Is the billboard effect really dead? Watch this space…
In the tug of war between hoteliers and online travel agencies (OTAs), have you ever wondered why hotels just don’t stop working with OTAs and just go at it alone, seeking to get direct bookings from travelers onto their own websites?
After all, commission levels are high with OTAs, as they increase their market share, in particular on ever-increasing mobile transactions. Online travel agencies are both friends and foes, and one of the key benefits for hotels, in particular for independent hotels, comes from the billboard effect.
What is the billboard effect?
In a seminal research paper published back in 2009, Chris Anderson, associate professor at Cornell University, found a direct correlation between visibility on an OTA site and uplift in direct bookings.
In fact, it was estimated that the benefits from being shown in OTA search results could transform into a sales uplift between 8-15% for hotels.
Not bad, right? But of course, things are rarely that simple.
We also know, from various studies published by Expedia Media Solutions or Think with Google, that the customer path to purchase is not a linear process and that many variables come into play.
In the United States, customers will visit on average 38 travel sites before buying a package, so while the billboard effect certainly plays a role in the process, it remains elusive to isolate this factor alone in the decision-making process.
Death of the billboard effect?
A recent study swings in the opposite direction, boldly claiming that the billboard effect is dead, if it ever existed.
As reported initially by Tnooz, this study was conducted in 2014 and took a look at 50,000 online travel shoppers, finding that users who browsed hotel sites tended to ultimately purchase their hotel stays via online travel agencies such as Expedia, Booking, TripAdvisor and similar intermediaries. The full report is slated for publication later in 2015, early 2016.
The methodology used is different than the one used by the study conducted by Cornell University.
A similar point, though, is that mobile device users were not considered in this recent study. While I can understand this omission from the 2009 study, it makes no sense not to consider mobile users nowadays, knowing they represent more than 50% of online travel searches, and more than 25% of online travel revenues.
So, is the billboard effect really dead? Reading between the lines from the results provided in the Tnooz article, things aren’t so crystal clear.
There certainly seems to be less of an impact, and OTAs are said to be doing a better job at keeping users on their site until transaction time. But there is nothing in the results that can justify such a bold statement as “the billboard effect is dead”.
Lazy Man’s Approach
Back in 2011, HeBS Digital coined the expression “Lazy Man’s Approach” when referring to hotels relying on the billboard effect for their online distribution and thus justifying working closely with OTAs. The fact of the matter is, the billboard effect is only one element among a complex online distribution ecosystem that hoteliers and hospitality marketers ought to master in order to succeed and achieve their business objectives.
Nowadays, hotels must embrace omni-channel marketing, which combines content marketing, traditional advertising and digital tactics across various platforms, social networks and devices. There are no silver bullets, just like the billboard effect was never a solution in and of itself.