Top 6 Digital Marketing 'Must-Do' List for 2014
By Holly Zoba Senior VP of Sales - Hospitality, Signature Worldwide | February 16, 2014
What are the top six things you should do this year to increase your sales through digital marketing? The answer should depend on your individual property of course, no two digital marketing plans should ever look alike, but there are six general areas you should be sure you have covered before you venture out into the other hundreds of directions you can choose.
1. Figure Out Your Ideal Channel Optimization
In 2010, $4 out of every $10 came through a digital channel; in 2014 it is expected to be closer to $6 or $7. It's important for a hotelier to understand which channels are currently providing revenue, and what is the expense tied to that channel. In a recent study, Kalibri Labs evaluated 250 hotels in NYC and discovered that in their current channel mix, the cost of their business was in the 20-30% range – so for every $10 earned, $2-$3 was spend attaining the business. Distribution costs are expected to increase, not decrease, and so obviously this is simply not sustainable in the long run.
Channel optimization is in fact a tedious process and often hoteliers don't know where to start so I have outlined a few key steps.
- Identify your current sources of revenue by channel - Of the rooms and revenue you have sold, how many come via your brand website? Via each OTA channel? Via other consumer sites like Facebook or LinkedIn, or through other retail and corporate sites like Orbitz or American Express? And what percent is voice?
- Identify the real costs associated with each channel - This is the most challenging, and quite honestly, the mos painful because you will likely discover exactly how much you have been spending to attain business, and you will likely realize you have not always chosen the best route. Forgive yourself and commit to not making the same mistakes in 2014.
What makes this challenging is that while it is clear where the last place the customer visited before they booked your property, what is often less clear is how they may have gotten there. For our purposes, we can take a simple approach. For your brand website, what fees do you pay for booking and what percent of your advertising fees are spent on digital by your brand? For OTAs, discover the real cost of each transaction. This may take some research, but knowledge truly is power because you ought to discover which OTA feed is most profitable for you. For an independent site or other social sites, what sort of pay-per-click or display advertising do you do? How much did you spend? And for corporate sites, what costs were associated with that business in addition to any booking fees paid? Do you have to pay to be a part of the directory? Don't forget to calculate in some payroll dollars – especially as it pertains to social marketing.
Once you know, by channel, the approximate cost of attaining that business, you should be in a much better position to determine when you need each channel and when you should be minimizing certain channels.
- Map out your year, differentiating high, low and shoulder demand periods as well as the channel use by marketing segment - During your high demand periods, forecast an ideal channel mix – your most profitable channels should provide you the lion's share of the business. Think about the market segments that primarily use these channels. Can you replace your higher cost channels with the same market segment using a different channel promotion? Of course the goal for high demand periods is to minimize reliance on your more expensive channels.
During your softer periods, do some analysis on your remaining channels and the market segments that typically use those channels. If you are relying on an OTA channel and you realize the cost is 25%, can you invest differently for better results? If for example you invested $1000 in display advertising and got a 10 times return, that channel is costing you 10% (plus your GDS fees for booking). If you increased your display advertising during a softer period by $1,000, what would your return be relative to the OTA channel distribution cost? What about voice? If your voice conversion rate is 30%, how can you increase that conversion rate to 40%?