COVID-19: Change in Marketing Spend

Wouter, can you share exactly what you’re seeing, from a marketing perspective, in travel, today?

I work for a travel company that focuses, predominantly, on the European market and the American market. For us, it hit China first, and we only saw a really small drop in our complete business, because our business in China is not that big. But when northern Italy had arrived and there were lockdowns seen in Venice, Florence and Milan, it was apparent that this was going to be huge. If you can imagine, for tourism, those are three huge cities. But also, Italy, as an origin market, where people come from who then book trips with us, it’s huge.

So then we knew we had to brace ourselves for the worst to come. If all of our markets go into lockdown, you don’t have any business anymore. Then we knew that we had to make a good plan.

Have you seen marketing CPMs decline massively? How have you seen the landscape evolve?

Yes, but that was only later. At first, when you see demand decline or, actually, when you see certain areas close down, you’re faced with cancellations. The first thing that happens is, the revenue that you made on bookings, you have to do the right thing and give that back to the travelers. All of the campaigns that you ran in the past, that were hitting your ROI targets, now suddenly, you are not hitting your ROI targets, you have to pay out to all of those people and, at the same time, you have campaigns out there, that market towards people that are looking for trip, that don’t know yet that it’s closed. You have to act fast, on all of those campaigns, making sure that you take into account the new cancellation rate that is, most probably, going to be in effect on those campaigns that you have.

That meant that we were very fast to turn down all of our marketing spend. I think, the first one in the market, outside the ones in the Asian markets. Later on, we saw our competition following, but that was weeks later. Only when the whole market goes down like that, then you see CPMs and CPCs decline. That was the time when we were working on the communication plan. What do you communicate to your travelers? We need to communicate that we are here, for them. We’re here, for you and we want to make sure that you get back home safely, that you get your money back. We didn’t want to work with vouchers or anything like that, because you don’t know when people can travel again. You don’t know what will hit them, economically, financially, so you want to make sure they get their money back. But as a company, also, we had to prepare well, to preserve our own cash, because you don’t know how long this is going to take.

That means that you can do some scenario planning and we had several scenarios, ranging from a quarter to three quarters, that we will not see any travel. We worked with the most severe case and then planned our company cash-wise on, how can we make sure that with scenario, we still don’t have to fire people, because we want to keep the good team together. How can we make sure that we are ready for the upswing, when it comes? How can we make sure that we have enough cash runway, not to go back to the financial markets, in the coming couple of years, because this will land us into a recession and this will make travel one of the least interesting verticals to invest in, for VC? So that’s what we’ve been planning, for the last month.

This plan is in effect right now, and that means that, if you look at performance marketing, there is no demand in the market anymore. No one is looking for a trip that they want to book right now. They are preserving cash themselves. This means that it’s really easy not to spend anything, at this current moment. We’re working on our communication strategy towards travelers, towards people at home, predominantly, so future travelers and the world is at home. So what can you do from your home, with your kids, with your family, if you’re bored. We’ve created all of these tours and activities that you can enjoy from your home. For example, a virtual tour of the Sistine Chapel; a virtual cooking class with chefs from Florence; a Harry Potter quiz, for people that are fond of Harry Potter and want to do that tour, one day, in London. Even fun drawings that you can print out, for the kids to color in. That’s the things we are doing right now, to enable people that can’t go anywhere, to still enjoy themselves and be in touch with our brand.