• by Paul Knegten , August 9, 2010

In my last piece, I talked about managing campaigns on a product level with dynamic ads and real-time bidding.

Today I'm going to go deeper into the benefits and implications of being able to sub-segment your audience based on its unique intent and which products (flights, hotels, packages) you have to sell them. From the data I've collected, there are some compelling insights that I can share that prove how much opportunity there is for travel advertisers in data-driven display advertising.

Remember when I said that real-time bidding allows you to bid differently for impressions being shown to travelers looking for hotels in Boston versus those looking for hotels in Las Vegas? Well, lo and behold, when we look at travel behavior across several hotel chains and OTAs, there is a considerably higher conversion rate for travelers going to Vegas. File that under "no, duh," but it illustrates an important proof point of the power of differential bidding in display.

In search, you would undoubtedly pay a significant premium for the keyword "Las Vegas" given the competitiveness of this market. So, at a certain point, buying that keyword becomes a bit blasé from an efficiency standpoint. But because inventory in display is so much more plentiful, and if you have your own user data (from a retargeting pixel, for instance), you get these same Las Vegas travelers at a significant discount over search. Yes: display advertising has the potential to be more efficient than search.

Here's how it works. By retargeting users that have searched for destinations on your site, you can retarget them later across the web with the right offer based on their search. But, because the data is yours, you don't bid a premium for the Las Vegas customers versus the Boston customers like you would in Search.

You can pay more for the impressions targeted to your Vegas audience but, in this case, your competition is not other travel companies bidding up the Vegas audience the way they would be in search, so you're able to bid far lower and still get a tremendous amount of volume.

This is an important distinction -- because display is still so vast and fragmented, it hasn't even approached anything that resembles an efficient market. Unless you're paying for third-party targeting data, you're very unlikely to encounter competition in bidding for specific audiences the way you would in search. And, this is why we're seeing data-driven search engine marketers giving display a whirl for the first time in a long time.