As per a new report from Zenith, the tourism industry is taking off, with a growth of 24% in 2021. This is across 13 key markets such as India, Italy, Poland, Russia, Spain, UK, USA and more. Moreover, the growth forecasts for 2022 and 2023 are 36 percent and 19 percent, respectively.
With that kind of a quick recovery, travel ad spend may increase up to six times faster than the overall ad market over the next few years. It will eventually reach the lofty standards of its pre-pandemic performance in 2023.
Travel advertising being digital
Despite the upbeat forecasts, Zenith warns that travel organizations must reestablish their connections with customers in the face of a drop in business travel, rising environmental problems, and health risks.
As a result, the expansion of travel apps, vaccination passports, and online concierge offerings triggered a seismic change to digital, with travel brands increasing their digital advertising spend from 63 percent in 2020 to 70 percent in 2023. In contrast, only 58 percent of advertising budgets are currently allocated to digital.
Online video will serve a crucial purpose in building emotional relationships with consumers, according to Jonathan Barnard, head of forecasting at Zenith.
“Travel was one of the earliest sectors to embrace digital as booking went online,” said Ben Lukawski, Global Chief Strategy Officer, Zenith. “Post-COVID, the best-performing brands will complete this transformation by making the total experience digital, from reducing form-filling to contactless entry, removing nearly all possible friction from experience.”
E-commerce now accounts for 32% of all sales in the travel industry, compared to 20% for all retail.
Travel ad spends in traditional advertising
Travel advertisers outspend their counterparts by dedicating 20% of their budgets to newspapers, magazines, and out-of-home (OOH), compared to 13% for the typical company. This doesn’t change the fact that travel ad spending on print tends to plummet in tandem with readerships.
Between 2019 and 2023, however, OOH spending is predicted to increase by 6% yearly.
Return to normalcy?
COVID-19 wreaked havoc on the travel advertising industry. In 2020, the travel ad industry shed almost half of its value (46%). The overall ad market dropped by only 4%.
According to Zenith, travel ad spending will drop from $18.0 billion in 2019 to $9.7 billion in 2020. Bottled-up travel demand will fuel a strong increase in travel advertising spending over the coming few years. However, it will be a challenging journey to get back to normal levels.
This year, travel ad spend will be 33% lower than in 2019, but the ad market will be 7% higher. Travel spending will not surpass 2019 levels until 2023, when it hits US$19.6 billion.
Travellers from India and Russia are important for travel brands
According to Zenith, India and Russia will see the fastest growth in travel advertising in 2023, with travel ad spend increasing by 31% and 21% over the 2019 base. As disposable incomes rise, more people will travel, and current travellers will take trips more often. Between 2019 and 2023, ad spending in China and Poland will climb by 16 percent and 14 percent, respectively.
The solid US ad market is bumping up media rates. This is one of the critical reasons travel ad spend in 2023 and 2019 will be 13 percent higher. Other advanced economies will expand between 9% and 9% over this time. This relies on customer preferences, media inflation, digitalization uptake, and various other factors. However, in all areas, the restoration of travel advertising from the recession in 2020 will lag significantly beneath the market’s overall development.
The report represents Australia, Canada, China, France, Germany, India, Italy, Poland, Russia, Spain, Switzerland, the UK, and the USA. These 13 key markets account for 74% of worldwide ad spend. The report includes information on regional and international business and leisure travel.