The mid to late 2000s saw hotels capitalize on search in an effort to get in front of potential customers, moving them to supplier direct forms of transacting both online and offline.
As illustrated in many different studies, search plays a critical role during the research phase for consumers with approximately 85% of consumers performing some form of search before booking with the hotel directing online, according to a Cornell Center For Hospitality Research study, “Search, OTAs and Online Booking: An Expanded Analysis of the Billboard Effect.”
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| Chris Anderson |
While search (and search engines) continue to evolve, it has the potential to become a more expensive venue for customer acquisition as the dominant search engines further monetize their search landscape with an increasing portion on the landscape (especially that above the fold or top half of the page) becoming paid versus organic. In efforts to combat these increasing costs, we see many new developments by advertisers.
On the property side, Hilton Worldwide was the first major brand to centralize search-engine marketing (as well as other online activities) in an effort to capitalize on economies of scale and avoid hotels competing against other in a given market. Similarly, we see the online travel agencies—some of the biggest users of search-engine marketing—vertically integrating, with the recent announced acquisition of Kayak by Priceline. Historically, search has been such a successful customer acquisition model as the process starts with consumers specifying (potentially) very specific travel related requests that advertisers can then reach with very targeted advertising copy.
Social media
In parallel with this reliance upon search has been the rise of social media. The major upside of social is the improved consumer segmentation created by the fact that ads are served up to a (potentially) very specific subset of consumers owing to the nature of the information with a user’s (e.g., Facebook) page. Just as much of the search discussion focuses on Google, here much of our social discussion will center on Facebook. Facebook provides advertisers many ways to reach potential consumers.
Here I outline basic Facebook advertising formats and then focus on recent innovations more targeted at conversion (versus awareness or brand building). As Facebook moves further down the demand funnel from awareness to conversion, it becomes increasingly closer to the revenue (and demand) management arena and simply not a marketing regime.
Facebook offers three main advertising formats: news feed, right-hand side and log out, with news feed deployed on both desktop and mobile.
Right-hand-side ads were the first form of advertisement within Facebook and offers simplicity and ease of use. News feed is a premium ad placement offer, offered on desktop and mobile (it’s the only way to reach users on mobile). News feed is not only where people spend most of their time on Facebook, it's also where people click on ads to go offsite. Most recent numbers indicate 680 million people are active on Facebook mobile each month, as of Q4 2012–and spending lots of time on the app (11:28 hours per month per user in the U.S.), according to Facebook’s fourth-quarter earnings release.
The log out experience is another high-impact placement to drive conversion as 40% of U.S. desktop daily active users log out every day with the entire real estate of this large ad unit driving traffic directly offsite.
In addition to placement, Facebook further offers different formats for individual ads. The domain ad is the most basic and popular ad type. However, domain ads are not eligible for news feed and are more limited in creative flexibility. Photo and link page post ads are multi-purpose ad formats designed for news feed.
Photo page post ads offer the largest ad image, providing a visual bang that catches people’s eye and draws them into the post. The photo doesn’t drive the user offsite but is usually done with a shortened URL in the ad text. Facebook Offers is great for direct marketing activities such as coupons, promotions or flash sales–working both for online or offline promotions. When people claim the offer, the story is shared virally with their friends in the news feed. The last ad type is mobile app install ads, which is a tailored ad format used to drive app downloads directly from the mobile news feed.
Targeting and conversion
The table below highlights the basic targeting levels in Facebook; an advertiser may refine the group of users it wishes to target based upon standard demographics and then refine this targeting across broad categories of users and then refine within a vertical set of behaviors.
Two recent additions to Facebook that refine these standard methods further and lead to improved conversion are Custom Audiences and Facebook Exchange.
Custom Audiences allows the user to design an audience around the specific makeup of their current customers–either targeting current customers who are Facebook users and/or a customized list matched to the makeup of current consumers. An advertiser supplies its own CRM data–customer lists, prospecting lists, etc.—and then they are found on Facebook via their email addresses, phone numbers or user ID, resulting in a targeted message. Such a program may augment (expand the base) or replace current direct marketing efforts.
Facebook allows advertisers to tag and track ads and consumer behavior through views, clicks or conversions. The table below summarizes these tracking methods. Similar to search, Facebook provides tools to allow advertisers to focus or optimize their spend around their own objectives, whether they be awareness (views) or conversions. Unlike search, users may pay by click or by impression.
Implications
Social has evolved beyond engagement into demand generation. While, at present, users may not necessarily be going to Facebook with travel intentions in mind, it is increasingly becoming a media to reach consumers by both creating awareness as well as now targeting consumers with expressed purchase travel intentions. We are just starting to investigate the return on investment of Facebook advertising so we can track conversions and measure direct ROI. Full attribution is required to determine if or how much of this demand is incremental and how Facebook conversion is impacted by actions elsewhere, as well as how Facebook advertising is also impacting conversion elsewhere.
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