Expedia Case Study

Expedia Beats Travel Industry Decline with Pay-for-Performance Advertising

With the travel industry facing a soft market in 2001 that was exacerbated by the events of September 11, online travel agent Expedia saw a need for a new cost-effective marketing channel to increase their revenues. They teamed with Commission Junction, a leader in pay-for-performance marketing, in June 2001 to develop a new sales channel. Even in this difficult climate, Expedia.co.uk sold more online in January 2002 than any other travel agent and became the world's largest online travel agent, proving that the use of innovative marketing tactics can sustain and grow a company while others are failing.

	"Pay-for-performance marketing is now a key part of our integrated marketing activity due to the measurable results and lower cost of customer acquisition." Sharon Griffiths Strategic Partnerships Manager

Across the travel sector, the market is still down by 10 to 15 percent, compared to the year 2000. However, Expedia.co.uk has seen their pay-for-performance program continue to grow and become an increasingly important part of their marketing mix. Not only have they experienced significant revenue growth, but their 5,000 publishers have as well. Sales of hotels and flights at Expedia.co.uk generated from their pay-per-performance links tripled from January to February 2002.

Expedia attributes some of their success to raising their cookie duration – the amount of time the publisher can receive credit for a sale after a consumer has first clicked through one of their links to the advertiser's site. This allows publishers more opportunities to earn commissions, since a sale may take place on a customer's subsequent visits to the Web site.

"Post September 11, we reviewed the pay-for-performance program we had with Commission Junction and introduced a 14-day cookie to offer publishers a greater earning opportunity and differentiate ourselves from other online operators," said Sharon Griffiths, Strategic Partnerships Manager of Expedia.co.uk. "It delivered an increase of 220 percent in transactions between December 2001 and January 2002."

Susan Kingston, Commission Junction Business Development Manager, UK and Ireland, has noticed a significant increase in interest of pay-for-performance advertising since the last quarter of 2001 as a result of clients abandoning less effective forms of online advertising, including CPM (cost per thousand impressions) and CPC (cost per click) models.

Due to the high ROI Expedia has experienced with Commission Junction, the company has since moved their other partners over to their pay-for-performance program and has begun using this technology for more of their online ad buys. The result has been a decrease in the cost of managing their partners, while they have been able to increase their compensation to the partners.

"Pay-for-performance marketing is now a key part of our integrated marketing activity due to the measurable results, lower cost of customer acquisition and the cost-effective nature of the model," Griffiths said. "It carries no up front risk to us and now the majority of our online advertising is purchased on a pay-for-performance basis."

"The dynamic is simple; you only pay for action," Kingston said. "The model provides a clear return on investment that is lacking in other forms of advertising. In this environment, marketers are facing budget cuts and they need to find ad channels that deliver reach, but most importantly proven results. Commission Junction provides exactly that for hundreds of quality advertisers like Expedia."

Expedia.co.uk Facts

• Program with Commission Junction launched in July 2001
  
  
• Implementation - easy with minimal resource dedicated to it
  
  
• Reasons Expedia.co.uk choose a pay-for-performance advertising model
  - Test a new and exciting sales and customer acquisition channel
  - Extend reach and lower customer acquisition costs
  - Test tracking technology as a platform for other partners as well
    as those gained through the network
  
  
• Why Expedia.co.uk chose Commission Junction
  - Simple to use and effective technology
  - Cost efficient solution
  - Market leader in its field
  - Good culture fit
  - Proactive attitude
  - Helpful support staff
  - Opportunity to add new features, such as the 14-day cookie
  
  
• After the initial program period had proved successful, Expedia.co.uk closed their in-house program and transitioned all partners to Commission Junction. The result has been a cost saving on administering partners with the ability to pay them more.
  
  
• Expedia.co.uk saw results immediately
  
  
• Expedia.co.uk has enjoyed significant commercial gain through sales the program including a 220% increase in publisher transactions.

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