Expedia Group, the online travel agency giant, is here for the retail media revolution.
The company has had an ad business for more than 20 years, because flights or hotels can be promoted based on travel searches on its sites and apps. But now Expedia has consolidated its first-party data across its portfolio (Orbit, Travelocity and Vrbo, to name a few aside from the eponymous Expedia) and is building out a programmatic advertising data business.
It’s part of the retail media revolution, but Expedia drops the retail element in favor of a “travel media network” approach, Rob Torres, Expedia’s SVP of media and affiliate solutions, told AdExchanger.
Here to stay
Expedia is part of an emerging category of travel and travel-adjacent companies that are mirroring brick-and-mortar chains like Walmart, Target and Kroger. The plan is to invest heavily in ad businesses for the high-margin revenue and the chance to create a billion-dollar business almost out of thin air.
Uber launched a dedicated ad business in 2022, and has a goal this year to clear $1 billion in ad revenue. Marriott also launched an ad business in 2022, and could have a billion-dollar business on its hands someday.
Now, Expedia has signaled its own interest in the trend with the promotion of Ariane Gorin to CEO in February. Gorin previously led the Expedia for Business unit, which includes advertising and media solutions.
“Our advertising business is big, differentiated and growing, and I equally see lots of opportunity ahead here,” Gorin said earlier this month during her first investor call since being named CEO.
Advertising revenue, which Expedia doesn’t disclose, has had consistent double-digit growth, she said, while the company saw 8% growth overall.
New places to go
Retail media is a big trend. So big, in fact, that travel can feel like a small corner, even though it’s a massive market of its own.
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One challenge Expedia is confronting now is how to attract non-endemic businesses.
There are financial institutions, auto brands and insurance companies in the mix with Expedia, Torres said, but they are a sliver of the pie right now.
“We really want to go after these travel-adjacent businesses that we’ve identified because we think there are huge opportunities for them,” he said.
But a big reason why retail and travel media businesses have struggled to extend beyond their most obvious advertisers (for Expedia, that means hotels, airlines and city tourism boards) is that the ad platform’s supply and strategy are built around its niche category.
Expedia might know it has a great target for, say, a credit card company with a traveler program. But that person is on a site looking for a trip and expecting to see recommendations, not a targeted credit card ad, so Expedia won’t serve that ad.
“All our advertising is very contextually relevant to what searches and what types of behaviors travelers perform on our sites,” said Jennifer Andre, VP of business development for the Expedia Group Media Solutions.
Programmatic audience extension campaigns with partners including The Trade Desk and Google’s Display & Video 360 DSP are one way to leverage the data for a marketer running on the web or CTV.
Travel particulars
But when an advertising platform is built around a particular type of media and audience, it’s hard to repurpose the system to work for other general advertisers.
It’s true for grocers, digital-out-of-home specialists, and companies that work in health care and pharma marketing. And it’s especially true for travel.
Uber’s ad business, for instance, doesn’t sell on a CPM; advertisers pay on a cost per trip basis.
For the travel industry, there are also entirely different kinds of seasonality and rolling marketing trends. There are times of the year when people are doing their research, so a brand might need more video content and effort to reach them where they research and find travel ideas, Torres said. Certain hotels or cities need to be able to push from travel research into bookings, and that’s when they would flip from more brand marketing to direct response marketing, like sponsored listings on travel search engines.
And just like all other retail media players, Expedia must balance the revenue opportunity with the user experience. Expedia, for instance, has only a managed service offering right now, and thus has more control of the data and how information is shared back to advertisers.
That means Expedia is going to be working primarily with direct brand marketers, which are endemic advertisers.
Opening up to self-service campaigns and giving control over the data to advertisers could unlock new budgets. So would selling the data separately, so an advertiser might target or attribute using Expedia data without using Expedia’s ad-buying platform.
But at what cost?
“We’re going to build some more self-service into this,” Torres said. “Whether or not you could just come in and use our data, most likely not.”
In other words, Expedia won’t let advertisers segment and retarget its first-party audiences using a DSP like The Trade Desk. They must work through Expedia, which provides the analytics but not direct access to data about its customers.
The data game
Expedia and the emerging travel media network ecosystem does have strong data advantages, even over the biggest retailers.
Travel companies are boxed in, somewhat, by their niche specialty.
But those companies are all strong first-party data platforms with similar media solutions businesses. Marriott is an advertiser on Expedia, which likewise is an advertiser in the Marriott travel network. United Airlines is considering launching a targeted ad sales unit. Adjacent players like Uber, Lyft and American Express have their own advertising data businesses.
The Marriott media business and Expedia Group Media Solutions don’t have a formal partnership, Torres said. But they’re close partners already as marketers and with other parts of the business. Media solutions opens up opportunities to work together in news ways that make sense for both.
The travel industry also has an advantage with retail media, in that the whole category creates a strong network of first-party data partners. With retail media networks like Walmart, Amazon and Target, the retailer has all the data, while brands have relatively little.
As Expedia builds out its ad revenue business, it’s learning and using its own marketing group, Torres said.
For example, Expedia was the first advertiser to run a global campaign on Netflix.
“We have the opportunity to lean in and learn from what they’re doing on the brand side of Expedia,” he said. “And we’ll learn how best to do that for our partners, as we bring that to the table.”
