April 2017, San Francisco
Facebook: travelling companion for the next decade?
As the social giant continues to make inroads into the travel industry, Sally White finds that the big shifts in the future will be a by-product of mobile
What more concrete a reminder of the importance of travel media than the weight of the weekend newspapers! Which works best? On the one hand the likes of Facebook, with explosive growth, are clocking in record profits. On the other, working through the weekend travel press at this time of the year offers a read of hundreds of ad and content pages!
In fact, research from the Association of British Travel Agents (ABTA) shows that travel and tourism companies need to have a presence across all media. As many as 76% of UK travellers booked their holidays online in 2016, with the PC still being the most popular choice (just 13% used their mobiles).
What is going for printed media is the high ratio of advertising spends to readers’ time spent - much higher than for digital, according to research from Silicon venture capital firm Kleiner, Perkins, Caufield and Byers. However, US research group eMarketer is adamant that mobile is the way of the future. It has predicted that against 49% of digital advertising in 2015, mobiles will be taking 72% in 2019.
Of course, this forecast trend is not universally accepted. ABTA carried out a survey in the UK which showed 56% finding the process of holiday booking on a mobile difficult compared to booking on a PC. Reading digital newspapers and other content, however, is another matter. Even for millenials, according to a GfK MRI US survey. It showed that they are checking in to newspaper websites through a wide range of platforms, from Google AMP to Facebook Instant Articles and Snapchat Discovery.
56% find the process of holiday booking on a mobile difficult compared to booking on a PC
Facebook has been hovering around in travel for some years. Every now and again the question of whether it could challenge Google hits the headlines. Expedia CEO Dara Khosrowshaki said only a few months ago that it could. He was quoted as saying that travel is such a significant portion of e-commerce that Facebook would have a travel-specific product.
Earlier that same month Facebook introduced Dynamic Ads for Travel, which allows travel companies to target Facebook users based on a range of data, including search history. Yet, analysts at brokers RBC doubted if this was sufficient to trounce Google’s supremacy.
“While Facebook's recently launched Dynamic Travel Ads are unique in that they retarget potential customers across devices, we're sceptical as to whether Facebook will be a real threat to Google in digital travel ad dollars, because Facebook is just not able to capture commercial/travel intent in the way that Google is," they wrote in a report.
Facebook is clear that in its view mobile is the way to go and that it had the right formulae. The reasoning is that: “...travel choices are heavily influenced by recommendations from other people. That’s always been the case, but in the past, travel recommendations would have been passed along in person, at a family gathering, or when friends got together at a bar or restaurant, for example.
“Now it happens in real time and at scale on digital platforms, many of which are social in nature”. This was from Lee McCabe, global head of Facebook’s travel strategy, interviewed for the website of consultants McKinsey.
He added: “Five years ago, most people used social-networking sites to share text. But more and more, people are using photos and videos to communicate and to share stories and recommendations, and that includes their experiences with travel. In five years, we’ll see even more videos, and after that, we’ll probably see more immersive content, like virtual and augmented reality. So the way people are communicating on these platforms is changing. But by and large, people-based platforms will continue to create a catalyst for travel.”
People were spending hours a day on the phone consuming some kind of media, eight hours in many countries. In the US “that number is even higher—they consume 12 hours a day of media, and nearly 25% of that time is spent on a mobile device.” But, “86% of time was spent on apps. People are not using their phones to browse the web.”
The growth of mobile has been a great driver in Facebook’s success, not just the numbers but the amount of time people use them. Between 2009 and 2013, US smartphone penetration nearly quadrupled, from 17% to 65%. During the same period, Facebook's daily-active-users to monthly-active-users rose from 57% to 73%. Europe saw a nearly identical improvement, except it lagged by one year. Facebook could now be in for a similar improvement in emerging markets over the next few years.
….Facebook has successfully completed its shift to mobile
Figures just published by Facebook, for Q4 2016, were described on Wall Street as ‘explosive’, showing much better than forecast trading. Mobile made up 84% of its ad revenue, the same as last quarter, accounting for $7.248 billion. And, the social network moved closer to amassing an audience of two billion monthly users.
Analysts say that this is “signalling that Facebook has successfully completed its shift to mobile”. Facebook has warned that revenue growth could slow because it predicts it will run out of ad space in mid-2017! However, it always talks conservatively while showing the ability to go on squeezing money out of its established western markets and adding new ones. Globally it is earning nearly $20 per user per year.
As it expands deeper into chat with Messenger and WhatsApp, and virtual reality with Oculus, Facebook has a strong core business to rely on. And if it can use Instagram Stories and similar copycats in its other apps to ward off the threat of Snapchat, say the analysts, it could continue to dominate social media into the next decade.
Now what - especially what is happening in virtual reality (VR) and video content? That was what the analysts wanted founder Mark Zuckerman to tell them as it relates to possible new developments for travel and other sectors. He explained that “we’re focusing on short-form content to start off with”. The model seems to be YouTube. And Facebook is launching its own 360-degree video app on the Samsung Gear VR.
So go on watching this space! As McCabe noted, “most of the big shifts in the industry are a by-product of mobile.”
At EyeforTravel’s upcoming San Francisco Summit (April 24-25) we will hear more from Facebook on how the platform can be used to deliver targeted ads via mobile
Image Credit: Tavisca and Tejas Phatak in Travel Business Solutions