News for the Hospitality Executive |
The Smart Hotelier's
Guide to 2013 Digital Marketing Budget Planning
By Max Starkov and Mariana Mechoso Safer August 1, 2012 Having just passed the mid-year mark, now is a good time to reflect on how events in 2012 have made a significant impact on hoteliers and how they should plan their digital marketing budgets for next year. The emergence of SoLoMo (the convergence of social, local and mobile); tablets as a distinct marketing and distribution category; new social media platforms such as Google+ and Pinterest; and ongoing Google algorithm updates that have made many hotel websites obsolete are just some of the topics that have made headlines so far this year. This is also the perfect time to review your business goals and objectives. What did you achieve in 2012 that you would like to continue and even improve upon next year? What business goals did you not achieve? Were you often distracted by the ‘next big thing’ and, as a result, did you lose sight of hotel digital marketing fundamentals such as keeping your property’s SEO strategy up to date? This article provides guidance on how to structure your budget in 2013. Next year’s digital marketing budget should focus on driving direct online bookings and achieving serious ROIs via structuring your initiatives in three main categories: “Core” Digital Marketing Initiatives; “Business-Need” Digital Marketing Initiatives; and Capital Investments, Strategy and Operations, including website re-designs and enhancements, day-to-day website operations, campaign management and professional development. This Year’s Good News and Not So Good News To start with the good news, travel demand is up. This year the hospitality industry has been enjoying a period of growth in all three key performance metrics. In Q2, 2012, the U.S. hotel industry’s occupancy increased 3.1 percent to 65.1 percent, average daily rate rose 4.7 percent to US$106.41 and revenue per available room was up 7.9 percent to US$69.32 (STR). Industry experts anticipate a continuation of these trends in the second half of 2012, though probably at a somewhat slower pace. So what’s the bad news? At a time when online travel demand is growing and hoteliers should have more control than ever over their online channel distribution strategies, and be capable of extracting maximum online revenues from local, state and regional opportunities, we are seeing the opposite. Independent hotels are overly OTA-dependent. Independent hotels have traditionally been easy prey for the OTAs due to lack of focus in and understanding of the economics and cost-effectiveness of the direct online channel, as well as ignorance of basic online distribution rules such as rate parity, and weak negotiating power with the OTAs. Last year, for example, more than 76 percent of online bookings for non-branded hotels came from the OTAs and just 24 percent came from the hotels’ own websites (STR, HSMAI Foundation). This isn’t to say hoteliers are not in a position to put up a fight. Rising travel demand means that OTAs’ merchant commissions are already shrinking due to push back from major hotel brands and the industry as a whole. Hoteliers have realized that flash sales sites and last-minute discounters are bad for business and lead to severe price and brand erosion and loss in business in other channels. Contracts with the OTAs are up for renewal this year and the major hotel brands should be pushing for commissions below 15 percent. Independent hoteliers should not pay merchant commissions above 20 percent. Will hoteliers finally put a stop to this extraordinary leak in revenues to the OTAs and third parties? Independent hoteliers must budget for a major expansion in their direct online channel efforts through the rest of 2012 and in 2013 if they want to decrease their over-dependence on the OTAs and the bottom-line killing flash sales sites such as Groupon, Living Social, etc., and last-minute discounters such as HotelTonight.com. Branded hotels are overly brand-dependent. Major hotel brands are doing a good job of brand building and online marketing at global and national levels, but simply do not have the bandwidth to cover regional, state and local markets. Branded and franchised hotels that are over-reliant on their brands’ online marketing efforts are missing out on serious incremental online revenues from local, state and regional initiatives. For example, HeBS Digital has a number of very pro-active franchised hotel clients, which consistently enjoy higher revenues from their vanity websites than from Brand.com. Hoteliers – branded or independent – must focus on the direct online channel. This means employing best practices in the online distribution channel and increasing direct online revenues via hotel website re-designs and enhancements; allocating funds to SEO, SEM, re-targeting, mobile marketing, etc.; and utilizing the OTAs only as part of a balanced distribution strategy. Continuing reliance on tired and obsolete advertising formats. Another important concern is that many hoteliers continue to rely on offline advertising media, especially print media. Last year advertisers in the U.S. over-spent by more than $20 billion in print-media advertising while under-spending by more than $20 billion in Internet and mobile media. How Are Your Peers Allocating Their Budgets? In the HeBS Digital’s Sixth Annual Benchmark Survey on Hotel Digital Marketing Budget Planning and Best Practices, nearly one-third of respondents planned to spend as much as 49 percent of their advertising and marketing budgets on digital marketing initiatives (including website design and optimization). For the third year in a row, ‘economic constraints’ continue to negatively affect digital marketing budgets more than any other reason (e.g. last year’s budget, what peers are doing, property renovations and non-marketing constraints). The Benchmark Survey shows that hoteliers are going back to the basics and putting budget dollars into core initiatives that produce the best results and the highest ROIs. Here are the top five initiatives your peers consider of highest priority, based on how hoteliers answered to the question “Of your total Internet marketing budget, where did you spend your money?” 33.0% Website re-design/design 27.2% SEO 26.0% SEM (paid search) 24.3% Email Marketing 15.7% Display Advertising (banners) Naturally, “fixing” the hotel website remains of paramount importance to hoteliers. Anything you do online today – from social media to banner advertising to email marketing – leads back to the hotel website. The results in favor of SEO and SEM show that hoteliers are paying attention to the importance of search engines for revenue generation, and how changes in the search engine algorithms affect their SEO strategies, and therefore we see an increase in budgets dedicated to SEO and Local Search. What about all of the “hot” initiatives like social media and mobile? Hoteliers are ranking those in the top 10 initiatives they have spent their marketing dollars on, immediately after the five “core” initiatives mentioned above: 15.6% Mobile Marketing 14.0% Local Search/Linking 13.4% Social Media 12.3% Retargeting/Remarketing Advertising 12.0% Online Video The Benchmark Survey results are supported by the overall growth in digital marketing spending by U.S. advertisers as a whole. According to a recent study published by eMarketer, US online spending will grow 23.3% in 2012 to reach $39.5 billion by the end of the year. The greatest increases in ad spending are for social media, email, and search marketing. Mobile is also seeing an increase in spend. Spending on traditional direct marketing such as direct mail, TV and radio will remain flat (eMarketer). Building Your 2013 Digital Marketing Plan & Budget: Three Main Criteria What line items should you include in your 2013 hotel digital marketing budget in order to drive as many revenues as possible through the direct online channel? Your 2013 budget should take a three-silo approach and include: 1. The Core Digital Marketing Campaigns:
This portion of the budget should include tried and true initiatives
that have been proven to drive high ROIs. Whether they are monthly or
year-round initiatives, such as SEM on Google and Bing/Yahoo, the "Show
Prices" CPC program on TripAdvisor, or ad hoc initiatives such as a
tablet website, these items must be included in your 2013 budget.
2. Business-Need Driven Marketing Campaigns: This part of the budget should be based on concrete business needs for the property, not advertising driven. Taking into account factors such as seasonality, area events that tend to bring business to your hotel, or customer segment need areas (such as meeting or group planning, family travel or weddings), you can never be 100% prepared in advance for what your business needs will be. In Q1 2013, will you need more weekend bookings? Once summer arrives, will family travelers be a target segment? Once you are able to determine your business needs, only then should you launch a multi-channel marketing campaign to achieve your goals for that quarter. Also important to note - with the rapid changes in our industry, one cannot always prepare for the new initiatives that may need to be placed into the budget at any moment. 3. Capital Investments, Consulting & Operations: The line items in this part of the budget include those that are necessary to keep your website "healthy," such as website re-designs, enhancements and technology upgrades as well as initiatives that don't produce direct revenue yet are essential to the success of your property, such as consulting, analytics and hosting. Scrimping on these initiatives can jeopardize the performance of all other budget line items. The Core Digital Marketing Campaigns & Initiatives Search Engine Marketing (SEM): Recommended share of the 2013 hotel digital marketing budget: 25%-30%. There are certain digital marketing initiatives which are proven winners, no matter what the state of the industry is or what the latest trends are. An example of one of these fundamentals is SEM. The search engines still rule distribution and are still the key driver of direct online hotel distribution. This includes mobile SEM, which must link to special mobile landing pages on your mobile website. With the search engines maintaining such an important role in the direct online channel, search engine marketing (SEM) continues to be the most efficient means of delivering a targeted marketing message via the online channel, in terms of both traffic generation and revenue production. By following industry best practices and optimizing your campaigns on a consistent basis, you can ensure that your SEM campaigns continue to drive high ROIs. Search Engine Optimization (SEO): 8%-10% The recent Google Panda updates (Panda 3.9 just launched) have raised the bar for hotel websites, demanding not only deep and relevant content on the hotel website but also unique and engaging copy. The Google Venice update had a heavy impact on the localization of search. In summary, it means that Google will try its ‘best’ to serve you localized results based on your location, whether or not your search query is geo-targeted (i.e. you could type in ‘hotel’ and Google bases search results off of your location). Hoteliers are also challenged to keep their hotel website consistently updated with fresh content as this significantly affects SEO. This means that budget dollars need to be allocated to keeping the website current or investing in a tool such as the HeBS Digital CMS Premium which allows hoteliers to add and edit both textual and visual content on a 24/7 basis, publish/un-publish new special offers, create packages and promotions, control the featured special promo tile on the home page, manage the photo selection on the website, and automatically push new specials and promotions to the hotel social media profiles and mobile website. Case Study: Search Engine Revenues In spite of all the new and trendy digital marketing initiatives and formats that overwhelm hoteliers nowadays, the good old search engines generated the most revenues for HeBS Digital’s client portfolio consisting of thousands of hotel properties. Here is the search engine (Google, Bing and Yahoo) year-to-date contribution as percentage from the total website revenues, as of July 2012:
“Show Prices” CPC Program on TripAdvisor: 5%-10% Take advantage of
the ability to dramatically increase your visibility on TripAdvisor,
the
largest travel website in the world. Adding a property listing in the
“Show
Prices” functionality on the hotel pages on TripAdvisor serves a dual
role: on
one hand it brings highly qualified online travel consumers directly to
the
property’s booking engine, and on the other hand this listing levels
the
playing field with the OTAs and provides a direct booking option
to the
site's users. SoLoMo:
3%-4% Bring SoLoMo
(social, local and mobile) initiatives to the forefront of
your hotel’s targeted digital marketing strategy. The convergence of
these
three content and marketing platforms allows the hotel to deliver more
personalized, relevant content to existing guests and customers in real
time
like never before. Local
search generates 3-5 percent of total website revenues across HeBS
Digital’s
client portfolio. Consumers perform more than 3 billion local searches
every
month (Google). Google, Bing and Yahoo have placed much more emphasis
on their
local search business profiles, meaning that hoteliers have had to pay
much
more attention to the ongoing management and enhancement of these
profiles or
their websites would plummet in the search engine rankings. Continuously optimizing these profiles as well
as enhancing your property’s listing on the main data providers is
vital to
your hotel’s SEO strategy and must take precedent next year in your
budget. Local
content is also the foundation of mobile content for the search
engines, making
it extremely important to any hotelier’s mobile website and SEO
strategy. Mobile
Website and Mobile Marketing: 7%-8% 2010: $99 million 2011: $753 million 2012: $1,368 million 2013: $2,155 million (PhoCusWright) HeBS Digital’s own data shows that having a
hotel mobile
website generates incremental revenue through mobile and voice
reservations
which, without a well-optimized property mobile site with rich content,
would
have easily gone to the competition or the OTAs. The question of whether
a hotel or a travel supplier needs a mobile website has already been
categorically answered: Mobile sites generate serious incremental
bookings. The mobile web
adheres to different rules
than the conventional desktop Internet. Mobile users have even shorter
attention spans and less time to browse than traditional desktop users.
The
mobile web features a number of limiting factors such as slower speeds,
yet-to-be-perfected mobile browsers, smaller displays, multi-step
booking and
more. The biggest mistake hoteliers make is not
having a mobile
site at all. Accessing a
“conventional” website via a mobile device, even the iPhone (320 x 480
pixels),
often results in an undesirable user experience (the inability to find
information needed) and a predictable outcome (abandoned website visits
and
reservations). Today’s hyperactive travel consumers rely on
mobile sites
that download quickly, provide short and concise textual content,
minimalistic
visual content and easy-to-use booking engines. Content quality is the biggest “must-have”
for a mobile
site. The Google Panda algorithm updates favor mobile websites with
rich visual
and textual content that is fresh, engaging and optimized for the
search
engines. Having
a hotel mobile website – even if developed according to industry’s best
practices – is only the beginning. Just like with the mobile website,
the
mobile Web abides by different rules that require mobile Web-specific
marketing
initiatives. Here
are the top mobile marketing initiatives hoteliers should
focus on in 2013 and beyond: mobile
SEO, mobile SEM (paid search), mobile
link
building to the mobile site from mobile directories and sites, and local content optimization. Mobile search
engines
favor and predominantly serve local content; therefore, hoteliers need
to
optimize their local content and listings on the search engines, main
data
providers, and local business directories. Tablet Website
Enhancement: 3%-5% More and more
consumers are using tablets to plan and purchase travel, and hoteliers
must
deliver a customized, user-friendly experience on these devices. One in five Americans will use a tablet by
the end of 2012 – and of this growing population, more than half
reported
shopping on their tablets once a week
and 12 percent shopped daily (eMarketer). Search engines and many major media sites
consider tablets
as a separate, distinct device category, characterized with its own
unique user
behavior and best practices for user experience and content delivery.
According
to Google’s company data, 7 percent of all searches already come from
tablets
versus 14 percent from mobile devices and 79 percent via desktops (Q1,
2012). Put it in your budget to either enhance your
desktop website
for the touch-screen tablet environment or build a tablet-only version
of the
property’s website, in addition to the desktop and mobile sites, all
managed
via a single digital content depository-enabled CMS. Email Marketing: 2%-3% The
grand-daddy of all digital marketing formats, email marketing generates
3-5
percent of total website revenues across HeBS Digital’s client
portfolio.
Email marketing is still an essential component of the hotelier’s
direct online
channel strategy, and an easy and affordable way to send messages to
your key
customer segments. Email marketing
campaigns still generate significant ROIs for hoteliers, making this
initiative
a crucial line item in almost every hotelier’s budget. Smarten up your email marketing strategy by
introducing
reservation recovery email initiative, and increase your opt-in list by
implementing a modal acquisition capability on the website. Remarketing &
Retargeting: 5%-10% Online media campaigns that are not
business-needs driven
(more on this below) should be launched using the latest targeting
capabilities, including retargeting, also known as remarketing. The
Google
Display Network offers the ideal symbiosis between re-targeting text
ads and
banner ads to target online travel consumers already familiar with your
property and brand. With these campaigns, you may target users
after they leave
your website. Messages are customized based on which part of the site
users
visited, and whether or not they made a booking. Retargeting campaigns
aid in
increasing brand awareness and loyalty, and move users through the
purchase
conversion funnel. A recent survey
by Econsultancy and Responsys showed that 70 percent of companies
believe that integrating
search and display had the most positive impact on their display advertising. Online
Video: 3%-4% Short videos of
your hotel and its amenities (best practices require not a
single
30-minute video, but shorter 30- to 60- second videos illustrating
different
aspects of the hotel product: weddings, spa, entertainment, etc.) certainly influence travel bookings. It
is now more affordable than ever to
produce and showcase a video on your website. There are high-quality
vendors
available that will come to your property, provide a script, film
videos, edit
and provide to you in a usable format for your site. Reputation Management:
2%-3% In 2013, there must be room in the budget
for managing the
property’s online reputation and presence in leading social media and
review
sites. Over the last few years, online customer reviews and social
media have
reached an unprecedented level of awareness within the hotel industry.
With
Google+ Local now utilizing Zagat reviews, and Bing now incorporating
Yelp
reviews, you are taking quite a big risk if you are not monitoring and
responding to reviews. Consider a solution such as Revinate or
ReviewPro to help
you manage the overwhelming amount of reviews and social media mentions
you may
not want to manage manually. HeBS Digital also helps clients utilize
these
tools effectively by providing analysis, customer intelligence,
competitive
benchmarking and automated reporting. Business-Needs Driven
Digital Marketing Campaigns & Initiatives Recommended share of
the 2013 hotel digital marketing budget: 15%-25% Business-need
campaigns help the property tackle business and occupancy needs that
arise
because of seasonality or group cancelations, weekend vs. weekday
occupancy
issues, as well as needs related to any key customer segment: meeting
planners,
wedding planners, leisure travel, corporate travelers, etc. Multi-channel marketing campaigns are the
most effective way
to address such a business need, increase reach, and boost bookings
&
revenue for a need period. In order to effectively build traction
across
multiple channels, hoteliers must first identify what the business need
is and then
determine an online marketing goal. Different media channels will help you
achieve different
goals. The question is – what are your property’s goals? Once
you determine your goals it’s important
to brainstorm a multi-channel campaign that utilizes the right online
channels effectively
and, most importantly, promotes one cohesive campaign message across
these
channels. When
strategizing a business-need campaign, take into consideration how the
fundamentals can play a role in achieving success. For instance, should
you
launch an SEM campaign to promote this initiative? Would adding a
section to
the website build awareness and increase the SEO visibility of this
campaign?
Once you’ve determined the fundamentals, you can begin exploring what
media
channels are right for your goals and begin building your marketing
plan. A
‘Business-Needs’ campaign should be launched at least once per quarter.
Here is
an example of what a ‘Business-Needs Driven’ campaign might look like: Property
X needs to drive leisure bookings for the upcoming month – they just
realized
they are only at 60 percent occupancy!
Capital Investments, Consulting
& Operations The Hotel Website: Recommended share of
the 2013 hotel digital marketing budget: 15%-25% The explosion of
the mobile and social media channels and the emergence of the new
tablet
channel presented a major challenge to hotel marketers: Creating and
managing
digital content throughout three distinct distribution and marketing
channels, as well as publishing the
hotel’s latest
special offers and promotions on the hotel’s social media profiles. Today's hotel
website needs fresh content, rich media and current promotions. The
hotel's
special offers, promotions and packages need to be marketed across all
channels,
from the desktop website to the mobile site and social media. The
hotel’s rich
media assets (hi-res photos, PDFs, graphics, videos, etc.) need to be
pushed to
all marketing and distribution channels, including the hotel website,
social
media, OTAs, GDS, etc.
Your old and tired 1-2 year old property
website cannot
possibly meet the new requirements and most likely has dropped off the
map,
i.e. experienced deteriorating search rankings. Case Study: Need for Website Content
& Digital
Marketing Asset Management System
Consulting: 8%-10% The HeBS Digital’s Sixth Annual Benchmark
Survey showed that
there was also an increase in budget dollars (19.9%) going toward the
services
of an outside Internet marketing agency, showing that hoteliers
recognize the
speed at which our industry progresses and the need to work with
dedicated,
experienced professionals in this area to stay on top of trends and
achieve
high ROIs. Work with a full-service hotel digital
marketing firm that
will actively help you create and manage a budget that makes the most
sense for
your property. This firm should also teach you the latest trends and
best
practices so you can achieve high ROIs and incremental revenue growth. Website Operations: 2%-3% A small yet necessary budget for website
hosting and
maintenance needs to be included in the budget. Website maintenance may
not
always be planned. For instance, this year’s Americans with
Disabilities Act
update meant that every
hotel website needed to be updated to include their ADA amenities
and
services, including a landing page describing ADA-friendly
accommodations. You
may also avoid the need to pay for website updates by investing in a
CMS
solution that not only allows for total control over the hotel website,
but
also functions as a centralized digital marketing asset depository and
dashboard to store, manage and distribute all of the hotel’s digital
marketing
assets. Analytics &
Campaign Tracking: 2%-3% There is no
such thing as a free lunch. A leading analytics tool such as
Adobe’s Digital
Marketing Suite powered by Omniture allows hoteliers to effectively
measure the
results of their digital marketing efforts. This in turn allows for the
necessary and quick shifts in marketing funds from less effective
marketing
campaigns to campaigns with higher ROIs. In summary, here is a quick snapshot of how
you should
allocate your 2013 digital marketing budget:
Conclusion In 2013, the hotel’s digital marketing
budget should be
separated into three silos. The core of the budget should focus on the
fundamentals of hotel digital marketing that drive serious ROIs; there
should
be a budget allotted for specific business needs and unforeseen
challenges; and
a portion needs to be set aside for capital projects such as website
re-design
and enhancements, consulting and campaign management, and day-to-day
website
operations and professional development. Keep in mind that while the industry is
enjoying growth in
all three key performance indicators, the economy still remains a
factor when
planning the 2013 budget. That means that the digital marketing budget
must
remain somewhat flexible (depending on business needs and campaign
results) and
that every dollar must be spent wisely, taking the dynamics of the
marketplace
and the industry’s latest best practices into account.
About the Authors and HeBS Digital Max Starkov is President & CEO and Mariana Mechoso Safer is Vice President, Marketing of HeBS Digital, the hospitality industry’s leading full-service digital marketing and direct online channel strategy firm based in New York City (www.HeBSdigital.com). Margaret Mastrogiacomo, Senior Manager, Interactive Media & Creative Strategy at HeBS Digital, also contributed to this article. HeBS Digital has pioneered many of the best practices in hotel Internet marketing, social and mobile marketing, and direct online channel distribution. The firm has won over 200 prestigious industry awards for its digital marketing and website design services, including numerous Adrian Awards, Davey Awards, W3 Awards, WebAwards, Magellan Awards, Summit International Awards, Interactive Media Awards, IAC Awards, etc. A diverse client portfolio of top-tier major hotel brands, luxury and boutique hotel brands, resorts and casinos, hotel management companies, franchisees and independents, and CVBs are benefiting from HeBS Digital’s direct online channel strategy and digital marketing expertise. Contact HeBS Digital’s consultants at (212) 752-8186 or [email protected]. |
Contact: Mariana Mechoso Safer HeBS Digital Phone: 212-752-8186 Email: [email protected] Web: http://www.hebsdigital.com |
Also See: | Smart
Hotelier’s Guide to 2012 Digital Marketing Budget Planning / Max
Starkov and Mariana Mechoso Safer / September 2011 |
Smart
Hotelier’s Guide to 2011 Internet Marketing Budget Planning / Max
Starkov and Mariana Mechoso Safer / October 2010 |
|
Mastering Internet Marketing in 2010: Results of the 4th Benchmark Survey on Hotel Internet Marketing / Max Starkov, Mariana Mechoso Safer and Evan Rosenblum / March 2010 | |
A Hotelier's Guide to Budget Planning in '08; Best Practices in Developing the 2008 Hotel Internet Marketing Budget / October 2007 |