HeBS digital Blog Archive for the ‘Online Travel Agencies (OTAs)’ Category The OTA Billboard Effect or the Lazy Man’s Approach to Hotel DistributionMonday, August 1st, 2011 The following article is Max Starkov’s latest contribution to the “Successful eMarketing” blog on HOTELS magazine’s website The existence of the so-called billboard effect is not a new marketing phenomenon. It has existed long before the online channel became a reality. As confirmed by many studies, any marketing exposure by a hotel produces a billboard effect:  when you launch a banner advertising campaign; when you purchase a full-page ad in the New York Times travel section; when you launch a paid search campaign on Google, etc. The OTA Billboard Effect Lately Expedia reps have been aggressively using a new Cornell Hospitality Report, namely “Search, OTAs and Online Booking: An Expanded Analysis of the Billboard Effect” to convince hoteliers that they should use Expedia in order to generate more bookings from the hotel’s own website due to the so-called “Billboard Effect.” The Cornell Report, based on data from Expedia and InterContinental Hotel Group (IHG) from 2008-2010, is a continuation of a previous report on the subject, heavily supported by Expedia. The report’s analysis determined that when an IHG property was listed on the first results page of Expedia, this created an increase of between 7.5% and 14.1% in bookings for the same property on IHG’s own brand website. In other words, this is a confirmation for Expedia’s billboard effect, which hoteliers should take into consideration when griping against the 25% plus merchant OTA commission. When these “billboard effect bookings” are taken into consideration, Expedia’s commission “would effectively be reduced to single digits,” states the Cornell Report. Hoteliers, rejoice! We have found the perfect recipe for success: we do nothing as far as marketing the property website is concerned. Instead, we plaster Expedia with our sales promotions and wait for the travel consumers to come to our own website and book. As discussed, the billboard effect is not strictly an OTA territory. In my view, the Cornell Hospitality Report is a one-sided research project, very proactively supported by Expedia, similar to the first report on the billboard effect published in 2009. Cornell, the finest hospitality institution in the U.S., should know better than to come up with this half-baked “scientific” research, which does not account for the complexities of hotel distribution as well as the “digital information cloud” we all live in and the resulting marketing and distribution channel convergence which directly affects the purchasing habits of today’s hyper-interactive travel consumers. This report makes conclusions that do not take into account, among many other things, the following: Complex Travel Planning Patterns in Hospitality Many surveys show that people are shopping around on a number of hotel and travel websites before narrowing down their search. Typically in hospitality, these sites include a hotel search on a search engine e.g. Google (65% market share), an OTA website, TripAdvisor, the hotel’s own website, etc. Therefore jumping from an OTA website to a hotel branded website and vice versa is at least partially due to particular travel research patterns unique to the users and not due to the so-called billboard effect: Step 1: “I always search on Google first where I identify a property I like” Step 2: “I go to Expedia and see what the rate for this property is” Step 3: “I visit TripAdvisor to read my peer reviews for this hotel” Step 4: “I visit the hotel website and book if I like the location, rate and what I have read and seen about this hotel”

When we log onto the Internet, we take lots of things for granted. We assume that we'll be able to access whatever Web site we want, whenever we want to go there. We assume that we can use any feature we like -- watching online video, listening to podcasts, searching, e-mailing and instant messaging -- anytime we choose. We assume that we can attach devices like wireless routers, game controllers or extra hard drives to make our online experience better. What makes all these assumptions possible is "Network Neutrality," the guiding principle that preserves the free and open Internet. Net Neutrality means that Internet service providers may not discriminate between different kinds of content and applications online. It guarantees a level playing field for all Web sites and Internet technologies. But all that could change. The biggest cable and telephone companies would like to charge money for smooth access to Web sites, speed to run applications, and permission to plug in devices. These network giants believe they should be able to charge Web site operators, application providers and device manufacturers for the right to use the network. Those who don't make a deal and pay up will experience discrimination: Their sites won't load as quickly, and their applications and devices won't work as well. Without legal protection, consumers could find that a network operator has blocked the Web site of a competitor, or slowed it down so much that it's unusable. The network owners say they want a "tiered" Internet. If you pay to get in the top tier, your site and your service will run fast. If you don't, you'll be in the slow lane. What's the Problem Here? Discrimination: The Internet was designed as an open medium. The fundamental idea since the Internet's inception has been that every Web site, every feature and every service should be treated without discrimination. That's how bloggers can compete with CNN or USA Today for readers. That's how up-and-coming musicians can build underground audiences before they get their first top-40 single. That's why when you use a search engine, you see a list of the sites that are the closest match to your request -- not those that paid the most to reach you. Discrimination endangers our basic Internet freedoms. Double-dipping: Traditionally, network owners have built a business model by charging consumers for Internet access. Now they want to charge you for access to the network, and then charge you again for the things you do while you're online. They may not charge you directly via pay-per-view Web sites. But they will charge all the service providers you use. These providers will then pass those costs along to you in the form of price hikes or new charges to view content. Stifling innovation: Net Neutrality ensures that innovators can start small and dream big about being the next EBay or Google without facing insurmountable hurdles. Unless we preserve Net Neutrality, startups and entrepreneurs will be muscled out of the marketplace by big corporations that pay for a top spot on the Web. On a tiered Internet controlled by the phone and cable companies, only their own content and services -- or those offered by corporate partners that pony up enough "protection money" -- will enjoy life in the fast lane. The End of the Internet? Make no mistake: The free-flowing Internet as we know it could very well become history. What does that mean? It means we could be headed toward a pay-per-view Internet where Web sites have fees. It means we may have to pay a network tax to run voice-over-the-Internet phones, use an advanced search engine, or chat via Instant Messenger. The next generation of inventions will be shut out of the top-tier service level. Meanwhile, the network owners will rake in even greater profits.