According to eMarketer, digital advertising in the US is expected to exceed $83 billion this year. In this online market, Google controls 40.7% of the spend, followed by Facebook with 19.7%.
The travel industry spends a significant share of those digital advertising dollars. In 2016, the travel industry spent $5.69 billion on digital advertising, a figure that is expected to grow by 10.8% annually until it reaches $8.28 billion in 2020.
The worry for marketers in travel, as in other industries, is whether these dollars are being spent as well as they could be. To maximize sales performance, marketers are moving to more sophisticated big data and analytics to help with decision making.
"An example of this is Fairmont Hotel, which is a long time client of ours," said Carl Livadas, vice president of data science at Sojern, which provides a direct demand engine for the travel industry that is designed to drive more direct bookings and to maximize revenue. "The hotel had been doing digital display advertising for years, but it made a decision in 2016 that it wanted to use Facebook more intensely that it had before," said Livadas. "Fairmont had been using Facebook for social media. Now, it wanted to launch more dynamic ad formats and campaigns on Facebook that would be able to convert more prospects into customers."
The thought was that by using deeper analytics and more big data sources that could shed a light on what was going on online, that Fairmont, a worldwide chain of resorts and hotels, could boost results in both direct bookings and percent conversions.
"Direct conversion of customers for hotels and other companies in the travel industry are important," added Livadas. "When they get bookings through a broker-middle person, hotels often pay out as much as 15% in commissions, which cuts into profit margins. It is also important to capture a prospect and getting that prospect to convert into a sale on the spot."
To take its marketing to the next level, Fairmont teamed with Sojern to look at the online sales process.
"Fairmont noticed that prospects visited its website for information on accommodations, but that before they got to the booking stage of the process, the prospects left the site, potentially to look at other hotel booking options like third party offerings," said Livadas.
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From these studies, Fairmont found that by just tweaking the ease of use of the user experience a little on its website, that it was able to capture a significantly greater percentage of direct bookings. The hotel also took steps to improve the user booking experience on mobile devices.
This process sounds simple, but the big data and analytics are complex.
"We aggregated data from many different sources and channels," said Livadas. "For instance, for a particular user, we could understand his/her travel habits, including whether he or she used a desktop or a mobile device to book travel. We even understood the times of day when a customer or prospect was likely to be at either a desktop or a mobile when he/she booked travel. This contributed to optimizing the user experience on the website. On the data side, we aggregated data from many different sources. The end result was a very rich travel profile for each individual customer. This data is stored and secured individually for each of our clients."
From a marketing standpoint, this big data strategy does three things:
- It keeps data secure and proprietary, since it's not being not shared with anyone else.
- Provides deeper insights into customer bases, and enables easier customer engagement and better sales conversion rates
- Enables data to be queried for new business insights
"We are fast reaching a point where companies can begin to predict which users are likely to result in bookings, what overall sales conversion rates are likely to be, and what the actual value of converting a sale is," said Livadas. "In the future, we will be enhancing the analytics so marketing departments will be able to optimize and have visibility of their advertising and sales performance across all sales channels."
- How big data analytics help hotels gain customers' loyalty
- 10 tips for running a successful analytics project outside of IT
- Data analytics: Five ways to make it work for your business (ZDNet)
- Hiring kit: User experience specialist (Tech Pro Research)
- Microsoft Power BI: Getting started with data visualization (free PDF)
Mary E. Shacklett is president of Transworld Data, a technology research and market development firm. Prior to founding the company, Mary was Senior Vice President of Marketing and Technology at TCCU, Inc., a financial services firm; Vice President of Product Research and Software Development for Summit Information Systems, a computer software company; and Vice President of Strategic Planning and Technology at FSI International, a multinational manufacturing company in the semiconductor industry. Mary is a keynote speaker and has more than 1,000 articles, research studies, and technology publications in print.