliate base.”

Jodine Milne from Megabus who launched their affiliate programme in 2009 also recognizes Affiliate Marketing is a long haul strategy that requires constant care.

“We aim to build deep, open relationships with our partners that allow key information to be passed frequently and transparently, so that the two parties can benefit from each other’s promotional activity,” she said.

As an advertiser who has only recently become aware of the full scope of the industry Milne adds “we believe that Affiliate Marketing will continue to grow and develop as more organisations and individuals become aware of the potential of this channel. It provides an excellent value method for merchants to promote and drive sales of their products and services.”

Affiliate Marketing has contributed substantially to the significant growth of online travel and continues to expand its market share.

Those merchants who are willing to invest time and resource, and offer a flexible approach to the full range of opportunities Affiliate Marketing offers them, will be the ones best placed to survive these challenging times.

*Source: Econsultancy Internet Stats Compendium, November 2009 *Source: Travel Trends and Affiliate Marketing *Source: European Travel Index Report (commissioned by Kelkoo and carried out by the Centre for Economics and Business Research)

AJR
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