August 29, 2018

OTAs breaking away from performance marketing addiction

Although the trend started to take shape earlier, in the second quarter five OTAs - headquartered in the United States, India and Argentina - all shrunk their marketing spend as a percentage of revenue.

For years, online travel agencies’ direct marketing spend in outlets such as Google outpaced their revenue growth, and critics wondered whether this spending bonanza was sustainable.

But in the quarter ending June 30, the two largest travel-marketing spenders, Booking Holdings and Expedia Group, which each devoted about $1.26 billion to direct marketing, recalibrated their marketing spend to decline as a percentage of revenue.

The turnabout is a watershed moment, although it’s unclear whether this is the new “normal” or a trend that will get upended before long.

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