Home Revenue Management OTA OTAs and the billboard effect

OTAs and the billboard effect

Aug 6, 2015  By 

In the tug of war between hoteliers and online travel agencies (OTA), have you ever wondered why hotels just don’t bother working with OTA anymore and just go at it alone, seeking to get direct bookings from travelers onto their own websites?

After all, commission levels are high with OTA, as they increase their market share, in particular on ever-increasing mobile transactions. But online travel agencies are both friends and foes, and one of the key benefits for hotels, in particular independent hotels, comes from the billboard effect.

What is the billboard effect?

In a seminal research published back in 2009, Chris Anderson, associate professor at Cornell University, found a direct correlation between visibility on an OTA site and uplift in direct bookings. In fact, it was estimated that the benefits from being shown in OTA search results could transform into a sales uplift between 8-15% for hotels. Not bad, right? But of course, things are rarely that simple.

We also know, from various studies published by Expedia Media Solutions or Google Think, that the customer path to purchase is not a linear process and that many variables come into play. In the United States, customers will visit on average 38 travel sites before buying a package, so while the billboard effect certainly plays a role in the process, it remains elusive to isolate this factor alone in the decision-making process.

Death of the billboard effect?

A recent study swings in the opposite direction, boldly claiming that the billboard effect is dead, if it ever existed. As reported initially by Tnooz, this study was conducted in 2014 and took a look at 50,000 online travel shoppers, finding that users who browsed hotel sites tended to ultimately purchase their hotel stays via online travel agencies like Expedia, Booking, TripAdvisor and similar intermediaries. The full report is slated for publication later in 2015, early 2016.

The methodology used is different than the one used by the study conducted by Cornell University. A similar point, though, is that mobile device users were not considered in this recent study. While I can understand this omission from the 2009 study, it makes no sense not to consider mobile users nowadays, knowing they represent more than 50% of online travel searches, and more than 25% of online travel revenues.

So, is the billboard effect really dead? Reading between the lines from the results provided in the Tnooz article, things aren’t so crystal clear. There certainly seems to be less of an impact, and OTA are said to be doing a better job at keeping users on their site until transaction time. But there is nothing in the results that can justify such a bold statement as “billboard effect is dead”.

Lazy man’s approach

Back in 2011, HeBS Digital coined the expression “Lazy Man’s Approach” when referring to hotels relying on the billboard effect for their online distribution and thus justifying working closely with OTAs. The fact of the matter is, the billboard effect is only one element in a complex online distribution ecosystem that hoteliers and hospitality marketers ought to master in order to succeed and achieve their business objectives.

Nowadays, hotels must embrace omni-channel marketing, which combines content marketing, traditional advertising and digital tactics across various platforms, social networks and devices. There are no silver bullets, just like the billboard effect was never a solution in and of itself.

Online bookings are evolving

The truth of the matter is, the online travel distribution is becoming more complex, as recent developments have demonstrated. In this evolving landscape, Google is now a pure player, Amazon is getting serious about destination travel, TripAdvisor is morphing into a real OTA, Expedia is digesting Travelocity and Orbitz acquisitions made earlier in 2015 while Priceline is getting serious in the China travel distribution market.

What’s a hotelier to do? With rate parity clauses now under serious fire in Europe, it’s only a matter of time until these changes come into play in North America and elsewhere across the globe. So how can hotels convince internet users to book on their own website rather than on an OTA? Well, more than ever, some best practices apply:

IHG Price guaranteeBest rate guarantee: Let users and visitors to your site know that they will get the best price, period. You can match rates found elsewhere, shave another 10%, or whatever. Just let people know that once they’ve found your site, there is no need to book elsewhere since you guarantee this. Which means people can trust your site, and trust is of utmost importance online. Just like it is offline.

Rewards program: Do you have a loyalty scheme in place or at least basic customer relationship management communications processes, sending out emails and newsletters? You should. Sending out special offers or value-add promotions is always a good practice, specially when addressing your customer base. Let them know about your best rates, or perhaps even implement a refer-a-friend discount or promotion, while you’re at it….

Roger SmithDeals on others accounts or social networks: We all fall into a very common trap which is to think the same people follow us across our various communication outposts. They don’t. If you have a special deal on your website, make sure to talk about it on your blog, in your newsletter, or on your Facebook Page. A great example? Check out how Roger Smith Hotel in New York City reminds Twitter users about their 10% discount when booking direct. Simple. Effective.

Invest in content marketing: Last but not least, you need to have a content marketing approach in place. Whether it is through a corporate blog, a news section or promotions offered on your site, producing fresh content contributes to a better organic performance for your site which, in turn, means you are less dependent on advertising and PPC campaigns. Unfortunately, many hoteliers still do down the path of least friction, banking on the billboard effect or traditional campaigns applied in the online world.

So, is the billboard effect really dead? I personally don’t think so but you will have understood from this post that it doesn’t really matter, either. Hoteliers shouldn’t rely too heavily on OTAs to begin with, even though there are still benefits to be reaped from this relationship. Like anything else in life, it’s a matter of striking the perfect balance, which is easier said than done.

About Frederic Gonzalo

Frederic Gonzalo

Frederic Gonzalo is Senior marketing and communications expert & speaker with 18 years expertise in the travel and hospitality industry. Consulting since early 2012, I provide strategic planning, social media & mobile development

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