Building a business that is both successful and sustainable during both good times and bad demands more than a focus on short-term profits, cost-cutting activities, or jumping on the latest ‘new, new thing’. This is particularly true for the travel and affiliate marketing industries, as each also tends to blindly rely on legacy business thinking and practices to get them through the tough times.

The current worldwide economic meltdown has wreaked havoc across virtually every industry.  To be sure, the banking and financial services industries have taken the brunt of the impact, but the travel industry has also been hit hard.

The global recession’s impact on the travel industry – the world’s largest industry by most economic measures – is being felt by countries and economies large and small, whether they are positioned in the travel arena as ‘sun and fun’ or business, meeting and convention destinations.  So too are the companies that serve these leisure and business travel markets, be they multinational corporations with operations across the globe or small businesses located on a street corner in a small town.  As was the case following past exogenous global events (e.g., 9/11, SARS), the travel industry once again finds itself mired in turmoil and uncertainty, with many players questioning their future viability.

Similarly, the affiliate marketing industry also finds itself at a crossroad. Despite being responsible for a significant amount of the innovation in ecommerce, some argue that affiliate marketing seems stuck in the ‘Wild West’ mentality that it was spawned in,  and thus it has yet to realize its true market potential.  Although some industry leaders have attempted to rally the industry beyond its historic reliance on a veil of secrecy and opaqueness, internal resistance to change continues to thwart progress, and this in turn relegate most affiliate marketers to playing at the margins of ecommerce.

Moreover, as some affiliates have found to their dismay, affiliate marketing is not impervious to economic blight, thus, raising the concern of many affiliates as to what they should do to safeguard their future.

In our view, the time has come for both the travel and affiliate marketing industries to work together and build the next generation travel distribution channel. Today’s market forces present an unprecedented opportunity for each party to prove their value to the other:

  • Travel Suppliers need efficient, low-cost distribution, particularly when sales are slumping and inventory is at distress levels

    • Affiliate Marketing represents the most cost-effective form of consumer-direct marketing
    • Affiliate Marketers that focus on quality traffic and have demonstrated the ability to leverage their consumer marketing prowess to drive incremental revenue to Travel Suppliers stand to reap sizable financial rewards
  • Affiliate Marketers need high-value / high-commission products to sell

    • Travel products and services represent one of the three largest purchases average consumers can make, either online or offline
    • Those Travel Suppliers that are willing to recast their existing, sub-optimal travel affiliate business model in favor of a new, quality-driven business relationship that helps their best affiliates to attract and channel quality traffic – and reward these affiliates accordingly -  will realize substantial and lasting competitive advantage

Although the size of the US travel affiliate market is relatively large, it’s still in its embryonic stage; various sources suggest annual online travel spend generated by affiliate marketing ranges from approximately $300 million to well over $500 million.  JupiterResearch estimated in its 2010 US affiliate market analysis that travel affiliate spend will grow at a compound annual growth rate (CAGR) of 18 percent through 2012, significantly faster than the CAGR of 13 percent that’s projected for affiliate marketing in general.

Our internal analysis suggests that these estimates are very conservative, and that they represent the tip of iceberg in terms of the revenue that affiliates can generate from selling travel products.

There is a new dawn for travel affiliate marketing…and we at Travel Dividends seek to foster its growth.  We urge all industry players – travel suppliers, affiliate marketers, and affiliate networks alike – to band together and build the next billion dollar affiliate vertical.