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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”