Little has been written about Expedia Media Solutions, the small but fast-growing advertising agency arm of the online travel giant Expedia. In 2015, the division is estimated to have generated about $200 million in revenue. That’s pocket change for the Bellevue, Wash.,-based parent company, which earned nearly $2 billion in the third quarter of last year alone.
Yet Expedia Media Solutions — or MeSo, as it’s known internally — is notable for its solid growth. The division had a 23% annualized growth rate on a nine-month, trailing period, as of the third-quarter, according to a Tnooz analysis of the parent company’s filings, which was corroborated by Kevin Kopelman, director of research at investment firm Cowen and Company. (Expedia declined to break out official numbers for this story.)
Expedia Media Solutions helps clients — primarily travel ones, such as hotels, airlines, and tourism boards — by creating and running ad campaigns aimed at boosting bookings, visitor numbers, and awareness. In a rare competitive advantage, it knows how much value a client earns from an ad because the bulk of its ads link-in to Expedia-owned brands, where it can measure changes in demand and user behaviour before, during, and after a campaign.
A hotel chain, for instance, could see if a sponsored listing in search results generated meaningful returns in room-night growth or if a brand campaign coincided with a lift in intention-to-buy among consumers. Expedia Media Solutions is notable for its attempt to bring enterprise-scale solutions and thinking to travel marketing — a sector that might be broadly described as being small-bore, fractured, and still heavily analogue. Director of product management Wendy Olson Killion noted in an interview:“
For hotel franchises, for example, there are different budgets: there are national budgets, local budgets, regional budgets. You’ll see regional travel groups, maybe a certain set of hotels, or brands of hotels in a location.”
Similarly, the destination marketing organization (DMO) side is practically a cottage industry of boutique advertising agencies, small publishers (such as travel magazines), and tourism officials. In short, travel marketing at the ad-unit level is not an obvious hunting grounds for an enterprise-scale company like Expedia.
Expedia Media Solutions has had to fight an island-by-island campaign to gain market share. It has made gains recently by adding several high-profile clients, such as Tourism Australia last June. It has done work for the destination marketing organizations of Britain, Denmark, Dubai, and the Netherlands.
Despite the big clients, Expedia Media Solutions said it is “well equipped to help the individual small supplier.” Matthew Reichek, senior director of product and analytics, cited this hypothetical example:
“If I own a B&B in Worcester, Mass., let’s say, and you represent a big chain across town, you and I can compete on a level footing using our TravelAds product…. “I can have a thousand dollars to spend, you can have a hundred thousand dollars to spend, yet if I bid more than you for certain targeting parameters, I’m going to get the positioning I want for those targeted customers until I hit my budget and you won’t, provided all the other things are equal.”
Simplicity is another factor that the division touts. A client can also come speak to one sales person to target a broad spectrum of types of travelers worldwide.
Just because it works at an enterprise scale doesn’t mean that Expedia’s ad agency arm takes a one-size-fits-all approach, said division head and global senior vice-president Noah Tratt:
“We are pretty good about identifying the nuances in people’s goals and building campaigns that are customized. We use our research and analytics to inform your creative; how much content you need to invest in; the pitch, your approach. We can target based on a lot of activity that people do on Expedia and then we can layer on other kinds of targeting variables as well.”
“For example, clients can request ads be displayed to specific demographics in specific geographic locations who are using particular types of devices and exhibiting particular types of search behaviour.”
“If I’m marketing, say, Holland to a Brazilian or to an American or someone from the People’s Republic of China, we know from booking behaviour that visitors from those destinations are going to come for a lot longer, on average, than ones from, say, the United Kingdom and Germany.”
“We would tailor our campaign for a destination according to our research from booking data on each target nationality’s typical behaviour and interests.”
Shaking up destination marketing
Expedia Media Solutions thinks it has a few competitive advantages over its boutique ad agency rivals. It said that it excels at enabling a DMO to target customers across Expedia-branded sites that match its preferred customer profile. Other shift-share reporting services can tell any given tourism board what its competitive set looks like. But Expedia’s reports may be more comprehensive than its competitors’ are when analysing at the ad-unit-level behaviours like click-through rates and impressions.
An official in, say, Macau, could choose to specifically display ads to, say, Canadians in a city whose travel buyers have recently shown a disproportionate interest in searching and buying flights to Macau and its competitors.
“Targeting may sound kind of antiseptic, but if you talk about intention-based advertising, that’s what we’re doing, because, when users come to our site, they conduct certain activities that are expressing intention, where they want to go and what they’re interested doing, and you can divine a lot of meaning from that.”