The Benefits of a Programmatic Performance Marketing Strategy for Hotel Brands

By Brett Tabano Senior Vice President of Marketing test, MediaAlpha | October 21, 2018

With the holiday season quickly approaching, hotel and travel brands need to be stepping up their digital marketing to drive sales and capitalize on one of the busiest travel seasons. From Labor Day weekend until the winter holidays, travelers will be booking flights and hotel rooms by the masses. Busy as it may be, fall is the perfect time for hotel brands to implement new ways to drive sales and increase revenue. And, one of the more beneficial tactics marketers should be considering is utilizing a programmatic performance marketing strategy with a strong emphasis on native search.

For those who are not familiar with native search, it entails running ads on native search engines. A native search engine differs from a traditional search engine such as Google because it is specific to one particular product or service category, such as Hotels.com. Moreover, native search engines often require the user to input a number of structured data fields to obtain the results they are seeking such as travel details, and those results are native to that website.
 
Native search, when enabled through a programmatic platform answers many questions hotel brands should always be pondering: How do we granularly target multiple consumer segments across thousands of timing and destination pairings? And, when are users repeatedly searching for the best deals across multiple sites before making a purchase?
 
With so much data needed to decide when, where, and how to display offers to the right consumer, and very little time to make that decision, it's no surprise that these brands are transitioning away from manual campaign management to a real-time, programmatic approach.
 
Programmatic performance marketing unleashes many benefits, including how it enables advertisers to make smarter bidding decisions, with complete transparency. It also equips brands to transform into digital publishers by selling native comparison search ads to competitors, and as a result, create a new revenue stream.
 
From the Advertiser Perspective

One perfect example of the success advertisers can achieve with a programmatic performance advertising campaign is KAYAK, a leading fare aggregator, and travel native and metasearch engine.
 
KAYAK recently reached a 120 percent return on investment by implementing a programmatic strategy for its performance media. They recognized that in an incredibly fast-paced, competitive space, relying upon ad networks to make manual optimizations in a black box environment was not enough. Instead, it opted for a dynamic, transparent, real-time bidding environment, which comes with a programmatic strategy. When you see where you spend and how you spend it, you can optimize and you can make smarter decisions. When a third party manages your media budget and doesn't provide source level ID's or disclose fees you are left in a constant state of wondering if you made the right choice for your media.
 
Marketers who are familiar with native search have already started to recognize the benefits it brings, along with a programmatic strategy, and are beginning to include it in their digital media mix. More than half of consumers who click on native ads do so with the intention of purchasing. For those brands who have yet to implement this strategy, fall is the perfect time to do so, as consumers are typically online searching for hotel and travel accommodations for the upcoming holiday season. Once the user clicks on the ad, the brand is that much closer to capitalizing on the sale.
 
Advertising, especially in the digital realm, is a fast-paced industry. With the internet finding its way to more consumers and devices than ever before, it's becoming increasingly difficult for brands to track their ads and far more convoluted to measure the impact and ROAS. Users are repeatedly searching for the best deals across multiple sites before making a purchase. It's highly uncommon for a user to go to one website and book the first hotel deal they find. Instead, users consistently search different brands for the best possible deal. They will go to Hotel A's website, see what prices and rooms are available, and then visit competitor – Hotel B – and complete the same action until a more favorable deal arises.
 
Additionally, today's consumers are less concerned with the types of ads on websites because their focus is finding hotel accommodations that fit their budget and needs, making it even more critical for hotel brands to display the right ad at the right time in the right format. The solution lies in programmatic performance marketing and native search.
 
From the Publisher Perspective

With native search, a hotel brand can act more like a content publisher and generate revenue through comparison ads, including ads from its competitors or other hotel brands. Since the user is searching on that hotel brand's site, by showcasing competitor's rates/offers, that brand is now generating a new source of revenue, regardless of who gets the final sale. Some hotel brands may be wary of offering ads for competitors because they think they might lose the business. The complete opposite is true. The user may not be staying in your hotel, but you're still making money as if they are. This is a great way to continue to create revenue for hotels of all sizes that may be booked entirely or full during a holiday or high-vacation time.
 
I know it sounds counterintuitive but let's look at a couple instances where this would make sense. Let's explore this further through an example:
 
With the holiday season quickly approaching, users are likely starting to research their Thanksgiving and Christmas plans. For a brand that has native search implemented on its site, this scenario is a perfect way to increase revenue. A user goes to your hotel's website (Hotel A) to look for a room under $200 a night for Thanksgiving weekend. Unfortunately, the user sees that your hotel is sold out for that particular weekend. In this case, if Hotel A doesn't have a native search strategy implemented, the user will then leave the site to conduct their search elsewhere. On the other hand, should Hotel A have enabled native search; the user will see other hotels' offers that are still available for that particular weekend. The user will then click on the competitive offer, and you will generate revenue from that click because their ad is on your website regardless if the user completed the booking. This is a win-win for both your brand and the consumer.
 
Now consider that same user came to the Hotel A site through a paid search listing on google. Hotel A had to pay for that click but has no availability for the dates the user is seeking and had to take a loss. If Hotel A implemented a native search strategy they would be able to recoup those lost marketing dollars and reinvest them to obtain new users. Another strategy would be for Hotel A to increase revenue through native search by including airfare and car rental options during their booking process. If you know the user is going to convert to booking a room why not showcase additional offers (airfare, care rental) so when they click through you generate revenue.
 
The fact is, very rarely are hotel accommodations or flights booked on the first site the user searches because they are searching and comparing more today than ever before with hopes of finding a better price, and this trend is only increasing. This is where websites such as KAYAK come into play as they provide the opportunity to compare different prices over a period of time, until the user is ready to purchase.
 
When it comes to booking hotel accommodations, users spend a significant amount of time researching, especially if they are unfamiliar with the destination or hotel brands located in the area. The goal should be to make your site sticky and engage them with comparison tools, so they don't leave and look to another website to provide them with the information needed. Instead, when a consumer lands on your site, he stays because he doesn't need to navigate back and forth between multiple sites to locate what he is seeking to buy or book. When you provide more relevant results, it enables better engagement and more straightforward comparison shopping, which leads to more immediate conversions - a substantial benefit of the nature of native search.
 
Anytime a user can do something easier, the more apt they are to return without even realizing it. Then, the more users return to your site, the more comfortable they become with it and the quicker they can get from point A to point B – in this case, search for a hotel room and book. Not only are you streamlining the process for the user, which helps boost brand loyalty, but you are also increasing your overall revenue.
 
Technology underpins programmatic advertising, and programmatic platforms are continually being iterated and improved. As a hotel brand, having the ability to anticipate trends and adapt quicker than the competition is critical. You should always seek ways to become more efficient and profitable, and native search is an organic way to accomplish that goal, especially during the seasons when users increase their travel searches. For these reasons, I encourage all hotel brands to consider native search when implementing a programmatic solution for their performance marketing efforts.

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Hotel Newswire Headlines Feed  

This week's Top Pick...

Zoe Connolly

Knowland CEO Robert Post responds to recent articles/opinions that the $50 million investment by Marriott, IHG, Accor, and Hilton in a new Group Booking Platform has signaled "meaningful change" in the painful process of selling event space and room blocks to meeting planners. The new booking platform uses a self-reporting database of hotel group block inventory and meeting space to offer meeting planners an OTA-like environment to shop and book event venues at the lowest price. Read on...

Jim Poad
Kurt Meister
Philip J Harvey
Rohit Verma
Gavin Davis
Ted Fifelski
Richard Takach, Jr.
Kelly McGuire
Scott Nadel
Steven Ferry
Coming up in October 2019...

Revenue Management: Focus On Profit

Revenue Management is still a relatively new profession within hotel operations and as such, it continues to evolve. One significant trend in this area is a shift away from using revenue as the foundation to generate key performance indicators (KPIs) and to instead place the emphasis on profit. Traditionally, revenue managers have relied on total revenue per available room (TrevPAR) and revenue per available room (RevPAR) as the basis of their KPIs. Now, some revenue managers are using gross operating profit per available room (GOPPAR) as their primary KPI. This puts profit at the center of revenue management strategy, and managers are increasingly searching for new ways to increase the profitability of their hotels. Return on Investment is the objective of any hotel investment, so it is only logical that profitability and ROI will be emphasized going forward. Another trend is an expanded focus on direct hotel bookings. Revenue managers know that one way to increase profitability is to steer guests away from online travel agencies (OTAs) and book directly with the hotel. This tactic also reinforces brand identity and loyalty, and encourages repeat business. In addition, it provides a valuable platform to market the hotel directly to the customer, and to upsell room upgrades or other services to them. Another trend for revenue managers involves automation in their software programs. Revenue management systems with automation are far more desirable than those without it. Automating data entry and logistics increases efficiency, allowing managers to spend more time on formulating strategy. As a bonus, an automated system helps with aggregating and interpreting data. The October issue of the Hotel Business Review will address these developments and document how some leading hotels are executing their revenue management strategies.