Marketers worldwide are drawn to the next big thing to help them optimise the ROI on their ad spend, and they are increasingly betting on data-driven ad targeting. So, naturally, marketing budgets in many countries are shifting to Connected TV or CTV.

With a continued shift to streaming TV and the speed at which things are moving, marketers are increasing CTV budgets, especially in more developed markets like the US and the UK.

78% of US and 90% of UK marketers plan to continue investing more in CTV advertising. 

Marketers must stay current with the latest trends to remain competitive and relevant. The shift in TV viewing habits to Connected TV (CTV) has opened up a world of opportunities for marketers to reach their target audience in a more engaging way. CTV advertising is a must-know strategy for any brand looking to stay ahead of the curve and maximise its marketing efforts. 

What is CTV?

CTV, or Connected TV, refers to any TV set connected to the Internet, allowing viewers to stream content through various apps and services. Unlike traditional Linear TV, CTV provides audiences with an on-demand, personalised viewing experience.

OTT, or Over-the-Top, is often confused with CTV, which refers to delivering TV and video content through the Internet rather than traditional broadcasting methods. CTV and OTT have become increasingly popular among consumers, with market research indicating a steady rise in cord-cutting and increased streaming services worldwide. For brands, CTV offers a new and highly effective platform for advertising and reaching audiences who are consuming content in a non-traditional way.

How does CTV Differ from Linear TV?

Television advertising has come a long way since its inception in the 1940s. Advertisers have relied on traditional Linear TV for decades to reach their target audience. However, with the introduction of Connected TV, there has been a significant shift in how people consume television content.

So, how does CTV differ from traditional Linear TV?

The most significant difference lies in the delivery method. While Linear TV broadcasts content on a predetermined schedule, CTV streams video content through an internet-connected device, such as a smart TV, streaming box, or gaming console. This allows viewers to access content on-demand and anytime, eliminating the need to adhere to a pre-scheduled TV programming lineup.

CTV advertising marries the power of traditional TV advertising with the preciseness and measurement capabilities of a digital ad medium.

81% of marketers worldwide report planned increases in CTV advertising budgets.

One of the major benefits of CTV advertising is the ability to target specific audiences. With CTV, marketers can leverage market research to deliver targeted ads to the right consumers based on demographic data, interests, and behaviour. In contrast, Linear TV ads are often less targeted, as they rely on broad audience demographics like age and gender.

Another significant difference is the level of audience engagement. While traditional Linear TV often involves passive viewing, CTV viewers are likelier to engage with the content they consume. Viewers can pause, rewind, or fast-forward through ads, making it crucial for brands to create compelling content that captures their attention and keeps them engaged.

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The Benefits of CTV Advertising

As marketers seek ways to engage with their audiences effectively in today’s fast-paced digital age, CTV advertising has become very popular.

Let’s look at some important benefits of CTV advertising for brands:

Data-driven insights.

It offers data-driven insights into viewer behaviour, preferences, and engagement. This helps advertisers understand their audience better and create more personalised campaigns.

“80% of what people play on Netflix actually comes from the recommendation algorithm.” 

-Aish Fenton, Director — Machine Learning, Netflix

Targeting capabilities.

CTV advertising provides targeting capabilities that allow advertisers to reach specific audiences. Advertisers can use audience data, such as location, age, and interests, to serve relevant ads to viewers.

Non-skippable ads.

CTV ads are non-skippable, which means viewers must watch the entire ad. This results in a higher engagement rate than other digital advertising forms. Advertisers can use this to their advantage by creating high-quality, visually appealing ads that capture the viewer’s attention.

Accurate, measurable results.

CTV advertising provides accurate measurement tools that allow advertisers to track and measure the success of their campaigns. Advertisers can see how many viewers watched their ad, how long they watched it, and whether they took any action, such as clicking a call-to-action button.

The Five Stages of CTV Planning

Define your target audience.

The first step in CTV planning is to understand who your audience is and how they consume TV content. Conducting market research to identify their viewing habits, preferences, and demographics can help you create a targeted CTV advertising campaign.

Netflix clearly understands its target audience, and its CTV ads are designed to speak directly to this demographic, featuring music and humour that resonates with them.

Set objectives.

Define what you want to achieve with your CTV campaign. This could be increased brand awareness, lead generation, or increased sales. Having clear objectives in mind will help guide your strategy and ensure you measure the success of your campaign effectively.

Choose your CTV platform.

Several CTV platforms are available, each offering different features and targeting options. Research which platforms your target audience will use and select one that aligns with your campaign objectives.

Consider working with a partner to access multiple platforms.

For instance, Amazon Prime Video uses Amazon’s extensive customer database to target its CTV ads. They use personalised messaging and relevant product suggestions to engage customers, increasing conversion rates.

Develop a media plan. 

After choosing your platform, you must decide where and when your ads will appear. This involves selecting ad formats, determining the frequency and reach of your campaign, and creating a budget. A media plan will help you allocate resources effectively and reach your target audience.

Monitor and optimise your campaign.

CTV campaigns are not set-and-forget; they require ongoing monitoring and optimisation. Monitor your campaign’s performance using Key Performance Indicators (KPIs) such as reach, frequency, engagement, and conversions. Make changes as needed to improve the performance of your campaign.

Your CTV ads should be compelling, creative, and engaging, designed to capture attention and leave a lasting impression. Use video and interactive elements to create an immersive experience.

Coca-Cola’s 45-second TV commercial, ‘2023 March Madness: Best Blocker Ever’ starring “Dave,” Lil Dicky and Taco star alongside Magic Johnson, made quite a sensation across platforms.

Market research is crucial to CTV planning as it helps you make informed decisions at every stage. It provides insights into your target audience, identifies opportunities and challenges, and enables you to understand the effectiveness of your campaign. By conducting thorough research and following these five stages, you can create a successful CTV advertising campaign that delivers results and keeps your brand relevant in the digital age.

Peloton’s successful CTV advertising strategy

Peloton is a famous fitness brand that took the world by storm with its home exercise equipment and digital classes. In 2020, the company launched a new CTV advertising campaign to promote its digital app and attract new users. The campaign featured a series of dynamic, visually appealing ads that showcased the benefits of Peloton’s app, including convenience, variety, and community. The ads were tailored to different demographics, with messages and imagery designed to appeal to busy professionals, parents, and fitness enthusiasts.

Peloton is a famous fitness brand that took the world by storm with its home exercise equipment and digital classes. In 2020, the company launched a new CTV advertising campaign to promote its digital app and attract new users. The campaign featured a series of dynamic, visually appealing ads that showcased the benefits of Peloton’s app, including convenience, variety, and community. The ads were tailored to different demographics, with messages and imagery designed to appeal to busy professionals, parents, and fitness enthusiasts. 

The brand’s latest 15-second TV commercial, ‘2023 Mother’s Day: Something She’ll Come Back To,’ is another example of how brands in various industries invest more in CTV advertising this year.

Measuring Success with CTV

As with any marketing strategy, measuring success is critical for ensuring that your CTV advertising efforts are making an impact. Fortunately, as discussed before, CTV advertising offers a range of metrics that can help you gauge the effectiveness of your campaigns. 

Here are a few key metrics to consider:

Viewability. 

Viewability measures the percentage of an ad that is actually visible to the viewer. On CTV, viewability tends to be higher than on other digital platforms since viewers are typically focused on the screen and not multitasking.

Completion rate. 

The completion rate measures the percentage of viewers who watch an entire ad from start to finish. On CTV, completion rates are higher than on other digital platforms since viewers can’t skip or fast-forward through ads.

Click-through rate. 

Click-through rate measures the percentage of viewers who click on an ad to visit the advertiser’s website. While CTRs tend to be lower on CTV than on other digital platforms, they can still be a valuable metric for tracking engagement.

Conversions. 

Ultimately, CTV advertising aims to drive conversions – whether that’s sales, sign-ups, or another type of action. Measuring conversions requires tracking viewers who saw your ad and took a specific action. 

While conversion tracking on CTV can be more complex than on other digital platforms, it’s still possible through attribution modelling and retargeting techniques.

To get the most out of your CTV advertising campaigns, it’s essential to use a range of metrics to measure success. By tracking metrics like viewability, completion rate, click-through rate, and conversions, you can gain valuable insights into your campaigns’ performance and optimise them for even greater success.

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How will Contextual Targeting on CTV and OTT Platforms take your brand to the next level?

Contextual targeting is an advertising strategy that delivers ads to specific viewers based on the content they are watching. It’s an essential tactic in CTV advertising because it can help increase relevancy and reduce ad fatigue.

Contextual targeting uses machine learning algorithms to analyse the content that a viewer is consuming and delivers ads that are relevant to that content. For example, if a viewer watches a cooking show, the ads could be for kitchen gadgets or cooking ingredients.

According to a study by Adweek, contextual targeting in CTV advertising has resulted in a 41% higher brand recall and a 25% higher purchase intent than standard targeting methods.

This is because viewers are likelier to pay attention to an ad relevant to the content they are consuming.

Contextual targeting on CTV and OTT platforms is crucial for engaging viewers with relevant ads. Ads that are contextually relevant to the environment in which they are viewed are more likely to be seen and responded to. This increases the possibility of converting viewers into consumers. On the other hand, irrelevant ads may be viewed as unpleasant and negatively impact the connection with the brand and product offering. Advertisers who align their content with the context of digital advertising can boost the long-term impact of their TV ads and promote consumer loyalty. Overall, context is essential in all types of media, including CTV.

Subway, the sandwich giant, leveraged the star power of celebrity icons like Tom Brady and Serena Williams to unveil new menu options and a huge giveaway to boost brand awareness and excite their target audience. This campaign proved highly effective on Connected TV platforms, resulting in a 33% increase in sales.

Kitchen appliance brand Breville partnered with the cooking show “America’s Test Kitchen” to deliver contextual ads to viewers of the show. The ads featured Breville products relevant to the cooking techniques demonstrated on the show, such as a blender for making smoothies or a toaster oven for baking. As a result, Breville saw a 42% lift in brand awareness and a 20% lift in purchase intent.

In addition to improving ad performance, contextual targeting ensures that brands deliver ads in a brand-safe environment. By analysing the content viewers watch, advertisers can ensure their ads are not shown next to inappropriate or controversial content.

To implement contextual targeting in your CTV advertising strategy, you can work with CTV advertising platforms that offer this feature, such as Amazon Advertising or Roku’s OneView Ad Platform. You can also use third-party tools like Grapeshot or Integral Ad Science to analyse the content that your ads will be shown next to.

Future Trends in CTV Advertising

As the world continues to shift towards a more digital-first landscape, it’s no surprise that the future of CTV advertising is bright. It is predicted that by 2023, over 200 million people in the US alone will be streaming CTV content. That means advertisers who want to stay ahead of the curve must be ready to pivot their strategies to take advantage of this new medium.

One of the biggest trends in CTV advertising is a move towards more programmatic buying. Advertisers increasingly use automated systems to buy and place ads rather than relying on manual processes. This allows for greater efficiency, faster decision-making, and better targeting.

Another trend that’s emerging is the use of data-driven targeting. Advertisers can create more tailored campaigns designed to resonate with specific demographics as they gain access to more data on their target audience. This not only increases the chances of engagement and conversion but also helps to build stronger brand affinity.

We also see a growing trend toward using interactive and immersive ad formats. With CTV, brands can create rich, interactive experiences that engage users in new and exciting ways. Whether through interactive overlays, immersive ad experiences, or even full-blown gaming experiences, the sky’s the limit when it comes to the possibilities of CTV advertising.

CTV advertising provides several benefits that can help brands stay relevant in the ever-changing digital landscape. Its data-driven, targeted, engaging, and measurable features make it a must-know strategy for marketers who want to create successful campaigns that resonate with their audience.

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As we see the return of normalcy and tourism rebounding, our latest report, Navigating Emerging Trends in Global Travel and Tourism, closely examines the trends shaping the future of the travel industry. This report explores five global travel trends shaping the future of travel in 2023 and beyond. 

The travel brand of the future is not just focused on transportation, discovering new destinations, or arranging trips. Instead, it has a progressive and holistic 360-degree approach that considers every aspect of the traveller’s journey to create exceptional, personalised, and unforgettable experiences. 

Download our insightful report, “Navigating Emerging Trends in Global Travel and Tourism,” to discover how leading travel brands keep up with the modern traveller. 

Today’s traveller seeks a personalised, customised, frictionless, and stress-free travel experience from start to finish. Integrating technology provides travellers with personalised and bespoke experiences. Read our case study on how Hopper became one of the fastest-growing OTA (Online Travel Agency) brands by offering a highly personalised, data-driven travel platform. 

Virtual tourism, including VR and AR experiences, is becoming more popular, allowing travellers to explore new destinations from the comfort of their homes. But how are brands approaching this technology?

Download the full report to learn how Thomas Cook Airlines used VR technology’s ‘try before you buy’ approach in a highly engaging video contest. 

Digital nomadism is rising, creating a new type of traveller with unique needs and preferences. The report showcases an airline that developed a Super App, the best value one-stop travel and lifestyle app, to build a digital lifestyle hub that enables Digital Nomads.

Finally, sustainability and experiential travel are becoming more popular as travellers prioritise social and environmental responsibility. 

Experiential travel is expected to continue its growth trajectory as more travellers seek exclusive and personalised experiences. The report highlights G Adventures, which offers sustainable and community-based tourism experiences. 

Also, read about the award-winning Changi Airport, which is ahead of the curve in sustainability practices across all areas. 

2023 is seeing a surge in travel despite economic uncertainty and high inflation. So what has changed post-pandemic? Read the full report to gain insights into the changing travel landscape. 

Download the full report to discover the future of travel and how your travel brand can appeal to travellers’ changing attitudes and behaviours globally with insights for airlines, hotels, transportation, travel operators, OTAs, and cruise ships.

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In today’s hypercompetitive market, pricing and promotion optimisation have become crucial for brands’ success. With the rise of price-sensitive consumers, companies must find ways to offer value without sacrificing profit margins. And that’s where data analytics comes in!

According to a recent study, companies that use data analytics to optimise pricing and promotions see an average revenue increase of 2-7%. That’s a significant boost to your bottom line!

But what exactly is a price-sensitive consumer? Well, studies have shown that nearly 60% of shoppers are price-sensitive when making purchase decisions. These consumers are highly aware of prices and will compare prices between products and brands to get the best value for their money.

As a marketer or market researcher, understanding the behaviour of price-sensitive consumers is essential for developing effective pricing and promotion strategies. Data analytics lets you gain insights into their purchasing patterns, preferences, and attitudes toward pricing and promotions.

This blog will explore how data analytics can help you optimise pricing and promotions for price-sensitive consumers. We’ll cover different pricing strategies, promotions and discounts, data collection and analysis, and provide real-world case studies and best practices. So, let’s dive in and learn how to use data analytics to boost your revenue and attract more price-sensitive consumers!

Understanding Price-Sensitive Consumers: Unlocking the Secrets of Their Behavior

Have you ever wondered what drives price-sensitive consumers to make purchasing decisions? Understanding their behaviour is the key to unlocking the secrets of their buying patterns and preferences.

Research shows that price-sensitive consumers are not necessarily bargain hunters but value seekers. They are looking for products and services that offer the best value for their money, not necessarily the cheapest option. Therefore, they tend to be loyal to brands that provide consistent quality, even if they are slightly more expensive.

One way to understand the behaviour of price-sensitive consumers is by analysing their demographics. Studies show that age, income, and education level are key factors that influence their purchasing decisions. For instance, younger, lower-income consumers tend to be more price-sensitive than older, more affluent consumers.

Another way to gain insight into the behaviour of price-sensitive consumers is by looking at their shopping habits. They tend to be more likely to buy on sale or during promotions, and they tend to be more willing to switch brands to save money. In fact, nearly 60% of price-sensitive consumers will switch brands if they find a better deal.

Understanding the psychology behind price-sensitive consumers is also important. They tend to experience more guilt and regret when making purchasing decisions, which can influence their behaviour. Therefore, offering clear and transparent pricing and promotions can help ease their guilt and increase their satisfaction with their purchase.

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Choosing the Right Pricing Strategy: How to Optimise Value for Price-Sensitive Consumers

Choosing the right pricing strategy is crucial for attracting and retaining price-sensitive consumers. With so many options available, it can be challenging to determine which strategy is right for your brand.

One common pricing strategy is cost-plus pricing, where a business adds a markup to its production costs to set a price. However, this strategy does not take into account the value perceived by consumers, and it may not be effective for price-sensitive consumers.

Another popular pricing strategy is value-based pricing, which sets a price based on the perceived value of the product or service to the customer. This strategy is particularly effective for price-sensitive consumers because it focuses on delivering value rather than simply offering the lowest price.

In fact, research shows that nearly 70% of consumers are willing to pay more for products and services that provide a superior experience. By focusing on value-based pricing, businesses can attract price-sensitive consumers looking for quality and value over the cheapest option.

Dynamic pricing is another pricing strategy that is effective for price-sensitive consumers. This strategy adjusts prices based on demand, allowing businesses to charge more during peak times and offer discounts during slower periods. This strategy can be particularly effective for businesses in industries with high demand fluctuations, such as the travel industry.

Ultimately, the right pricing strategy for your business will depend on your industry, product, or service, and target audience. By understanding the behaviour of price-sensitive consumers and the different pricing strategies available, you can develop a pricing strategy that maximises value and attracts price-sensitive consumers.

Promotions and Discounts: The Key to Attracting Price-Sensitive Consumers

Promotions and discounts are powerful tools for attracting price-sensitive consumers. In fact, nearly 90% of consumers say that promotions and discounts influence their purchasing decisions.

One popular promotion strategy is flash sales, which offer a limited-time discount on products or services. These sales can create a sense of urgency and scarcity, encouraging consumers to purchase before the promotion ends. Flash sales can be particularly effective for attracting price-sensitive consumers looking for a good deal.

Coupons are another effective promotion strategy. Research shows that nearly 80% of consumers use coupons when shopping. Coupons can be distributed through various channels, such as social media, email, or direct mail. They can also be personalised to target specific consumer segments, such as price-sensitive consumers who have previously purchased a product or service from your business.

Loyalty programs are another effective way to attract price-sensitive consumers. These programs offer rewards, discounts, or other incentives to customers who make repeat purchases or engage with your business in other ways. Loyalty programs can be particularly effective for retaining price-sensitive consumers and encouraging them to make repeat purchases.

It’s important to note that while promotions and discounts can effectively attract price-sensitive consumers, they can also reduce your profit margins. Therefore, it’s essential to carefully consider the cost of each promotion or discount and its potential return on investment.

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Data Collection and Analysis: Using Insights to Develop Effective Promotions and Discounts

Data collection and analysis are essential for developing effective promotions and discounts that appeal to price-sensitive consumers while maximising profitability.

One way to collect data is through sales data analysis. By analysing sales data, you can identify which products or services are popular among price-sensitive consumers and develop promotions or discounts to increase their value perception.

Another way to collect data is through surveys. Surveys can provide valuable insights into the behaviour and preferences of price-sensitive consumers. For instance, you can use surveys to determine which promotions or discounts appeal to price-sensitive consumers or what factors influence their purchasing decisions.

Social media analytics is another valuable source of data. Social media platforms provide a wealth of information about consumer behaviour, such as what types of products or services they are interested in and what kinds of promotions or discounts they respond to.

Once you have collected data, it’s important to analyse it to gain insights into the behaviour of price-sensitive consumers. This can involve using statistical methods to identify patterns or trends in the data, such as which promotions or discounts are most effective or which consumer segments are most price-sensitive.

Using data analysis, you can develop promotions and discounts tailored to the behaviour and preferences of price-sensitive consumers. This can increase the effectiveness of your promotions and discounts while also maximising profitability.

Case Studies: Real-World Examples of Using Data Analytics to Optimise Pricing and Promotions for Price-Sensitive Consumers

Using data analytics to optimise pricing and promotions is not just a theoretical concept; many companies have successfully implemented these strategies to increase revenue and attract price-sensitive consumers. Let’s look at some real-world case studies.

Case Study 1: Amazon

Amazon is a leader in using data analytics to optimise pricing and promotions. The company uses sophisticated algorithms to adjust prices based on demand and competitor pricing dynamically. For instance, during the holiday season, Amazon adjusts prices every 10 minutes to ensure they offer the best deal to price-sensitive consumers.

Additionally, Amazon uses data analytics to personalise promotions and discounts for individual consumers. By analysing customer data, Amazon can offer targeted promotions that appeal to price-sensitive consumers and increase their value perception.

Case Study 2: Walmart

Walmart is another company that has successfully used data analytics to optimise pricing and promotions for price-sensitive consumers. The company uses algorithms to analyse sales data and identify trends and patterns in consumer behaviour. This allows Walmart to develop targeted promotions that appeal to specific consumer segments, such as price-sensitive consumers.

Walmart also uses data analytics to optimise its pricing strategies. For instance, the company has found that offering lower prices on certain items can increase foot traffic and increase sales of other, higher-margin items.

Case Study 3: Starbucks

Starbucks has also used data analytics to optimise its pricing and promotions strategies. The company analyses sales data to identify popular products among price-sensitive consumers and develop targeted promotions and discounts.

Additionally, Starbucks uses loyalty programs to retain price-sensitive consumers. The company’s rewards program offers personalised promotions and discounts to members based on their purchasing history, encouraging them to make repeat purchases and increasing their value perception.

These case studies demonstrate the power of data analytics in optimising pricing and promotions for price-sensitive consumers. By using data to gain insights into consumer behaviour and preferences, businesses can develop strategies that appeal to price-sensitive consumers while maximising profitability.

Best Practices: Actionable Recommendations for Optimising Pricing and Promotions for Price-Sensitive Consumers

Now that we’ve explored the importance of data analytics in optimising pricing and promotions for price-sensitive consumers, let’s summarise the key takeaways and provide actionable recommendations for marketers and market researchers.

  1. Understand the behaviour of price-sensitive consumers: By analysing demographics, shopping habits, and psychology, you can develop strategies that appeal to price-sensitive consumers.
  2. Choose the right pricing strategy: Consider value-based pricing, dynamic pricing, and other strategies focusing on delivering value rather than simply offering the lowest price.
  3. Use promotions and discounts strategically: Use flash sales, coupons, and loyalty programs to attract price-sensitive consumers while maximising profitability.
  4. Collect and analyse data: Use sales data analysis, surveys, and social media analytics to gain insights into consumer behaviour and preferences.
  5. Personalise promotions and discounts: Use data analysis to develop personalised promotions and discounts that appeal to specific consumer segments.
  6. Optimise pricing and promotion strategies continuously: Use data analysis to adjust your pricing and promotion strategies based on consumer behaviour and market trends.

By following these best practices, you can develop effective pricing and promotion strategies that appeal to price-sensitive consumers while maximising profitability. Remember, using data analytics is key to achieving this goal.

The Future of Pricing and Promotions: Emerging Trends and Technologies

As technology advances, the future of pricing and promotions is constantly evolving. Let’s explore some emerging trends and technologies shaping the future of pricing and promotions for price-sensitive consumers.

  1. Artificial Intelligence (AI): AI is becoming increasingly important in pricing and promotions. AI algorithms can analyse vast amounts of data and identify patterns and trends in consumer behaviour, allowing businesses to develop personalised promotions and discounts that appeal to price-sensitive consumers.
  2. Augmented Reality (AR): AR technology can be used to enhance the shopping experience for price-sensitive consumers. For instance, AR can be used to provide virtual try-on experiences for clothing and makeup products, allowing consumers to see how the products look before making a purchase.
  3. Subscription Services: Subscription services are becoming more popular among price-sensitive consumers. By offering a subscription service, businesses can provide consistent value to consumers while increasing revenue and encouraging repeat purchases.
  4. Dynamic Pricing: Dynamic pricing is becoming more sophisticated, with businesses using AI algorithms to adjust prices in real time based on demand and consumer behaviour. This allows brands to offer personalised pricing that appeals to price-sensitive consumers while maximising profitability.
  5. Mobile Payments: Mobile payments are becoming more popular among price-sensitive consumers, with nearly 80% of consumers using mobile payments at least once a week. By offering mobile payment options, businesses can make purchasing more convenient and appealing to price-sensitive consumers.

As these emerging trends and technologies evolve, brands must adapt and use data analytics to stay ahead of the competition. By embracing these trends and using data to gain insights into consumer behaviour, businesses can develop effective pricing and promotion strategies that appeal to price-sensitive consumers and maximise profitability.

Using Data Analytics to Optimise Pricing and Promotions for Price-Sensitive Consumers

In today’s hypercompetitive market, brands must find ways to appeal to price-sensitive consumers while maximising profitability. Using data analytics, brands can gain insights into consumer behaviour and develop effective pricing and promotion strategies that appeal to price-sensitive consumers.

Research shows that nearly 60% of shoppers are price-sensitive when making purchase decisions. This is a significant percentage of consumers that brands cannot afford to ignore.

Using data analytics to understand the behaviour of price-sensitive consumers, businesses can develop pricing and promotion strategies that maximise value and appeal to their preferences. This can increase revenue, attract new customers, and retain existing ones.

From understanding the behaviour of price-sensitive consumers to choosing the right pricing strategy, strategically using promotions and discounts, collecting and analysing data, personalising promotions and discounts, and optimising pricing and promotion strategies continuously, businesses can use data analytics to stay ahead of the competition and appeal to price-sensitive consumers.

As technology evolves, businesses must adapt and embrace emerging trends and technologies, such as AI, AR, subscription services, dynamic pricing, and mobile payments, to continue attracting price-sensitive consumers and increasing revenue.

Data analytics is a powerful tool for businesses to optimise pricing and promotions for price-sensitive consumers. Using data analytics to understand consumer behaviour and preferences, brands can develop effective pricing and promotion strategies that appeal to price-sensitive consumers while maximising profitability. 

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If you could understand and influence human emotion, could you use this ability to increase sales and identify the most compelling advertisements, the perfect price point, or the most flawless product mix? 

While advertisers, psychologists, and salespeople have understood this connection for years, only a few have been able to use it to their advantage. Fortunately, neuromarketing is putting the ability to understand consumer behaviour and create compelling marketing tactics into the hands of many. 

In the modern business landscape, with constantly changing consumer preferences, companies must understand what drives consumer behaviour to stay ahead of the curve. 

“People buy on emotion and justify on logic.” Zig Ziglar 

Recent research has revealed that emotional decisions are not irrational or flawed, and our unconscious mind has its own logic. It processes millions of bits of data seamlessly without becoming overwhelmed, unlike our conscious mind, which has a bottleneck due to the limited capacity of our working memory to process only 3-4 pieces of new information at a time. 

However, the unconscious mind’s brilliance stems from its lifetime of learning from our successes and failures, and it makes decisions based on heuristics that have evolved. These decisions are often successful, leading experts to rely on their intuition or “gut feelings.”

The Iowa Gambling Task study highlights the effectiveness of the emotional brain. In this study, subjects were given a fixed budget and four decks of cards to draw from to win as much money as possible. The decks were arranged so that two offered consistent wins, while the other two had high payouts but carried significant risks. Although it took about 50 cards for people to stop drawing from the dangerous deck, it was on the 80th card that they could explain why. On the other hand, the subjects’ anxiety levels were tracked using a device that measured the electrical conductance of their skin, revealing that their hand trembled when they reached for the risky deck after drawing only ten cards. Hence, our intuition or unconscious mind quickly senses danger and makes decisions. On the contrary, logic is slow.

Marketing is all about understanding and influencing consumer behaviour. For years, brands have relied on traditional market research methods to understand customers’ needs and preferences. However, with advancements in neuroscience, researchers can now use cutting-edge tools and techniques to gain deeper insights into consumer behaviour. 

This blog post will explore neuroscience applications in marketing, its history, and the tools used to study consumer behaviour. We will also discuss the use cases of neuroscience in marketing, the new methods in consumer neuroscience research, and the future of neuromarketing.

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What is neuromarketing?

Neuromarketing or Neuroscience marketing involves utilising physiological and neural data to understand the drivers behind customers’ choices, inclinations, and decisions. By applying this knowledge, brands can enhance their advertising, product development, pricing, and other marketing strategies.

As a multidisciplinary field, there are many definitions of the term, but in simple terms, it is a form of decision science applying neuroscience ideas to the marketing field. 

In a nutshell, neuroscience applications in marketing refer to using neuroscience techniques and tools to understand consumer behaviour and develop effective marketing strategies. 

The concept is based on the idea that a person’s behaviour is driven by their brain activity and that marketers can use this knowledge to create more effective marketing campaigns.

Neuromarketing and neuroeconomics have been used interchangeably, confusing their differences. Many experts consider neuromarketing a subgenre of neuroeconomics that studies neuroscience in decision-making. But others argue that neuromarketing should be considered independent since it focuses on marketing.

History and Origins of Neuroscience for understanding consumer behaviours

The origins of neuroscience can be traced back to the early 19th century when researchers began studying the nervous system’s structure and function. Over time, the field has expanded to include studying brain activity and its impact on behaviour. In the 1990s, researchers began using brain imaging techniques such as fMRI and EEG to study brain activity and its relationship to behaviour. 

The term “neuromarketing” was popularised by Dutch marketing professor Ale Smidts in 2002; however, the field’s roots date back to the 1990s when rigorous research and experimentation began. Among the pioneers was US marketing professor Gerald Zaltman, who filed a patent for the Zaltman Metaphor Elicitation Technique (ZMET) four years before the term “neuromarketing” was coined. ZMET is a marketing research tool that delves into people’s conscious and subconscious thoughts using carefully curated image sets to elicit positive emotional responses and potentially influence purchasing decisions.

The use of neuroscience in marketing began in the early 2000s, with companies like Coca-Cola and Frito-Lay using fMRI to study consumers’ responses to their products.

One of the earliest recorded neuromarketing experiments occurred at Baylor College of Medicine in 2003, led by Professor of Neuroscience Read Montague. The study was an extension of a 1975 taste test challenge between Pepsi and Coca-Cola, where participants blindly tasted and selected their preferred drink. Although the results showed Pepsi as the winner, Coca-Cola continued to dominate the cola market share. Curious, Montague repeated the experiment, using fMRI scans to track participants’ brain activity this time.

The study revealed that different parts of the brain lit up depending on whether participants were aware of the brand they were consuming. Coca-Cola triggered responses from the medial prefrontal cortex associated with attention and short-term memory. When aware of the brand, participants preferred Coca-Cola over Pepsi, but when oblivious to the brand, they preferred Pepsi, as indicated by the ventral putamen, responsible for decision-making and reward perception.

Using neuroscience tools to sweeten market research

Consumer neuroscience tools are the instruments used to study brain activity and behaviour. These include biometric tools like eye tracking, facial recognition software, and imaging tools like EEG and galvanic skin response. Each tool has its inherent strengths and limitations, and usage would depend largely on the study’s goals. 

Eye tracking

Eye tracking is a tool used to measure eye movements and gaze behaviour. It is used to study how people process visual information and can help marketers understand which elements of their advertising or website design are most effective.

Facial recognition software

Facial recognition software analyses facial expressions and emotions. It is used to study consumers’ emotional responses to products, advertising, and other marketing materials.

fMRI

Imaging techniques such as fMRI are used to measure brain activity. They study how the brain processes information and responds to various stimuli.

ECG

ECG is used to measure heart rate and heart rate variability. It is used to study the emotional response to marketing materials.

Electroencephalography

Electroencephalography (EEG) is a neuromarketing research method used to measure cognitive processes, such as calculations, to predict consumer behaviour.

Galvanic skin response

Galvanic skin response is used to measure changes in skin conductance. 

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Tests used to understand consumer behaviour

Neurolinguistic programming (NLP)

Neurolinguistic programming (NLP) focuses on the relationship between language, behaviour, and the brain. It operates under the belief that language can shape thoughts and emotions and that modifying language can change thoughts and emotions. NLP is commonly used in marketing research to investigate how language and framing influence consumer behaviour and decision-making. For instance, it can be used to analyse how the language used in an advertisement affects the emotional response of consumers or how presenting a product in a specific manner can impact purchasing decisions.

Implicit association tests (IATs)

Implicit association tests (IATs) are psychological assessments that measure unconscious biases and attitudes by analysing the time it takes a person to associate a particular word or image with a specific category. In marketing research, IATs are often employed to study consumer attitudes and preferences and detect potential biases in decision-making processes. For example, IATs can be conducted to examine consumer attitudes toward various brands, products, or marketing messages.

NLP and IAT can provide valuable insights into consumer behaviour and decision-making processes and can be used with other neuroscience marketing research methods. 

Uses cases and applications of Neuroscience in Marketing

Several applications of neuroscience in marketing include advertising, branding, website optimisation, pricing, product development, and product experience.

For example, eye tracking can identify the most effective placement of ads on a webpage, while facial recognition software can identify the emotional response to an ad.

New Methods in Consumer Neuroscience Research

Recent advancements in technology have opened up new avenues for consumer neuroscience research. Virtual Reality (VR) can create realistic environments for studying consumer behaviour, while mobile EEG devices allow researchers to study brain activity in real-world settings.

Another exciting development is using machine learning algorithms to analyse large datasets of brain activity. This approach can help identify patterns and relationships between brain activity and behaviour, providing deeper insights into consumer behaviour.

Limitations of neuromarketing

  • Limited Sample Size

Neuromarketing research often requires expensive equipment and specialised expertise, which limits the number of participants involved in the study. This limited sample size could lead to biased results and generalisation errors.

  • Difficulty in Interpretation
    The interpretation of brain data is a complex process requiring the expertise of specialised neuroscientists. There often needs to be explicit agreement on what a particular brain activity pattern means, which can interpret neuromarketing data as challenging.
  • Lack of Real-Life Relevance
    Most neuromarketing research is conducted in laboratories and may not accurately reflect real-world scenarios. In real-life environments, consumers’ behaviour is often influenced by several external factors, such as culture, social norms, and personal experiences.
  • High-Cost
    Neuromarketing research requires expensive equipment and specialised expertise, which can be cost-prohibitive for small and medium-sized businesses. As a result, only large corporations can afford to invest in such research.
  • Ethical Issues
    Neuromarketing research raises ethical concerns, such as the possibility of manipulating consumer behaviour and invading their privacy. Consumers may be unaware of the research’s purpose, and their data could be misused for commercial gain.

Ethical considerations

  • Informed Consent
    Consumers should be fully informed about the research’s purpose and the data collection process. They should have the right to opt out of the study and have their data removed.
  • Privacy
    Neuromarketing research involves collecting sensitive personal information, requiring adequate data security measures to prevent breaches and unauthorised access.
  • Transparency
    The results of neuromarketing research should be transparently communicated without manipulating the data or using it to mislead consumers.
  • Fairness
    Neuromarketing research should not be used to exploit vulnerable consumers or unfairly target specific groups.
  • Responsibility
    Brands should take responsibility for their actions and use neuromarketing research ethically without manipulating consumers or promoting harmful products.

The Future of Neuroscience in Market Research

With the advancement of technology, neuroscience in marketing is expected to become even more prevalent. Gaining deeper insights into consumer behaviour can help brands create more effective marketing campaigns, improve product development and enhance the overall customer experience.

However, as detailed above, there are concerns about the ethical implications of using neuroscience in marketing. Critics argue that using these techniques can be invasive and that there are potential risks to consumer privacy.

As with any technology, using neuroscience in marketing responsibly and ethically is paramount. By doing so, brands can harness the power of neuroscience to gain deeper insights into consumer behaviour while respecting consumer privacy and autonomy.

Neuroscience applications in marketing offer exciting opportunities to gain deeper insights into consumer behaviour.  As technology evolves, new consumer neuroscience research methods are emerging. The future of neuroscience in marketing looks promising, offering new ways to improve the customer experience to drive business success.

Kadence International helps leading brands make game-changing decisions. If you are looking for a research partner to help better understand your customers, we would love to help. Simply fill out our Request for a Proposal here.

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Contextual advertising is quickly becoming the go-to solution for a cookieless world. 

With the evolution of technology, consumers have been exposed to various online ads, including banner and video ads. These ads have been either contextual —based on the content of a web page, or behavioural —served to a consumer based on their web-browsing behaviour.

To better understand consumer preference, Harris Poll recently conducted a study investigating consumer opinions on relevant online ads and their views on using their browsing history for advertisement targeting.

The survey revealed that 65% of respondents are more likely to be tempted to purchase from an ad relevant to the page they are currently viewing, whereas only 35% expressed a preference for an ad based on their web-browsing activities from the past month.

Contextual targeting is an effective advertising technique that can improve the relevancy and success of your ad campaigns. By understanding how it works and taking the necessary steps to get started, you can create successful campaigns that reach your target audience and drive results.

What is contextual advertising?

Contextual advertising is an innovative marketing method that creates highly targeted advertising campaigns based on a person’s online content. When displaying an ad, contextual advertising considers various factors to ascertain what content is the most appropriate for users. It seeks out potential prospects by considering contexts like the material of a web page, area, or meteorological conditions.

For instance, an article about nutrition could show ads for vitamin supplements, while a travel website might feature advertisements for hotels and tour operators.

This article on the “12 Best Mississippi River Cruises for 2023-2024” shows a display ad for Norwegian cruises.

How does contextual advertising work, and how to get started?

Contextual targeting is an online advertising technique that targets specific audiences based on the context of the website or app they are using. It allows advertisers to serve ads relevant to the user’s content, improving the likelihood of a click or conversion. So, how does it work?

Contextual targeting analyses a web page or app’s content and determines the main theme or topic. This could be done through the use of keywords or through natural language processing (NLP), which uses algorithms to understand the meaning of the text. Once the content topic is determined, advertisers can use this information to show relevant ads to users who are most likely to engage with the content.

Getting started with contextual targeting requires a few steps. First, determine your advertising goals and target audience. Then, find a contextual targeting platform that aligns with your needs. Some popular platforms include Google Ads, Facebook Ads, and AdRoll.

Once you select your platform, you can create your ad campaigns. Make sure to choose relevant keywords and topics for your ad groups, and use creative that aligns with the content on the web page or app. Testing and optimising your campaigns is crucial to success, so regularly analyse your data and make necessary changes.

The concept of contextual advertising is quite simple. Crawlers search the web and organise pages based on their semantic context. When someone visits the page, the ad server obtains the content information, which it compares with relevant ads according to keywords and other content-based criteria. The more efficient the system is at understanding the proper context of the page, the better the ad matching will be. For example, a contextual advertisement for a hardware store could appear beside an article on home improvement.

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How is contextual advertising different from behavioural advertising?

Contextual and behavioural advertising are two different forms of online marketing often used to target audiences in unique ways. While they share similar goals of delivering relevant and engaging content to potential customers, they use distinct strategies.

Contextual advertising relies on analysing the webpage’s content or app on which the advertisement will be displayed. The goal is to match the ad to the specific topic of the webpage in the hopes that the user will be more likely to engage with it. For example, if someone is browsing a skincare blog, a contextual ad might display an advertisement for a personal care or makeup brand.

On the other hand, behavioural advertising uses information about the user’s online behaviour to deliver ads tailored to their interests and past activity. This involves tracking users’ browsing and search history to understand their interests, behaviours, and purchasing habits. This allows for highly personalised advertising, with highly relevant ads appearing on the platform based on the user’s past behaviours.

Consumers are, by and large, uncomfortable with ads that require personal information.

So contextual and behavioural advertising share similar goals but use vastly different strategies. Ultimately, the best approach will depend on the brand, audience, and desired outcome. Regardless of the method, the goal remains to deliver engaging, relevant content to potential customers.

Ways brands can use contextual advertising to drive results

The modern marketing world has presented several innovative and powerful ways for businesses to target their customers. One such method is contextual advertising, which considers multiple factors such as location data, weather conditions, and content on a page to tailor the ad experience for a given user accurately.

Weather-triggered advertising is an excellent example of how this can increase engagement and, ultimately, purchases. For instance, a cold beverage brand could use location and weather data to send targeted ads to customers on hot days, or a retailer selling rain gear could increase foot traffic with ads on rainy days.

  • Google AdSense is one of the most popular contextual advertising tools and allows businesses to target customers based on the content they’re viewing. For example, if you have a travel blog, you may receive ads from airline and tour providers.
  • In-game and in-video advertising are also great ways to use contextual ads. In-game ads often appear before the game loads and during the game, and YouTube has been incorporating in-video ads for a while now.
  • Native advertising is another type of contextual advertising that presents sponsored content in the same format as other content on the website while personalising the ad experience based on location and other data.
  • Dynamic Creative Optimisation (DCO) is a strategy that takes contextual advertising further and makes it more effective. AI platforms use consumer engagement data and other relevant signals to determine the best creative for each individual user.
  • Conversational marketing is a powerful tool that allows companies to offer customers more personalised recommendations and to provide them with more relevant messaging.
  • AI advertising considers all of these factors and can use machine learning to understand how likely a user will take a specific action, helping businesses increase engagement and drive better outcomes.

Contextual targeting uses first-party data  

Contextual targeting can use first-party data to incorporate commerce indicators into the existing contextual signals and construct product affinity scores for each URL. This allows marketers to narrow in on the most impactful pages and products. Considering the recent phasing out of third-party cookies, contextual targeting has returned to the limelight since it doesn’t rely on cookies.

In today’s digital landscape, delivering relevant advertising to audiences while respecting their privacy has become increasingly challenging. The demise of third-party cookies, a staple for tracking users across the web, has made it more difficult for advertisers to create personalised campaigns that target the right users at the right time.

That’s where contextual advertising comes in. Rather than relying on user data to deliver ads, contextual advertising uses the content of the website or app the user is currently browsing to determine which ads to display. This means the ads users see are related to the content they’re engaging with rather than just based on their browsing history.

Why is contextual advertising so crucial in a cookieless world? 

Contextual advertising allows advertisers to continue to reach their desired audiences without infringing on their privacy. It also helps to ensure users are shown ads relevant to their interests and needs rather than just what they’ve recently searched for online.

Contextual advertising also allows for greater flexibility and creativity in ad creation. With cookie-based advertising, advertisers were limited by the data available to them about users. But contextual advertising focuses on the content and the context in which the ad will be displayed. This allows for more imaginative and impactful ads that resonate deeply with users.

Contextual advertising is more important than ever in a cookieless world because it allows advertisers to continue to reach their desired audiences while respecting user privacy and encourages greater creativity and flexibility in ad creation. With contextual advertising, the future of digital advertising looks bright.

Uses of Contextual Advertising

Contextual advertising is a type of advertising that targets users based on their online behaviour, such as their search history or the content they have recently viewed. This form of advertising is becoming increasingly popular and offers several advantages for businesses.

Contextual advertising is used to improve targeting. By understanding what content a user has been viewing, businesses can tailor their ads to match their interests. For example, a golf equipment retailer might target users who have recently searched for golf sets or have visited golf tutorial websites.

Contextual advertising is used to help increase ad relevance. By targeting users actively looking for specific products or services, businesses can increase the likelihood that they will click on their ads. This can lead to higher click-through rates and, ultimately, higher conversions.

Contextual advertising is also used to reduce ad waste. By targeting only those users likely to be interested in a particular product or service, businesses can save money on advertising and ensure the right people see them.

Contextual advertising offers a range of benefits for businesses looking to reach their target audience. Companies can use data to understand user behaviour and interests to create targeted and relevant ads that drive conversions and help grow their bottom line.

How New Balance harnessed the power of contextual advertising

To give an excellent example of the power of contextual advertising, let’s look at the New Balance campaign. This global athletic brand launched a unique running event by projecting its ads onto a nearby billboard. Instead of relying on cookie data for personalised ads, New Balance harnessed the power of contextual advertising.

Using sophisticated algorithms, New Balance’s campaign recognised people running past the billboard, thanks to special sensors, and adapted the content to reflect their goals and interests. They encountered content tailored to their activity level, aspirations, and preferences as they continued to run.

This illustrates how contextual advertising isn’t limited by personalisation based on cookies. Instead, the content is chosen in real-time, according to contextual clues, such as physical activity and digital trends. In addition, it can reach target audiences who might otherwise be unreachable by cookie-based campaigns.

Thanks to this more granular approach, marketers can zero in on their target market with precision and tailor the message more accurately to each consumer. Contextual advertising offers greater reach by allowing marketers to think beyond traditional channels, leading to better engagement with potential customers.

Beyond New Balance’s billboard example, contextual advertising uses geographical location and weather information. By tapping into these factors, marketers can modify ads for the best user experience, depending on the time of day, geographical location, and current conditions. This has the potential to provide a more immersive user experience.

Ultimately, this approach creates campaigns that not only target the right person but also create the proper context, building higher engagement and greater chances of conversions. It offers far more than a cookie-based approach ever could.

Given the impending changes to cookie use and its limitations, it’s clear that contextual advertising is the future of digital marketing. As companies come to terms with the post-cookie era, those that switch to contextual marketing early will find it easier to remain ahead of the competition.

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Advantages of contextual advertising over behavioural advertising

More in-the-moment ads lead to enhanced relevance. 

Contextual advertising enables brands to display ads highly relevant to the user’s immediate interests based on the web page or app content they are currently consuming. In contrast, personalised advertising depends on the user’s past behaviour, which may not accurately reflect their current needs or preferences.

Better Engagement. 

Since contextual advertising is directly related to the content the user is (currently) viewing, it has a better chance of grabbing their attention and prompting them to act. This leads to a higher click-through rate and better conversion rates than behavioural advertising, which may seem intrusive or irrelevant to the user.

Reduced Intrusiveness. 

Contextual advertising is less intrusive as it does not depend on tracking the user’s online behaviour or gathering personal data. Users may perceive behavioural advertising as intrusive, leading to privacy concerns and brand distrust.

Increased Brand Safety. 

With contextual advertising, brands can ensure their ads are displayed on content that aligns with their values and messaging, reducing the risk of association with controversial or inappropriate content. In contrast, personalised advertising may place ads in contexts that do not match the brand’s image, negatively impacting a brand’s reputation.

Better Performance and ROI. 

Contextual advertising is often more cost-effective than behavioural advertising, requiring less data collection and analysis. Brands can also achieve higher conversion rates and ROI as contextual ads are displayed to users who are already interested in related content. This leads to a better return on investment compared to behavioural advertising, which can be hit or miss depending on the accuracy of the user’s past behaviour data.

Challenges in contextual advertising

Inappropriate Ad Placement.

One of the biggest challenges of contextual advertising is ensuring the ad is placed appropriately on a website. A contextual ad may contain content that could be considered inappropriate or offensive for some visitors, so it’s crucial to ensure the ad is displayed only in the right context.

Competition. 

Another challenge for contextual advertising is the competition in the online advertising space. Thousands of other ads run at any given time, and many are targeted toward the same audience, making it harder for your ad to stand out.

Lack of Targeted Audience. 

Ensuring that the right audience sees your contextual ad can be challenging. If the ad is placed on the wrong website, it will likely not reach its intended audience, which means it won’t generate the expected traffic or conversion rates.

You must keep a close eye on your contextual ads as some contexts are too broad for precise targeting, and with so many possible placements, your ad may be quickly out of sight and out of mind.

Difficulty in Tracking Results. With contextual advertising, tracking the results can be difficult as it’s challenging to know if the ad led to a specific conversion or had any impact. The metrics available for measuring success can be confusing and limited.

Ad-blocking Technology. 

Another significant challenge of contextual advertising is ad-blocking technology, which blocks contextual ads on websites. This makes it harder to reach your intended audience and decreases the likelihood of the ad being clicked or generating a conversion. As more people adopt ad-blocking software, contextual advertisers must find creative ways to ensure their ads still reach their target audience.

As marketers have observed, while people prefer ads that are personalised and tailored to their interests, they remain apprehensive about revealing their Personally Identifiable Information (PII) to brands. 

This trepidation is corroborated by many recent studies, revealing that many consumers find it creepy when brands collect their data and browsing habits to deliver targeted ads.

So, what is the best way for brands to produce personalised ads without causing consumers to feel uncomfortable? 

Using contextual ads is one way, as many studies imply consumers find contextual ads more appealing than behavioural ads, as they do not collect any of the user’s personal details. With many tech giants like Apple and Google discontinuing support for third-party cookies, we are seeing a gradual fading out of third-party identifiers, leaving brands to depend on first-and-zero-party data gathered directly from customers. 

Such data, when properly collected, gives brands an advantage in serving their customers with more pertinent ads.

Another critical aspect is building trust. Transparency regarding data collection and the brand’s intentions with that data is paramount to building and retaining consumer trust. 

In a cookie-less world, the significance of contextual advertising cannot be emphasised enough. It is no longer sufficient to rely on user data, especially since there is an increasing demand for privacy and a decline in the use of cookies. Contextual advertising provides targeted and relevant ads and allows brands to maintain their ad campaigns in a way that respects users’ privacy. With the right approach, contextual advertising can improve the user experience, drive conversions and ROI, and boost overall business growth. 

The cookie may be crumbled, but the potential of contextual advertising is limitless. As we navigate the evolving digital landscape, embracing the power of context and its place in advertising will become increasingly important.

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The world is constantly changing, and the way we travel is no exception. From horse-drawn carriages to supersonic jets, the transportation industry has seen incredible innovation and evolution over the years. And with the rise of new technologies, emerging travel trends, and a growing focus on sustainability, the future of travel looks brighter and more exciting than ever.

As a marketer or researcher in the travel industry, staying on top of these trends and changes is essential. After all, understanding the evolution of travel can help you anticipate future developments and identify new market opportunities.

So, let’s take a journey through the evolution of travel, from the early days of transportation to the latest innovations and trends. Along the way, we’ll explore the impact of technology, changing consumer preferences, and environmental concerns and what they mean for the future of travel. Whether you’re a travel industry professional or simply a curious traveller, get ready to discover this dynamic industry’s fascinating history and promising future.

Historical Context.

To truly understand the evolution of travel, it’s important to look back at its rich history. From ancient civilisations to modern times, humans have always wanted to explore new lands and experience new cultures.

Early forms of transportation, such as walking, horseback riding, and sailing, were limited by speed and distance. However, with the advent of the Industrial Revolution in the 18th century, transportation underwent a major transformation. The steam engine was invented, revolutionising travel by enabling faster and more efficient transportation by trains and ships.

The 20th century brought even greater innovations in travel. The invention of the automobile, the Wright brothers’ first flight, and the launch of the first commercial airline all marked significant milestones in the history of travel.

The rise of the automobile led to the growth of road networks and the construction of highways, which made travel more accessible to the masses. With the launch of commercial airlines, air travel became faster and more convenient than ever before, opening up a whole new world of international travel.

However, these new forms of transportation also had their downsides. Increased use of fossil fuels led to rising levels of pollution and greenhouse gas emissions, and air travel, in particular, has been criticised for its environmental impact.

Despite these challenges, the travel industry continued to evolve throughout the 20th century and into the present day. In the next section, we’ll take a closer look at the current state of travel and some of the trends and changes shaping its future.

Current State of Travel.

In recent years, the travel industry has undergone significant changes driven by various factors, such as technological advancements, changing consumer preferences, and the impact of the COVID-19 pandemic.

One of the most significant changes in the travel industry has been the rise of online booking platforms and the democratisation of travel. Online booking sites like Expedia, Booking.com, and Airbnb have made it easier than ever for people to research and book travel options from the comfort of their own homes.

Another major trend in the travel industry has been the rise of experiential travel. Rather than simply visiting tourist attractions, more and more travellers are seeking out immersive experiences that allow them to truly connect with local cultures and communities.

Sustainability has also become an increasingly important concern in the travel industry. Many travellers seek eco-friendly and socially responsible travel options, and many travel companies are responding by promoting sustainable tourism practices.

However, the COVID-19 pandemic has significantly impacted the travel industry. International travel has been severely restricted in many parts of the world, and there has been a shift towards domestic travel and road trips. Additionally, health and safety concerns have become a top priority for travellers, with many opting for travel insurance and flexible booking options.

Despite these challenges, the travel industry remains resilient and adaptable, poised for continued growth in the coming years. In the next section, we’ll explore some of the emerging technologies and trends shaping the future of travel.

Emerging Technologies.

The travel industry is no stranger to technological innovation, and the coming years promise even more exciting developments that could revolutionise how we travel.

One of the most promising areas of innovation is electric vehicles (EVs). Electric cars have become increasingly popular due to their environmental benefits and low operating costs. As battery technology improves, electric cars are becoming more practical for long-distance travel, which could have significant implications for the travel industry.

Another emerging technology with the potential to transform travel is self-driving vehicles. Self-driving cars and buses could make transportation more efficient and reduce congestion on roads while offering passengers a more relaxing and enjoyable travel experience.

In the aviation industry, supersonic air travel could soon become a reality. Several companies are developing supersonic planes that could travel at speeds of up to Mach 2.2, cutting travel times in half for long-haul flights.

Virtual and augmented reality technology could also play a significant role in the future of travel. VR and AR experiences could allow travellers to explore destinations and attractions from their homes or enhance their in-person travel experiences with immersive digital content.

Finally, blockchain technology is another emerging trend that could significantly impact the travel industry. Blockchain can help improve travel safety and security, streamline booking and payment processes, and reduce the risk of fraud.

Overall, the future of travel is looking brighter and more exciting than ever, thanks to these emerging technologies and trends. The travel industry is constantly evolving, and marketers and researchers must stay on top of these developments to identify new opportunities and stay ahead of the curve.

Environmental Impact.

While the travel industry offers endless opportunities for exploration and adventure, it also has a significant environmental impact. From carbon emissions to waste generation, travel can negatively affect the planet.

As travellers become more aware of these issues, there has been a growing interest in sustainable travel options. Many travellers seek out eco-friendly hotels, travel by train instead of a plane, and participate in voluntourism programs that allow them to give back to local communities.

The travel industry is also taking steps to reduce its environmental impact. For example, airlines are investing in more fuel-efficient planes and implementing recycling programs, while hotels are adopting energy-efficient lighting and water-saving initiatives.

One promising development in the travel industry is the growth of sustainable tourism. This involves travel that is both environmentally and socially responsible, taking into account the impact on local communities and ecosystems.

In addition, many governments and organisations are taking action to promote sustainable travel practices. The United Nations has designated 2017-2027 as the Decade of Sustainable Tourism, focusing on promoting responsible tourism practices and sustainable economic growth.

Ultimately, the travel industry is responsible for minimising its environmental impact and promoting sustainable practices. By embracing sustainability and promoting eco-friendly travel options, the industry can continue growing while preserving the planet for future generations.

Market Opportunities.

The evolution of travel has created numerous market opportunities for businesses in the travel industry. As consumer preferences and technological advancements evolve, new business models and revenue streams emerge.

One significant market opportunity is the rise of experiential travel. Rather than simply booking a hotel and visiting tourist attractions, many travellers seek unique and immersive experiences that allow them to connect with local cultures and communities. This trend has created opportunities for businesses that offer authentic and personalised travel experiences, such as local tour operators and vacation rental companies.

Another market opportunity is the growth of sustainable tourism. As travellers become more environmentally and socially conscious, there is increasing demand for eco-friendly and socially responsible travel options. This has created opportunities for businesses that prioritise sustainability, such as hotels and tour operators that offer environmentally-friendly practices and support local communities.

The rise of technology has also created new market opportunities in the travel industry. Online booking platforms, mobile apps, and other digital tools have made it easier than ever for travellers to research and book travel options. This has created opportunities for businesses offering innovative and user-friendly digital platforms, such as travel booking sites and apps.

Finally, the COVID-19 pandemic has created new market opportunities in the travel industry. As more people work remotely, there is a growing demand for extended-stay travel options such as vacation rentals, co-living spaces, and work-from-anywhere packages. Additionally, businesses prioritising health and safety measures, such as contactless check-in and cleaning protocols, have a competitive advantage in the current climate.

Case Study: TUI Group – Embracing Sustainability and the Modern Traveller.

TUI Group is a leading travel and tourism company offering a range of products and services to travellers worldwide. With a history that dates back to the 19th century, TUI Group has evolved and adapted to changing consumer preferences and market trends. In recent years, TUI Group has made sustainability a core value and developed a sustainability strategy that aligns with the changing expectations of modern travellers.

TUI Group’s sustainability strategy is based on three pillars: reducing carbon emissions, promoting sustainable tourism practices, and supporting local communities. By prioritising sustainability, TUI Group aims to differentiate itself from competitors and appeal to environmentally-conscious travellers.

One key aspect of TUI Group’s sustainability strategy is its focus on reducing carbon emissions. TUI Group has set ambitious targets for reducing carbon emissions, including a goal of becoming carbon-neutral by 2050. To achieve this goal, TUI Group is investing in more fuel-efficient aircraft, reducing plastic waste generated by its operations, and promoting sustainable transportation options for travellers.

In addition to reducing carbon emissions, TUI Group is also focused on promoting sustainable tourism practices. This includes offering sustainable tourism experiences, such as eco-tourism and wildlife tours, and partnering with local organisations to promote sustainable tourism in destinations around the world.

Another vital aspect of TUI Group’s sustainability strategy is its commitment to supporting local communities. TUI Group works with local organisations to promote economic development and sustainable tourism in destinations around the world. This includes supporting local businesses, promoting cultural exchange, and investing in community development projects.

By prioritising sustainability, TUI Group is capitalising on a growing trend among modern travellers who are increasingly interested in eco-tourism and sustainable travel practices. According to a 2019 survey by Booking.com, 70% of global travellers said they would be more likely to book environmentally friendly accommodations.

In addition to its sustainability efforts, TUI Group has also embraced other emerging trends and preferences of modern travellers. For example, TUI Group has invested in digital technologies to improve the customer experience and offer personalised recommendations for travellers. TUI Group’s digital platforms allow travellers to book trips, customise itineraries, and access travel information from their mobile devices.

Overall, TUI Group’s sustainability strategy and focus on emerging trends and preferences of modern travellers have helped the company differentiate itself from competitors and build a loyal customer base. By continuing to innovate and adapt to changing market trends, TUI Group is well-positioned to succeed in the rapidly-evolving travel industry.

Social Media and the Future of Travel Marketing.

Social media has revolutionised how people plan, book, and share travel experiences. Platforms like Instagram, Facebook, and Twitter have made it easier than ever for travellers to research destinations, find inspiration, and share their experiences with others.

For brands in the travel industry, social media offers a powerful tool for connecting with travellers and promoting their products and services. By leveraging social media platforms effectively, businesses can build brand awareness, engage with customers, and drive bookings.

One of the key advantages of social media for travel businesses is the ability to showcase their products and services in a visually compelling way. Platforms like Instagram are particularly well-suited for travel marketing, as they allow travel brands to share beautiful images and videos that inspire travellers and highlight their unique selling points.

In addition to promoting products and services, social media can also be used to provide customer service and support. Travellers can use social media to ask questions, make bookings, and get assistance with any issues during their trip.

Another important use of social media in the travel industry is influencer marketing. By partnering with social media influencers with large followings in the travel space, brands can tap into new audiences and build credibility with potential customers.

However, businesses need to use social media strategically and thoughtfully. They should identify their target audience, develop a clear brand voice, and create content that resonates with their customers. Additionally, they should monitor social media channels regularly and respond to customer feedback promptly and effectively.

Social media offers travel businesses tremendous opportunities to connect with customers, build brand awareness, and drive bookings. By embracing social media and using it effectively, businesses can stay competitive in the rapidly-evolving travel industry.

The AI Revolution in Travel: Chatbots, Predictive Analytics, and Personalised Recommendations.

Artificial intelligence (AI) is revolutionising the travel industry, offering new ways for businesses to personalise the travel experience and streamline operations.

One of the most visible uses of AI in the travel industry is chatbots. These automated messaging platforms can handle various customer service inquiries, from booking reservations to answering questions about travel policies. By leveraging chatbots, travel businesses can improve the customer experience, reduce wait times, and free up staff to focus on other tasks.

Another important use of AI in the travel industry is predictive analytics. AI algorithms can identify patterns and predict future travel trends by analyzing vast amounts of data. This can help businesses make more informed pricing, marketing, and inventory management decisions.

Personalised recommendations are another key area of AI in the travel industry. AI algorithms can provide personalised recommendations for destinations, activities, and accommodations by analyzing data about a customer’s travel history and preferences. This can help businesses improve the customer experience, increase customer loyalty, and drive more bookings.

Additionally, AI can be used to improve travel safety and security. For example, AI algorithms can analyze passenger data to identify potential security threats and flag them for further screening.

While AI offers many opportunities in the travel industry, using it responsibly and transparently is important. Customers may be wary of AI if they feel their privacy is compromised or don’t understand how the technology is used.

Adventure Tourism: A Growing Market for Travel Businesses.

Adventure tourism has emerged as a significant market segment in the travel industry, with more and more travellers seeking unique and exciting experiences that allow them to connect with nature and push their limits.

From trekking in the Himalayas to kayaking in Patagonia, adventure tourism offers travellers the chance to explore some of the world’s most beautiful and remote destinations while engaging in physically and mentally challenging activities.

For travel brands, adventure tourism represents a significant growth opportunity. By offering unique and immersive adventure experiences, businesses can differentiate themselves from competitors and attract travellers willing to pay a premium for these types of experiences.

To cater to the adventure tourism market, businesses must first identify their target audience and develop products and services that meet their needs. This may involve partnering with local adventure tour operators, offering customised itineraries, and providing specialised equipment and training.

In addition, businesses must prioritise safety and risk management in adventure tourism. This may involve hiring experienced guides and instructors, providing appropriate safety equipment, and developing emergency response plans.

Finally, businesses must also consider the environmental impact of adventure tourism and take steps to minimise their footprint. This may involve promoting sustainable travel practices, supporting local conservation efforts, and minimising waste and pollution.

Changing Demographics and the Future of Travel.

As the world’s population ages and becomes more diverse, the travel industry faces new challenges and opportunities. Two key demographic trends that significantly impact the sector are the rise of solo travel and the growth of senior travellers.

Solo travel has become a significant trend recently, particularly among younger generations. Many solo travellers seek new experiences and opportunities for personal growth and are willing to take on the challenges and risks of travelling alone.

For travel brands, this trend presents both opportunities and challenges. On the one hand, solo travellers may be more likely to book high-end experiences and luxury accommodations since they are not sharing the costs with other travellers. On the other hand, brands must be prepared to address solo travellers’ unique needs and concerns, such as safety and security.

The growth of senior travellers is another significant demographic trend in the travel industry. As the baby boomer generation reaches retirement age, they increasingly seek new travel experiences and destinations. 

Many senior travellers seek opportunities to explore new cultures, reconnect with family and friends, and pursue lifelong passions.

For travel brands, the growth of senior travellers presents significant opportunities to develop specialised products and services that cater to this market. For example, brands may offer senior-friendly accommodations, specialised tours and excursions, and other travel options tailored to senior travellers’ unique needs and preferences.

Leveraging Market Research to Build Successful Travel Brands.

Market research is essential for travel brands that want to stay competitive in the rapidly-evolving travel industry. By gathering and analyzing data about customer preferences, behaviour, and attitudes, travel brands can develop more effective marketing strategies, optimise their products and services, and build stronger customer relationships.

One key area where market research can be particularly valuable is in identifying emerging travel trends and consumer preferences. By staying on top of industry trends and understanding what motivates travellers to make their travel decisions, travel brands can develop more effective marketing campaigns and offer products and services that better meet customer needs.

Market research can also help travel brands optimise pricing and revenue management strategies. Travel brands can adjust their pricing strategies by analyzing customer behaviour and demand patterns to maximise revenue and profitability.

Another area where market research can be valuable is in developing more effective customer engagement strategies. By gathering customer feedback and analyzing their preferences and behaviour, travel brands can develop more personalised and effective marketing campaigns and improve their customer service and support.

Finally, market research can help travel brands improve their products and services by identifying areas for improvement and uncovering unmet customer needs. By gathering customer feedback about their travel experiences, travel brands can identify areas where they can improve and new opportunities to innovate and differentiate themselves from competitors.

Future Outlook.

As the travel industry continues to evolve, many exciting developments on the horizon could transform the way we travel.

One promising area of innovation is the development of sustainable transportation options. Electric cars, self-driving vehicles, and high-speed rail can reduce carbon emissions and promote sustainable travel.

Another potential trend is the growth of personalised travel. As technology advances, it may become possible to offer highly personalised travel experiences based on individual preferences and interests. This could include customised itineraries, tailored recommendations, and unique travel experiences that are tailored to each traveller.

The growth of the sharing economy is also expected to significantly impact the future of travel. Platforms like Airbnb, Uber, and Lyft have already disrupted the traditional travel industry, and as these platforms continue to evolve, they could offer even more innovative and convenient travel options.

Finally, the COVID-19 pandemic will likely have a lasting impact on the travel industry. While the pandemic has created significant challenges, it has also spurred innovation and forced businesses to adapt to changing circumstances. As travel resumes in the post-pandemic world, it will be interesting to see how these changes continue to shape the travel industry.

Overall, the future of travel looks brighter and more exciting than ever. By embracing emerging technologies, promoting sustainability, and responding to changing consumer preferences, the travel industry is poised for continued growth and innovation in the years to come.

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Once commonly perceived as twenty-somethings backpacking from one hostel to another, looking for a spot to plug in their laptops, the meaning of digital nomads today is not quite the same as it used to be. 

Due to the rise of flexible work arrangements, a new breed of digital nomads has emerged, one that merges work, play, and purpose. Dubbed “anywhere workers” in a recent Lonely Planet survey, most work in high-tech fields, with 61% working full-time. 

The work-from-home to the work-from-anywhere trend has fueled the growth of bleisure travel —one that combines business with leisure, and it’s here to stay. 

Let’s look at how a leading vacation rental brand profits from the rise of bleisure travel in an interesting case study. 

Long-Term Stays Surging on Airbnb as Remote Work Continues to Drive Travel Trends.

Airbnb, Inc. is an online marketplace founded in 2008 by Brian Chesky, Nathan Blecharczyk, and Joe Gebbia, with headquarters in San Francisco. The company facilitates short-term homestays and experiences by acting as a broker and charging a commission for each booking made through its platform.

This trend can potentially impact the office property and hotel markets as remote workers prioritise more flexible accommodation options.

The company used the WFA trend to pull itself out of the pre-pandemic slump. 

How Airbnb capitalised on this travel trend both internally and externally.

Airbnb reported over 100 million bookings during the first quarter of 2022, a record that underscores a rebound made possible thanks to various cost-cutting measures and the tech giant’s focus on capturing business from remote workers.

Airbnb conveyed to its 6,000-person workforce, half of whom are based in the United States, that they would not be required to return to an office if they choose not to. Instead, the company’s “Work From Anywhere” policy enables employees to move anywhere within their home country without affecting their compensation. Under the policy, workers are expected to attend in-person meetings once per quarter for a week. Additionally, starting in September, employees can live and work anywhere worldwide for up to 90 days each year.

According to CEO Brian Chesky, the company has successfully managed to navigate through the pandemic, rebuilt the company, went public, upgraded its services, and achieved record earnings, all while working remotely. 

Airbnb launched its “Live and work anywhere on Airbnb” initiative to lure remote workers.

  • Airbnb launched remote working hubs in 2022 across various countries.
  • The remote working hubs provide Airbnb with another way to tap into entrepreneurs as guests.
  • Airbnb is forming more partnerships with local and national governments to launch remote working hubs and other initiatives to drive tourists to remote destinations, like The Bali remote working hub in partnership with the Ministry of Tourism and Creative Economy of the Republic of Indonesia.  

Airbnb aims to expand its offerings to capture more short-term and long-term stay bookings, presenting a valuable new use case for the platform beyond traditional travel.

Our Insights on Airbnb’s “Live and Work Anywhere” Initiative in 2023.

Remote work, whether occasional or long-term digital nomadism, has become a permanent part of the post-pandemic work culture. This shift allows Airbnb to attract more short-term and long-term stay bookings.

In 2023, Airbnb aims to expand its offerings to capture these stays, as they present a valuable new application for the platform beyond conventional travel. 

This expansion also allows AirBnB to demonstrate an increase in its total addressable market (TAM) beyond short-stays and tourists.

The Results

The surge in remote work has driven a significant increase in long-term stays of 28 days or more, which have become the fastest-growing category on Airbnb compared to 2019. 

  • Over 100 million bookings
  • 70% year-over-year increase
  • $1.5 billion Revenue
  • More than doubled – Extended stays
  • 20% of gross nights booked- Extended stays

Want to learn more about the latest travel and tourism trends? Download our report Navigating emerging trends in global travel and tourism, here.

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As the world becomes more conscious of the impact of climate change and the need for sustainability, the travel industry has begun to feel pressure to adopt more eco-friendly and sustainable practices.

Eco-friendly and sustainable travel is becoming more important to travellers who want to ensure their trips are not damaging the environment. In this blog post, we will discuss how travel brands can become more sustainable and what they can do to reduce their carbon footprint.

The Importance of Eco-Friendly and Sustainable Travel

Eco-friendly and sustainable travel is important because it helps reduce tourism’s negative impact on the environment. The travel industry significantly contributes to carbon emissions, contributing to climate change. Sustainable travel practices can reduce the carbon footprint of travel, protect natural habitats and wildlife, and support local communities.

Appealing to the Eco-Conscious Traveler

Eco-conscious travellers are increasingly looking for travel brands that have sustainable practices. Travel brands can appeal to these travellers by promoting eco-friendly practices and offering sustainable travel options. For example, hotels can provide guests with reusable water bottles, use energy-efficient lighting, and reduce waste through recycling and composting.

The Price of sustainable travel.

According to recent survey results, sustainability in travel comes at a cost that not all consumers are willing to pay. 

Booking.com’s recent research suggests that travellers struggle to balance their desire to save money with their inclination to make more sustainable choices. The study gathered insights from over 33,000 travellers across 35 countries and territories. It found that 40% of respondents anticipate environmental deterioration in the next six months, while 63% expect a worsening of the cost-of-living crisis. This creates a dilemma for travellers as they try to balance their priorities with the demands of daily life. They’re unsure what to prioritise as they work to reconcile what’s important to them with practical constraints.

In addition to cost, another survey found that nearly 70% of consumers were willing to forego convenience to become more sustainable travellers.

Travellers are now more than ever concerned about their impact on the environment and the communities they visit. Consequently, they seek reliable information and authentic commitments to inform their decisions. 

Our latest report on trends in global travel provides insight into how sustainable travel can capture demand from mindful travellers, highlighting how travel brands can highlight sustainability initiatives to encourage awareness.

Reducing Carbon Footprint.

Aviation brands, cruiseliners, hotels, and tour services can reduce their carbon footprint by adopting sustainable practices. Airlines can invest in fuel-efficient planes, use biofuels, and implement carbon offset programs.

Cruiseliners can use renewable energy sources, install energy-efficient lighting, and reduce waste through recycling and composting. Hotels can install solar panels, use energy-efficient lighting, and reduce waste through recycling and composting.

Tour services can use eco-friendly transportation, such as bikes or electric cars, and promote sustainable tourism practices.

There are many opportunities for travel brands that embrace sustainability. 

  • Meeting consumer demand.
    Travel brands that become more sustainable and eco-friendly can tap into the growing demand from consumers who want to reduce their environmental impact when travelling.
  • Differentiation.
    By embracing sustainability and eco-friendliness, travel brands can differentiate themselves from competitors and build a unique brand identity that appeals to eco-conscious travellers.
  • Cost savings.
    Sustainable practices can result in cost savings for travel brands in the long run, such as by reducing energy and water usage and minimising waste.
  • Positive impact.
    Travel brands embracing sustainability can positively impact the environment, local communities, and cultures they visit, enhancing their reputation and brand image.

There are also barriers and obstacles on the path to becoming a sustainable travel brand. 

  • Increased costs.
    Becoming more sustainable and eco-friendly often involves significant upfront investments in technology, infrastructure, and employee training, which may increase costs for travel brands.
  • Consumer scepticism and greenwashing.
    Some consumers may doubt the authenticity of travel brands’ sustainability claims, leading to scepticism or even mistrust.
  • Limited availability of sustainable options.
    In some destinations, sustainable options may be limited, making it challenging for travel brands to provide eco-friendly products and services.
  • Regulatory compliance.
    Travel brands may face additional regulatory requirements for sustainability and eco-friendliness, which can increase costs and administrative burdens.

Travel Brands profit by incorporating sustainability in their corporate strategy.

The pandemic has prompted some governments and companies to tout sustainability as part of their corporate strategy — or at least their future modus operandi.

Leading global travel brands have reduced their carbon footprint and promoted sustainable travel practices. 

We already know driving sustainability awareness is good for brands. Expedia Group Media Solutions’ Q1 2022 Travel Trend Report revealed that, by the end of March, the 4,300 hotels that had signed the UNESCO Sustainable Travel Pledge experienced a week-over-week booking increase of almost 25%. 

This compared favourably to a 15% increase for non-pledged hotels in 2022. Furthermore, the pledged hotels had higher average daily rates and longer lengths of stay than the global average across Expedia Group points of sale.

In the US, Delta Air Lines has committed to reducing its carbon footprint by 50% by 2050. 

Intrepid Travel has pledged to become climate positive in the UK by 2025. 

“Rather than overshadow the issue, the Covid-19 pandemic has roughly doubled the rate at which businesses and local governments commit to reaching net zero.”
Nora Lovell-Marchant, Vice President of Global Sustainability at American Express Global Business Travel.

In Singapore, Banyan Tree Hotels and Resorts has implemented sustainability practices in its properties. In Japan, ANA Holdings has invested in biofuels and electric planes. 

In China, Ctrip has launched an eco-friendly hotel program. In Thailand, The Siam Hotel has implemented sustainable practices, such as using recycled materials in its construction. 

In India, Lemon Tree Hotels has installed solar panels and implemented sustainable practices in its hotels.

Types of Sustainable and Eco-Friendly Travel.

Sustainable and eco-friendly travel can take many forms, including eco-travel, environmental, volunteer, and responsible tourism. Eco travel involves visiting natural areas while minimising the impact on the environment. Environmental travel focuses on the conservation and protection of natural habitats and wildlife. Volunteer travel involves working on conservation or community projects. Responsible tourism involves travelling in a way that minimises negative impacts on the environment and benefits local communities.

Business travel is a high-priority area in most organisations. 

Sustainable practices are not only limited to leisure travel but also to business travel. Business travel significantly contributes to many organisations’ carbon footprint, and companies must adopt sustainable practices to reduce their environmental impact. As consumers become more eco-conscious, they expect organisations to prioritise sustainability in their operations, including business travel.

Importance of Sustainability in Business Travel.

Sustainability in business travel is essential for several reasons. Reducing the carbon footprint of business travel can help organisations achieve their sustainability goals and reduce their environmental impact. Sustainable business travel practices can also help companies save costs by reducing the number of trips, choosing sustainable airlines, hotels, and rentals, and using eco-friendly transportation options. Sustainable business travel practices can enhance organisations’ brand reputation, increasing loyalty from eco-conscious customers and employees.

Leading Companies and Sustainable Business Travel.

Leading companies have recognised the importance of sustainable business travel and have taken steps to reduce their carbon footprint. For example, Microsoft has pledged to become carbon negative by 2030 and has introduced a range of initiatives to reduce the carbon footprint of its business travel. These include encouraging virtual meetings, offsetting carbon emissions from flights, and using public transportation or electric cars for local travel.

In the travel industry, Hilton has introduced a range of sustainability initiatives in its hotels to reduce its environmental impact. These include reducing waste, conserving water, and using renewable energy sources. The company has also introduced a sustainability measurement tool that helps hotels to track and improve their sustainability performance.

In terms of transportation, Delta Air Lines has committed to becoming carbon neutral by 2030 and has introduced a range of measures to reduce its carbon footprint. These include investing in fuel-efficient planes, using biofuels, and introducing carbon offset programs for its customers.

Google’s eco-friendly search tool helps travellers cut through the industry greenwashing.

Google has been continuously introducing new features to help consumers choose sustainable options when using its services like Google Maps, Google Flights, and hotel search. In September 2022, the company announced the expansion of these efforts by introducing several new features enabling travellers to filter their searches and make sustainable choices when booking flights, hotels, and trains.

These new allow consumers to view eco-related information about their travel choices, such as estimated carbon emissions on flights and whether hotels have an ecolabel from a trusted third-party group.

Now, web searchers can filter their flight and hotel searches to remove non-sustainable options and book trains more easily through Google’s services.

To cater to eco-conscious air travellers, Google Flights adds a “Low Emissions” filter, allowing users to view flights with lower emissions than similar trips. When searching for hotels on Google.com/travel, users can click on a new “eco-certified” filter to browse a list containing only eco-certified properties.

What Companies Can Do to Ensure Sustainable Business Travel?

To ensure sustainable business travel, companies can take several steps, including:

  • Encouraging virtual meetings: Virtual meetings can reduce the need for business travel, thereby reducing organisations’ carbon footprint.
  • Choosing sustainable airlines, hotels, and rentals: Companies can choose airlines, hotels, and rentals with sustainable practices, such as using renewable energy sources, reducing waste, and conserving water.
  • Using eco-friendly transportation options: Companies can use eco-friendly transportation options, such as public transportation or electric cars, for local travel.
  • Reducing the number of trips: Companies can reduce the number of trips by encouraging employees to combine business and leisure trips or using video conferencing for internal meetings.
  • Offsetting carbon emissions: Companies can offset carbon emissions from business travel by investing in carbon offset programs, which fund renewable energy projects and help to reduce carbon emissions.

Sustainable business travel is becoming increasingly important for organisations that want to reduce their environmental impact and meet the expectations of eco-conscious customers and employees. Leading companies have already reduced their carbon footprint and promoted sustainable business travel practices. Organisations can ensure sustainable business travel by encouraging virtual meetings, choosing sustainable airlines, hotels, and rentals, using eco-friendly transportation options, reducing the number of trips, and offsetting carbon emissions. 

Organisations can achieve sustainability goals by prioritising sustainability in business travel, saving costs, and enhancing their brand reputation.

The Future of Sustainable Travel.

The future of sustainable travel looks promising as more travel brands adopt sustainable practices and more travellers demand eco-friendly options. The use of renewable energy sources, such as solar and wind power, is expected to increase in the travel industry. Electric planes, trains, and cars will also become more prevalent. Travellers will continue seeking sustainable and eco-friendly travel options, and travel brands must adapt to meet this demand.

Eco-friendly and sustainable travel is becoming increasingly important to travellers who want to ensure their trips are not damaging the environment. By adopting sustainable practices, travel brands can reduce their carbon footprint and appeal to eco-conscious travellers. Leading global travel brands have already taken steps to reduce their impact on the environment, and the future of sustainable travel looks promising as more travel brands and travellers embrace eco-friendly practices.

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The academic and business press may have criticized customer rewards for being cheap promotional tools and short-term fads, but they have been around forever, and more brands are embracing rewards programs rather than shying away from them. Many organisations are investing millions of dollars in creating and executing innovative rewards programs, ranging from frequent flyer offers by airlines to reduced fees by telecommunications companies to increase and retain their customer base.

Customer loyalty programs remain a popular marketing strategy brands use to increase customer retention and promote customer loyalty. These programs typically offer rewards, discounts, or other incentives to customers who make repeat purchases or engage in other loyal behaviours. 

But do they really work? 

In today’s business landscape, it is becoming increasingly common for senior leaders to request that their marketing teams evaluate the potential impact of loyalty marketing initiatives. 

The fundamental question is whether such programs foster additional customer loyalty beyond what would typically result from the inherent value of the product or service offered. Additionally, brands must scrutinise their loyalty programs to determine whether they truly encourage customers to spend more or merely incentivise them to make repeat purchases. And in a highly competitive marketplace, are loyalty marketing programs a viable solution for every organisation seeking to improve customer loyalty?

Engineering the economics of a loyalty program’s structure is key. 

It is a well-known fact in business and marketing that retaining customers is more valuable than acquiring new ones, which is why rewarding frequent buyers makes sense. 

So how can a brand go wrong with a simple loyalty program?

While you can get people to buy again from you by offering them rewards, how do you ensure you also profit when you get a repeat purchase? 

This is where many loyalty programs fall short. A lot goes into creating an effective rewards program. First, it has to be good enough to change the customer’s behaviour in your favour, and yet, it should not be so generous that it shrinks margins. You must also understand your consumers, as the same reward often encourages varying purchase behaviours. 

Our research at Kadence has uncovered some patterns in successful and effective loyalty programs. These findings may be used as a toolkit to create a successful rewards program for any consumer-facing brand. 

Let’s explore with real-world examples how to ensure the effectiveness of a customer loyalty program, but first, let’s dive into the origins of loyalty programs and how they work. 

History and Origins of Loyalty Programs

The origins of loyalty programs can be traced back to the late 18th century when American retailers began offering customers copper tokens that could be redeemed for goods. However, it was in the 1980s that loyalty programs began to gain widespread popularity. American Airlines AAdvantage program is often credited as the first modern loyalty program, launched in 1981. Since then, loyalty programs have become an increasingly popular marketing tool brands use in various industries, from retail and hospitality to finance and healthcare.

What goals do loyalty programs strive to achieve?

While loyalty programs do not create an unwavering devotion or faithfulness to a brand in the true sense of the word, they can help accomplish many business goals. It is critical to start with a goal. What are we trying to achieve with the loyalty program? Is the goal to keep customers from moving to other brands, or is it to prompt customers to make additional purchases they would not have typically made, or is it to get a larger share of the wallet?

Once you know your goal, it’s easier to zero in on the most suitable loyalty program structure and engineer an economically viable rewards program. 

For brands with a higher lifetime value, like a mobile service or internet provider, it is crucial to keep the customers from falling off into the hands of the competitor. The goal for such companies is often to create a loyalty program that makes the exit difficult for customers because of the incentives or point system. 

How do loyalty programs work?

Customer loyalty programs are designed to encourage repeat business from customers by offering them incentives and rewards for their loyalty. The programs provide customers with points, discounts, freebies, or other rewards based on their level of engagement with a business or brand.

Customers typically sign up for the loyalty program by providing their contact information, such as name, email, and phone number. They then earn points or rewards by making purchases referring friends, or engaging with the brand in other ways.

As customers accumulate points or reach certain milestones, they can redeem them for rewards such as free products, discounts on future purchases, or exclusive perks.

Loyalty programs also provide businesses with valuable customer data, which can be used to personalise marketing messages, improve customer experiences, and tailor rewards to individual preferences.

Any customer loyalty program aims to foster long-term customer relationships, increasing retention and loyalty and ultimately driving revenue growth.

types of loyalty programs

Many brands have recently flipped the script on tiered loyalty programs. 

When T-Mobile, a wireless voice, messaging, and data services provider, sought a fresh approach to express gratitude for its customers’ support and rapid growth, it went against the tide. Seeing that traditional loyalty programs were a decent way to generate additional sales but a lousy way to thank customers, T-Mobile wanted to prove the brand’s loyalty to customers instead of the other way around. 

The result was T-Mobile Tuesdays, a customer appreciation program that offered simple, easy access to free stuff and great deals every Tuesday without forcing customers to spend more with T-Mobile. It was a fresh take on loyalty programs that proved to be highly successful, with customers enjoying well over $1 billion worth of freebies and exclusive discounts in the five years since the program began. In contrast to most companies’ traditional loyalty programs that ask too much of their customers and give little back in return, T-Mobile’s program is unique in that it values and rewards all customers equally.

Many brands utilise loyalty programs to sell other products and services. This helps them set their sights higher to capture sales that would otherwise not be made. Multi-tiered rewards work best in this scenario. An increasing number of airline and retail brands use this reward system. Sephora has been very successful with its VIB program, which provides rewards and incentives commensurate with the value of purchases made within a given year.

A point-based system works well for the goods and services we frequently purchase in smaller quantities. Many hotels, grocery stores, and retailers use this system to reward customers based on points for every dollar spent. Customers are more likely to consolidate purchases with a single brand when rewarded in cash. 

Well-thought-out rewards or loyalty programs also help brands access valuable customer data. So while many grocery store programs may not promote loyalty because they are just giving out a membership card for special pricing, they have a wealth of information about their customers, which allows them to customise offers for every customer. However, orchestrating the insights from data requires a substantial investment in data analysis tools and a dedicated team for the job. 

technology and customer loyalty programs

How consumer psychology plays a crucial role in the structure and type of rewards program. 

Numerous studies have indicated that members tend to utilise loyalty programs more frequently as they progress further in the program, while their participation initially is uncertain. 

At the beginning of their membership, they may feel distant from the rewards since they have yet to make any progress and need to understand how achievable the goals are. This is where the principle of the endowed progress effect comes into play. The endowed progress effect states that people with artificial advancement toward a goal exhibit greater persistence toward reaching it. This is used to create effective loyalty programs to prevent customers from losing interest in the loyalty program. This is why many brands throw in bonus points to get them started. 

While a growing number of brands offer a buy–ten-get-one-free promo to keep customers from going to competitive brands, it may be more valuable to create a program that provides customers with a taste of something new and increases the range of products or services they buy from you. For instance, the US-based fast-casual chain Panera Bread offers a pastry or other such item to reward its regulars. Starbucks offers many different rewards, including free drinks, food items, and even merchandise, which must be redeemed within a period. This also helps promote the app as it helps keep track of the rewards. 

Many airlines use this strategy and upgrade their travellers to business class when they have empty seats, which gives their regular customers a taste of luxury and motivates them to purchase in the future.

fitness-tech-trends

The importance of measuring the effectiveness of customer loyalty programs.

While customer loyalty programs can effectively increase customer retention and loyalty, they often fall flat. It is critical to measure the effectiveness of these programs to ensure they achieve the desired results. This is where market research comes in. 

Market research is invaluable in devising the most effective loyalty programs and measuring their effectiveness. 

Here are some reasons why measuring loyalty programs is essential:

Know the ROI of your loyalty program.

Measuring the effectiveness of a loyalty program allows companies to determine the Return On Investment (ROI) of their loyalty program. This helps brands understand the costs and benefits of the program and whether it is worth continuing or making changes.

Customer Retention. 

If the program is not effectively retaining customers, brands may need to make changes to improve its effectiveness.

Customer Satisfaction. 

This information can be used to identify areas for improvement and make changes to better meet the needs and preferences of customers.

Competitive Advantage. 

A well-designed and effective loyalty program can provide a competitive advantage for companies. Measuring the program allows brands to understand how they perform compared to their competitors, make changes to improve their program, and stay ahead of the competition.

Customer Insights. 

By tracking customer spending, engagement, and satisfaction, brands can better understand customers and make data-driven decisions about loyalty programs and other marketing initiatives.

How to use market research to measure the effectiveness of customer loyalty programs.

Customer loyalty programs are an effective way to increase customer retention and loyalty. However, it is essential to measure their effectiveness to ensure they achieve the intended results. Market research allows brands to make data-driven decisions that drive customer loyalty and revenue growth.

Step 1: Define Your Objectives.

The first step in measuring the effectiveness of a customer loyalty program is to define your objectives. What are you hoping to achieve with your program? Is it improved customer retention, increased customer spending, or something else?

Defining your objectives will help you determine the metrics you need to measure and the research methods you will use.

Step 2: Choose Your Metrics.

Once you have defined your objectives, you need to choose the metrics you will use to measure the effectiveness of your loyalty program. 

Some standard metrics used to measure loyalty program effectiveness include:

  • Customer retention rate: The percentage of customers who continue to do business with your company after joining your loyalty program.
  • Customer spending: The amount of money customers spend on your products or services after joining your loyalty program.
  • Customer satisfaction: Customers’ satisfaction with your loyalty program and your company overall.
  • Referral rate: The number of customers who refer new customers to your company.

Step 3: Conduct Market Research.

Once you have defined your objectives and chosen your metrics, it’s time to conduct market research to measure the effectiveness of your loyalty program. 

You can use several research methods, including surveys, focus groups, and interviews.

Surveys are one of the most common research methods used to measure the effectiveness of customer loyalty programs. Surveys can collect data on customer retention, spending, satisfaction, and referral rates. They can be conducted online, by phone, or in person and can be targeted to specific groups of customers.

Focus groups and interviews are also effective research methods for measuring loyalty program effectiveness. These methods allow you to gather more in-depth customer feedback and understand their experiences with your loyalty program.

Step 4: Analyse Your Data.

Once you have collected your data, it’s time to analyse it. Look for patterns and trends in your data and compare them to your objectives and metrics. This will help you understand your loyalty program’s effectiveness and identify improvement areas.

Step 5: Make Improvements.

Based on your analysis, make any necessary improvements to your loyalty program. This could involve changing your rewards program, improving your customer service, or making other changes to meet the needs and expectations of your customers.

Many brands are using market research to measure the effectiveness of their customer loyalty programs. 

beauty-trends

Examples of global brands doing rewards right. 

Starbucks is known for its highly successful customer loyalty program, Starbucks Rewards. Sephora’s Beauty Insider Program is another successful loyalty program that uses market research to measure effectiveness. The Insider tier is free to join, while VIB and Rouge tiers require customers to spend specific amounts yearly. 

Sephora’s tiered program is highly impactful due to the sense of exclusivity created by the upper tiers. Tiered programs are successful when the upper tiers have a limited number of members, typically around 10%. This way, the most loyal customers feel a sense of accomplishment, motivating other customers to strive for the same. Sephora’s Beauty Insider program segments customers into three groups: Beauty Insiders, VIB, and VIB Rouge, effectively establishing a hierarchy.

Tiers contribute to the gamification aspect of Sephora’s loyalty program and influence customer behaviour, and motivating customers to strive for each new tier is the key to high engagement. Sephora has mastered this strategy, as evident from the feedback shared by its members on social media.

The program offers customers exclusive discounts, free samples, and other perks that align with its customer base. The brand also uses AI to make personalised recommendations. 

In the retail world, Amazon Prime, US-based Target Circle, India-based Flipkart Plus, Japan-based Rakuten Super Points, China-based Tmall Super Member, Singapore-based GrabRewards, and UK-based Tesco Club cards are excellent examples, as are many frequent flier programs like the Southwest rapid rewards card. 

Ensuring the effectiveness of a company’s loyalty program involves first defining its purpose. This entails meticulously considering the program’s design elements, including the rewards’ value and type and the methods of awarding and redemption. The key to a successful program is its efficient and consistent implementation. 

Loyalty programs have come a long way since their inception in the late 18th century. From American Airlines’ AAdvantage program to the modern loyalty programs of today, these have become essential marketing tools brands use to increase customer loyalty and drive revenue. While expecting absolute loyalty may be unrealistic, businesses can achieve long-term relationships with satisfied customers, serving as a valuable competitive advantage. With the help of technology, loyalty programs are becoming increasingly personalised, sophisticated, and effective and are likely to continue evolving in the years to come.

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