Will Travel For Turkey

For the first time in more than five years, fewer Americans will be traveling this holiday - 41 million, down 600,000 from last Thanksgiving, according to the Automobile Association of America.

According to the AAA, 4.54 million people are expected to fly during the long holiday weekend, which is down 7.2 percent less than the 4.89 million who did the same last year.

The economy is largely attributed to this slowdown, with relatively higher airfares along with fees and surcharges.

While there is a lot of focus on the media, I think another deterrent is simply that it is unpleasant to travel by air with frustrated passengers lending an air of hostility to jam-packed, food-less, possibly-delayed flights.

I shouldn't sound negative. Because I am, after all, prepared to travel for turkey.

Whether you're hitting the road, rails, air or simply walking into your dining room, have a very happy Thanksgiving.

Don't be distracted by headline-grabbing stats

Over the last week or so, a number of firms have published scary headlines and stats like, "Retail E-Commerce Growth Drops Sharply". We agree that it is a tough market all around and that the 12% growth rate we project for this holiday season is not what we might have projected had the economy not tanked. Today the Census Bureau's estat numbers for 3rd quarter 2008 online sales came out at only a 5% growth over last year. Not great and reflective of the very soft back to school season and all the uncertainly in the financial, housing, international and political markets. But also not the sole number to rely on. And, 3rd quarter is does not project fourth quarter directly and we do expect much stronger growth for the remaining holiday season. Online is still a good deal livelier than what we are hearing from offline sources. So, we still expect to see growth at the 12% rate this holiday season.

Don't let's let the news that is clearly trying for attention rather than realism sway us to alarmist reactions. For example, according to Hitwise traffic data- the share of traffic to retail sites is about where it was last year - so you could interpret that as no growth. But, reality says that other categories like News and Media and Financial have increased their share -due to the election and the economy mostly - that would affect the share of other categories -remember these are share numbers not total numbers. So, looking beyond the headline to what is real will help us not panic and to stay focused on getting the job we know how to do done.

Cheap + travel. Search.

In a report we published last month called "Traveler Behavior in a Slowing Economy", we discussed how the current economic environment is forcing travelers to reduce their travel frequency and spending.

We found that 33% of people who took a leisure trip in the summer say they will be more price sensitive than usual in their travel plans. Considering this is already an intensely price sensitive group with the average person researching 3 websites per product, More Price Sensitive is an important shift. In addition, 28% say they will research their travel even more intensely than they have before.

There are two trends whose implications I've been thinking about.

Last year, we�d seen an increase in branded search terms. I suspect going forward, words like "cheap", "discount" and "deal" will creep back into top searches.

I also think we're going to see travelers start researching earlier. That doesn't mean they will purchase earlier. But they will be scanning, researching more intensely, and aware to pricing options to their desired destinations.

The combination of these two behavioral shifts could have a profound affect on all areas of online travel marketing. Search marketers will need to analyze their SEM robustly to determine if, in fact, they are affected by an increase in generic search terms. Promotions may need to start earlier and last longer. Website features will need to support longer planning windows.

The list will go on. "new economic reality" + "travel marketing". Search.

Buy Now Pay Later Promos

This weekend, Saks Fifth Avenue ran a full page ad in the NYTimes promoting "The Gift of Time. Enjoy no interest and no payments for 12 months on item purchases of $2,000 or more." I'm not surprised. This is a great message for those who may not be as liquid as they once were and for those who hope this economic situation will abate in mid '09.

It also might hit home to wary older customers. In fact, according to our recent consumer survey, where we asked: Given the current state of the US economy, how are you planning to change your holiday shopping habits? Customers over 45 years old are more likely to say they will spend less overall and avoid any major purchases. So retailers whose customer base skews older, might try the same tactic Saks has launched.

Dismal Retail News

Following the same path we have been on for the last many months, Wal-Mart showed strength almost singularly in the offline retail panoply. The overall results reported yesterday and today show the worst growth rate since the commerce department started tracking retail in aggregate. A decline of 2.8 percent is rough. And, even taking out auto, fuel and building supplies, the rest of retail declined by .5 percent, which in itself shows that every sector is being hit--even lux. We'll look for online third quarter results for the online retail market out soon and cross our fingers.

Online travel agencies, the economy and Velveeta

To say Q3 was a tough one for online travel agencies would be an understatement. Expedia and Priceline shares lost more than 50 percent each since the beginning of the third quarter, while Orbitz is down 40 percent in that period.

During Q3, it became abundantly clear that the economic slowdown was driving a serious contraction in demand.

At that time, there was an opportunity to come forward with a fresh and responsive marketing message to acknowledge the new financial reality.

Look to retail. Target has a stylish and amusing television campaign based on their "Brand new day" theme that shows how their products can help people save money as a substitute for activities they are likely to give up due to cost (i.e. a coffee maker instead of going to a coffee shop, an exercise ball to replace gym fees). Walmart has a more direct savings-focused television ad demonstrating that replacing cereal for take-out breakfast can save $900 per year.

Economy-relevant advertising in not restricted to retailers. For example, Velveeta cheese has addressed its customers' new economic reality with a television ad showing a woman sawing groceries in half to save money but keeping a full block of Velveeta in her cart, along with a web promotion based on Velveeta helping consumers stretch their dinner budgets.

Over the last few months, online travel agencies have taken a different tack. Most didn't change their destination marketing strategies to focus on more affordable locations, offer shorter vacation packages or alternative accommodation. Fare alerts remained largely buried. Social media wasn't leveraged. Instead, there were co-promotions: the last installment of the Raiders of the Lost Ark series and The Amazing Race occupied key homepage real estate for Expedia and Travelocity. More recently, Orbitz has partnered with the latest James Bond movie, focusing on Vienna, Tuscany and Brazil. Not that these aren't creative joint promotions. They would have been great brand awareness campaigns in 2007. But this is 2008 and the world is very different.

Vouchers for future travel when savings are required now or discounts on luxury hotels are ignoring the elephant in the room. Suppliers or other marketers offering joint promotion in exchange for travel agency homepage exposure can be a major distraction from what travelers what to hear:

I understand that you want to travel and that you need to save money. I will help you.

Paperless at LGA

The TSA and Continental Airlines launched paperless boarding pass capabilities at LaGuardia Airport this week, bringing the number of airports to host the service to ten. Alaska Airlines, Delta and Northwest are also trialing mobile boarding pass technology.

There are a host of technical considerations behind the scenes for bar-code boarding passes, including the global encryption standards that were adopted last year by IATA — the International Air Transport Association. IATA expects all airlines to be bar-code-boarding-pass capable by the end of the year and the TSA has stated it sees tremendous potential for paperless boarding passes.

In a survey we conducted at JupiterResearch earlier this year, we found that 18% of online travelers are interested in being able to check in for a flight using their mobile device. This number increases to 27 percent among business travelers.

Certainly the airlines see value in establishing their brand as innovative as well as realizing some airport traffic flow benefit. But that won't be what drives traveler adoption. Travelers will adopt technology where they see its value. And while there is some value in not having to obtain or produce a piece of paper, that alone is not a compelling force to try something new. The value of so-called paperless boarding will be speed and convenience, which will require confidence in the technology, the ability to make fees payments via mobile or phone, and seamless support from airline staff. At least, that is what customer-centric value is. But that�s not something we hear a lot from the beleaguered airlines these days.