When the pandemic began and travel was immediately suspended last year, the marketing budget was among the first to suffer a drastic cut from travel agencies around the world. Shift search conducted a survey at the end of April last year to assess the damage done to the marketing team. Of the 756 companies participating in the survey, 90% had already reduced their marketing spend.
Over the year, there have been periods of recovery in different sectors and regions, determined by the number of virus cases and levels of government lockdowns and restrictions. Marketers have struggled to find new sources of data to capture fleeting and fluid demand, sending the right messages, all with much tighter budgets and the absence of a playbook to fall back on.
With the unprecedented disruption behind us, marketing leaders face the difficult tasks of recalibrating still limited resources and helping steer their businesses in the right direction with their consumer insight and actions to reach consumers. Where are the marketing teams in terms of budget allocation and marketing priorities? What has changed in the media mix and what should be the new media balances and objectives?
To help answer these questions, Skift Research surveyed marketers in key travel industries and interviewed four senior executives, representing hospitality, meta-research and destinations.
In Skift Research Digital travel advertising 2021, launched last week, we present key survey findings and insights from these leaders, and discuss focus areas in using media and marketing to drive recovery and long-term growth.
Last week we published our latest Skift Research report, Digital travel advertising 2021. Below we share an excerpt from the report.
Media and third-party services lost larger budgets than other areas in 2020. But the overall mix will return to pre-pandemic levels in 2021.
The marketing mix has been changing in recent years, with marketers focusing on digital channels, with increasing investment in marketing technology being the dominant trend. Skift Research conducted a survey of travel marketers in 2018 to assess levels of investment across all areas of marketing and media channels. By updating internal employee payrolls, we found that advertising and media accounted for almost 50% of all marketing budgets.
Marketing technology was the second-largest spend category, accounting for 25% of marketing spend, four percentage points more than what travel marketers spent with agencies, PR and other third-party services. For 2019, 48% of travel marketers surveyed planned to increase their budgets for MarTech, the highest of the three categories.
We asked the question again in our 2021 survey, but this time adding internal payrolls to the mix as this is a crucial item to track during the pandemic. Even with staff in the mix, media still accounted for the largest share of marketing spend in 2019, with 36% of all marketing budgets going to paid media. Internal payroll is the second category of expenditure, accounting for a quarter of marketing budgets. MarTech and third-party services each accounted for 18% and 15% of total budgets, respectively. In 2020, while all areas of the marketing functions saw a cut, paid media and third-party services saw more cuts than the other two big areas, with paid media losing 6 percentage points in budget share and third-party services losing 2 percentage points of share. Marketers expect a return to the 2019 mix in 2021 as they bring back investments in media and agencies to capture the pickup in demand.
It should be noted that if we exclude the internal payroll from the budget count, the spending shares of the other three major areas were very much in line with what we captured in our 2018 survey.
MarTech will continue to assert its central role over the next several years as data and analytics capabilities, marketing automation and infrastructure building continue to shape the way marketing teams and campaigns are operated and measured. Of travel marketers surveyed, 76% plan to increase MarTech investments over the next five years, the highest of any field. Advertising and the media are the second most important area of investment in the coming years. However, it also stands out as the area where most businesses are considering cutting spending, indicating a forked attitude towards ad spending.
This is the latest in a series of reports and data products published by Skift Research to help you understand travel industry trends. Tap into the opinions and ideas of our seasoned network of employees and contributors. Over 200 hours of desk research, data collection and / or analysis are devoted to each report.
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