Affiliate Window report on developments affecting affiliates in the travel sector this year
The UK travel sector has enjoyed excellent growth in Q2 2015 at the third highest rate the industry has seen in six years according to the latest IMRG Capgemini e-Retail Index. This is coupled with Barclaycard spend reports showing travel expenditure was up 8.4 per cent for Q2 against 2014, with hotels growing by 6.9 per cent and flights improving 4.1 per cent for the same period. Travellers are also staying for longer, with stays rising by 10.8 per cent for January to March 2015 versus last year, and on holiday expenditure increasing to £6.8 billion according to the ONS.
Looking specifically at Europe, the BBC reported that 16 July 2015 saw the pound rise to its highest rate against the euro since 2007, which will also likely have a strong influence on bookings for the rest of 2015. With the current economic climate in Greece, some travel advertisers have seen strong performance with discounted prices in the late booking market to Greece and the Greek Islands. On The Beach have seen 115 per cent increase in late bookings to Greece.
Within the online travel landscape, mobile devices are increasingly prevalent as a source of traffic and bookings, with tablet and smartphone adoption continuing to rise. An Expedia Mobile report recently showed that three out of four UK travellers now own a smartphone, tablet and desktop computer in 2015 (up from one in two in 2014). In spite of this customers still spend over three times longer on travel advertiser websites via desktop than mobile devices, showing the resilience of desktop in the online travel sector.
From an affiliate perspective, we’ve seen steady performance across the sector with revenue up 6 per cent in spite of traffic declining in the sector around 17 per cent year to date, showing considerably higher conversion rates within affiliates. Mobile devices (smartphones and tablets) are also growing within the affiliate travel sector, accounting now for 40 per cent of total affiliate traffic. Average order value has continued to grow each year since 2011, and may grow further as consumer holiday spends across the board, as the ONS report shown above suggests.
Trends over time
The graph below indicates the monthly revenue trend for Affiliate Window’s travel advertisers:
Key Performance Indicators
Average Order Value (AOV)
AOV has grown steadily across the travel sector, rising from £171. 76 in 2011 to £264.51 in 2015 year to date. AOV was at a five-year high of £296.70 in January 2015.
Monitoring and helping to improve AOV can significantly improve the earning potential for affiliates and help advertisers to achieve greater overall revenues, without necessarily acquiring additional customers. With AOVs improving in 2015, affiliates can expect to see greater earnings compared to like-for-like activity and performance last year.
The total conversion rate has also grown consistently over the past three years, from 4.68 per cent in 2013 to an average of 6.62 per cent in 2015 to date. All device types have increased, with smartphone growing to 2.56 per cent in 2015 from 2.19 per cent in 2013.
With conversion rates increasing, publishers who continually optimise their marketing activity can greatly improve earnings from similar traffic volumes. Both advertisers and publishers should work hard to improve this metric, through advertiser offer optimisation and more fluid customer journeys.
Earnings per Click (EPC) and commissions
Typically seeing higher than network average AOVs in the sector, the travel vertical has also seen continued growth in EPC from £0.34 in 2013 to an average of £0.60 this year. Average commissions have also improved to £9.02 this year from £7.38 in 2013.
For advertisers improving the overall EPC and average commissions can greatly improve the attractiveness of the affiliate programme in relation to competitor programmes in the same sector.
From a traffic perspective mobile devices now account for 38.09 per cent of total traffic in 2015 compared to 22.27 per cent back in 2013. Mobile bookings are rising too, with smartphone accounting for 6.94 per cent of bookings in 2015 (4.49 per cent in 2013), and tablets now taking 16.35 per cent of the booking share (12.72 per cent in 2013). Looking specifically at smartphones, it’s interesting to see Android devices now holding 21.84 per cent of smartphone bookings, versus 77.08 per cent for iPhones—in 2013 we saw 83.88 per cent from iPhones and 11.54 per cent from Android devices.
Mobile performance has improved significantly across the travel sector, especially in the past year, making this a fantastic growth opportunity for advertisers with more robust mobile routes to market, and publishers with response and mobile optimised platforms.
Tools for affiliates
Typically most travel programmes will offer affiliates a Meta feed, standard banner creative, voucher codes, and text links. Some programmes also have APIs and booking widgets for affiliates.
Utilising travel specific tools such as live or daily updated meta feeds and booking widgets can greatly enhance the accessibility of a programme to affiliates, especially those geared up to show live inventory, pricing and offers from advertisers via feeds. Additionally APIs can enable publishers to display the most up to date offers and availability of inventory, helping to improve customer journeys and conversion rates further.
In the chart below, we’ve broken out the percentage of affiliate’s transactions by publisher type. Cashback has seen a slight drop against 2014, whilst discount code sites have increased to the highest share of total transactions this year. Editorial content, and communities and user-generated content have dropped in their share just this year, whilst other affiliate types including sub-networks have seen an increase.
Finally, we’ve put together some sector specific sites to consider for the travel sector: