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Tim Peter

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November 5, 2013

3 Myths of Online Distribution Hurting Hotels (Travel Tuesday)

November 5, 2013 | By | No Comments

The essence of distribution strategyHotels work hard to balance the amount of revenue from online travel agencies (OTA’s), like Expedia and Booking.com vs. revenue from their own, brand-direct channels (phone, brand/property website, etc.).

A long-time reader emailed and asked:

“I pay a fair bit in commissions to OTA’s, but my website isn’t free. OTA’s have big marketing teams and I only have a director of sales. While I don’t like paying OTA commissions, wouldn’t I be better off saving on the cost of my own website and paid search and all those other things I don’t know much about and letting the OTA worry about those instead? That way, I just have to worry about negotiating a more fair commission level with the OTA’s.”

This is an important question for many hotels. And, yes, it’s a fact that pretty much every OTA will have bigger budgets and more resources dedicated to marketing, online and offline, than pretty much every hotel.

The challenge, though, is that this question depends on a few “common-sense” assumptions that are among the biggest myths of hotel distribution. What are these myths?

  1. Myth: Your guests’ make an either/or decision when choosing where to book. Guests don’t look at OTA’s or brand websites prior to making a booking decision; they look at OTA’s and brand websites prior to booking. The Google research I talked about last week suggests guests visit between 20 and 30 websites, conduct 12-17 searches, and spend 60+ days planning their trip. OTA’s play a role in facilitating that decision; so do hotel websites. Failing to provide information guests need on your site—or worse, not having a site at all—makes you appear less trustworthy than a hotel with a great site and a solid OTA presence. And that’s more likely to push guests to choose another hotel altogether, and not just another booking channel.
  2. Myth: OTA’s are evil. Just as your guests need choices, so do you, and OTA’s often offer a good choice for reaching guests. Distribution shouldn’t be about OTA’s vs. brand websites. It’s how they work together to help the guest and your property. A smart distribution strategy makes use of OTA’s for what they’re good at—reach, new markets, scale—while leveraging your own site for what it’s good at —brand storytelling. OTA’s can be a great source of new business when used well (and, yes, a fair commission level is part of “using them well”). Remember that OTA’s require inventory to sell, which gives you negotiating power. Use that power wisely to make OTA’s work for you, not against you.
  3. Myth: OTA reservations replace your need for a website. Remember, guests use your website as more than just a booking channel (although, ideally, it’s that too). Even if 100% of your business came from OTA’s, you wouldn’t get rid of your phone number, would you? Of course not. Nor would you get rid of your website. The cost of distribution through OTA’s are in addition to the costs of your website, not instead of. Your job is to put your website to work for you as both a customer service and a booking channel to reduce your costs and improve your revenues. Plus, you want to give guests who found you through OTA’s for their first stay a place to come the next time they want to stay with you.

You’re right not to try and compete head-to-head with OTA’s. Their scale, budgets, and resources make them a valuable contributor to your business, not a competitor. Just remember that, for the most part, it doesn’t matter where the first reservation from a given guest comes from. It’s the second reservation that matters.

So, yes, negotiate fair commission levels with OTA’s. And, yes, leverage their reach to find new guests. But funnel some of those revenues into investing in your own website as well, to tell your brand story, help guests decide whether you’re the right hotel for their stay, and receive direct bookings. When all the pieces work together, your property and your brand benefit both today and in the longer term, too.

If you’re interested in learning more about the future of e-commerce and marketing via the social, local, mobile web, register to receive a special report I’ve produced in conjunction with hotel marketing firm Vizergy, “Digital Hotel Marketing in a Multiscreen World.” While it’s targeted specifically at hotel and resort marketers, the lessons apply to just about any business. You can get your free copy of the report here.

You might also enjoy some of our past coverage of the social, local, mobile web and what it means for your business, including:

Tim Peter

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October 16, 2013

What's E-commerce Mean Today, Anyway? Thinks Out Loud Episode 46

October 16, 2013 | By | No Comments

What's E-commerce Mean Today, Anyway?

What’s E-commerce Mean Today Anyway? Headlines

You can also register to receive a free copy of my special report, “Digital Hotel Marketing in a Multiscreen World,” produced in conjunction with Vizergy, here. While it’s targeted to the hospitality industry specifically, most of the lessons apply across verticals.

Contact information for the podcast: podcast@timpeter.com

Technical details: Recorded using a Shure SM57 microphone
through a Mackie Onyx Blackjack USB recording interface into Logic Express 9 for the Mac.

Running time: 15m 18s

You can subscribe to Thinks Out Loud in iTunes [iTunes link], subscribe via our dedicated podcast RSS feed (or better yet, given that Google has now killed Reader, sign up for our free newsletter). You can also download/listen to the podcast here on Thinks using the player below:

Tim Peter

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October 8, 2013

Does Metasearch Force You to Lower Prices? (Travel Tuesday)

October 8, 2013 | By | No Comments

Google maps metasearchI’ve talked for a while about Google’s addition of metasearch to Google Maps and what it means for hotels. When Google first introduced this feature, I stated,

With all due respect to Kayak, Hipmunk, and others, metasearch (as we’ve known it to date) still represents a modest proportion of search traffic for most travel companies. According to the New York Times, Kayak’s ranked as the eighth most popular travel site prior to its acquisition, receiving less than half the traffic of the top players (Trivago and Hipmunk are considerably smaller).

However, I noted at the same time,

Google Maps’ mobile app alone gets 2-3 times the traffic of the biggest travel sites, without including desktop traffic (though, to be fair, some of that would likely be duplicated across desktop and mobile). Add improved exposure for Kayak and Trivago through their new parent sites, plus TripAdvisor’s move towards metasearch and the category as a whole stands to gain.

My point then was that Google stood to benefit as much as anyone from the growth of metasearch—and that hotels were likely to face increased price competition because of this.

Fast forward a couple of months and here’s where we are:

Comparison travel shopping sites such as Kayak and Dealbase are now used to make travel reservations by 28 percent of travelers, up from 15 percent in 2010 (Source: Travelpulse, MMGY Global/Harrison Group)

Of course, I’ve also noted for long time that in an age when the price for your product and your competitors are mere clicks away from one another, you can’t just try win on price alone. And, because of the price transparency created by the Internet (whether due to metasearch or customers simply shopping around), trying to compete on price is often like trying to win a race to zero. In other words: A really bad idea.

As a recent New York Times article notes,

In the end, hotels need to build their customer base on more than just price, Professor Adler said. “If guests come and the cleanliness, facilities or service isn’t what they expect, they won’t book there in the future, just to save some money.”

Yes, guests shop around. And yes, they’re often looking for last-minute deals. But what they ultimately want is value. That’s why upselling, when done right, works. It’s why guests have a favorite hotel. Or a favorite restaurant. Or a favorite airline (or at least one they hate less).

Distribution and pricing and marketing all go hand-in-hand to tell your guests the right story about your brand and your property. Price is use one component of that story. Tell the rest of your story well and maybe you won’t have to compete solely on price.

If you’re interested in learning more about the future of marketing and e-commerce on the social, local, mobile web, register to receive a special report I’ve produced in conjunction with hotel marketing firm Vizergy, “Digital Hotel Marketing in a Multiscreen World.” While it’s targeted specifically at hotel and resort marketers, the lessons apply to just about any business. You can get your free copy of the report here.

You might also enjoy some of our past coverage of the social, local, mobile web and what it means for your business, including:

Tim Peter

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October 7, 2013

Solving for "Why": The Myth of More

October 7, 2013 | By | No Comments

E-commerce strategy developmentBusiness, and marketing specifically, often focuses on “more.” But here’s a question for you: Is more always better?

I’d argue that cases exist where “more” isn’t always a good thing, at least not in itself. Let me give you an example.

A company I worked with recently (they’ve given me permission to share this), called me in because they’d launched a promotion designed to bring in more traffic and, they hoped, more sales.

They’d achieved the first goal; traffic to their site skyrocketed. But… something went wrong. Their revenues didn’t increase. In fact, they fell.

What went wrong?

Hang with me for a second and I’ll explain.

First, there’s a fairly simple model I’ve used for years for evaluating e-commerce strategies and tactics that looks like this:

Revenue ( R ) = Visitors ( V ) times Frequency ( F ) times Conversion ( C ) times Purchase Value ( P )

Or, more simply:

Revenue = V * F * C * P

If you want to increase your revenues, you can increase:

  1. The number of visitors your site gets
  2. The frequency those visitors come to your site
  3. The conversion rate among those visitors (you can bone up on what conversion rate is here)
  4. The value of the transaction from those visitors who convert
  5. Some combination of the above (there are 11 possible combinations, in case you’re curious)

Increase one or more of these numbers and you can expect your revenue to grow. And the more of these four variables your chosen initiative affects, the more likely you are to increase revenues. Which, you know, is kind of the point. This model also works for ad-supported businesses with just a little finessing.

Too often, businesses look to grow one of these numbers in isolation from the others (a problem I’ve discussed at length here and here). Occasionally, this isolated focus occurs because companies “silo “teams, for instance making one group responsible for promotional tactics and another responsible for improving site functionality.

Fortunately, that wasn’t the case here. Unfortunately, the tactic the company had chosen—creating so-called “link-bait” content designed to increase the number of sites linking in, improve their search engine ranking, and grow traffic—did increase their traffic, but it didn’t consider any other component of the model. And ignoring the other elements caused the overall decline they experienced.

So what went wrong?

Well, a few things:

  1. The content wasn’t particularly relevant to their business. While the content was well written, eye-catching and increased their traffic, almost none of the new traffic converted.
  2. The new visitors rarely returned to the site. The client’s frequency metrics fell pretty sharply as the “new” visitors almost never came back to the site a second time.
  3. The new content distracted long-time customers. Not only did the new content not encourage repeat visits or purchases, it actually distracted the company’s existing site visitors from their initial purchase intent, hurting conversion rate.
  4. The additional traffic slowed their site response. A couple of their pieces got picked up by larger content aggregators and the added volume hurt site stability, which impacted sales during peak periods. Worse, their operating expenses increased because of the need to improve server capacity (while the cost of a single additional visitor is essentially free—low marginal cost, in economic terms—the cost of a 2.5x volume increase was not).

Fortunately, none of these were long-term problems. By shifting focus from “more traffic” to “more qualified traffic,” we were able to re-engage existing customers, improve conversion rates, and drive higher purchase values from visitors to the site (visit frequency returned roughly to pre-link bait campaign levels). Result: happy customers and happy business owners.

Now, does that mean “more traffic” is a bad goal? Or “more” anything, for that matter?

Not at all.

But you’ve also got to consider what you want those visitors (or what-have-you) to do when they arrive at your site and whether they’re drawn from new visitors or people you’ve already engaged with—or, of course, both.

So when you’re thinking about “more,” think also why you want more. Then align your objectives, strategies, and tactics with solving for “why.”

If you’re interested in learning more about the future of e-commerce and marketing via the social, local, mobile web, register to receive a special report I’ve produced in conjunction with hotel marketing firm Vizergy, “Digital Hotel Marketing in a Multiscreen World.” While it’s targeted specifically at hotel and resort marketers, the lessons apply to just about any business. You can get your free copy of the report here.

You might also enjoy some of our past coverage of the social, local, mobile web and what it means for your business, including:

Tim Peter

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September 23, 2013

Mobile Makes E-commerce Even More "Frictionless"

September 23, 2013 | By | No Comments

E-commerce on smartphones is frictionlessI’ve been playing with Apple’s new iOS 7 the last few days and it got me thinking about how frictionless e-commerce already is on mobile. Consider these customer experiences:

  • Apple’s new iTunes Radio allows for song purchases directly from within the player, as have Pandora and others.
  • Apple’s flagship iPhone 5s can use its TouchID fingerprint reader to authorize purchases in iTunes for music, apps, and movies.
  • Amazon’s Kindle line enables consumers simple access to buy both digital and physical inventory.
  • UK retail giant Tesco has introduced a new device, the Hudl, largely to achieve benefits similar to the Kindle’s.
  • Google offers its Wallet payment platform on both Android devices and, as of last week, iOS, streamlining purchases and money transfers.
  • eBay offers a variety of apps providing instant access to commerce activities for its users across mobile platforms.

And, of course, all of these ignore the myriad in-app purchase capabilities among numerous games and productivity apps, whether offered as add-on’s to an existing paid product or as part of a “free-mium” business model (providing a free basic version and selling premium features for power users).

The Value of “Frictionless” E-commerce

Now, streamlining purchase activity has long been a central tenet of e-commerce. Amazon and eBay have built their businesses primarily on moving the barriers between consumers and commerce (for example with tools like this, this, this, and this).

But mobile destroys those barriers.

While many mobile e-commerce applications have lots of room to improve, the integration available across mobile platforms, including shopping/browsing history and payment information, combine to produce the “slickest” (in terms of friction) commerce capabilities we’ve ever seen. Facebook already has gotten in the game, partnering with a number of payment providers and e-commerce shops to facilitate streamlined payment.

AGFAM and Frictionless E-commerce

Among the AGFAM players, Facebook and Google may face a slight disadvantage here (and, really, I can’t emphasize slight enough — after all, check out what Facebook’s doing with payment integration as mentioned earlier). But with their long-term focus on growing advertising revenue, they’re simply less accustomed to monetizing the transaction, typically preferring to monetize the traffic, visit, visitor, or “eyeball” instead. That’s not necessarily a weakness; it could well be a strength. It’s simply that their (relative) inexperience facilitating transactions may provide Amazon, Apple, eBay, and even Yahoo openings to dominate the space over time.

Mobile Drives “Big Data,” Improves Context and Conversions

And, of course, none of this takes into account the consumer data available from the mobile experience itself, including location, motion, and more advanced data coming in next generation devices. The trend is clear: “content + context” data will continue to drive conversions, both in 2013 and beyond.

Conclusion

Mobile brings e-commerce into the retail environment to the point where “it’s just shopping.”

The key is how quickly you embrace that reality to decrease friction for your customers—and conversions for yourself.

If you’re interested in learning more about the future of e-commerce and marketing via the social, local, mobile web, register to receive a special report I’ve produced in conjunction with hotel marketing firm Vizergy, “Digital Hotel Marketing in a Multiscreen World.” While it’s targeted specifically at hotel and resort marketers, the lessons apply to just about any business. You can get your free copy of the report here.

You might also enjoy some of our past coverage of the social, local, mobile web and what it means for your business, including:

Tim Peter

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August 16, 2013

Facebook Isn't Offering a Mobile Payments Platform. But What They Are Offering is Far More Interesting.

August 16, 2013 | By | No Comments

Facebook moving into commerceOn yesterday’s podcast, I mentioned that Facebook was launching a PayPal competitor as reported by AllThingsD. Turns out, not so much.

But, what they are doing is really interesting all the same.

TechCrunch clears up the confusion noting Facebook’s payments test is a companion that fills in billing info. Key story highlight:

” The feature pre-fills credit card and billing info for making easier purchases through PayPal, Stripe, Braintree or other payment processors in third-party mobile apps. It’s not a payment processor itself, but could help Facebook prove the ROI of its ads.” [Emphasis mine]

Now, clearly there’s a need for this kind of app. I’ve mentioned before how poor usability hurts the growth of mobile.

But the bigger trend, one I’ve mentioned in the past is that “he who owns the data, owns the customer.” (You can read more about that in my presentation on where marketing and online distribution are headed below):

Companies like Facebook, and its AGFAM brethren—Apple, Google, Facebook, Amazon and Microsoft, plus eBay who deserves an honorable mention—recognize the value of customer data.

You’d think Facebook would love to get a piece of the highly profitable payments pie. But this move shows where they believe the real value lies.

If you’re interested in learning more about the future of marketing on the social, local, mobile web, register to receive a special report I’ve produced in conjunction with hotel marketing firm Vizergy, “Digital Hotel Marketing in a Multiscreen World.” While it’s targeted specifically at hotel and resort marketers, the lessons apply to just about any business. You can get your free copy of the report here.

You might also enjoy some of our past coverage of the social, local, mobile web and what it means for your business, including:

Tim Peter

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August 15, 2013

Why E-commerce Keeps Growing. And Why it Still Will. Thinks Out Loud Episode 39

August 15, 2013 | By | No Comments

Why e-commere keeps growing. And why it will.

Why E-commerce Keeps Growing and Why it Still Will Headlines

And here’s the presentation I talk about:

Contact information for the podcast: podcast@timpeter.com

Technical details: Recorded using a Shure SM57 microphone
through a Mackie Onyx Blackjack USB recording interface into Logic Express 9 for the Mac.

Running time: 14m 37s

You can subscribe to Thinks Out Loud in iTunes [iTunes link], subscribe via our dedicated podcast RSS feed (or better yet, given that Google has now killed Reader, sign up for our free newsletter). You can also download/listen to the podcast here on Thinks using the player below:

Tim Peter

By

August 12, 2013

E-commerce Up 16% YOY, M-commerce 24%. What More Do You Need to Know?

August 12, 2013 | By | No Comments

Incredible growth onlinecomScore reports e-commerce spending increased 16% year-on-year in the second quarter, to $49.8 Billion in the quarter. As the article notes:

“E-commerce accounted for 9.6 percent of consumers’ discretionary spending, the highest second quarter share on record.”

The article continues:

“Consumers spent an additional $4.7 billion in mobile commerce (m-commerce) via smartphones and tablets, an increase of 24 percent over the past year.”

These numbers underscore what I said last week about how retail and e-commerce are now “just shopping.” Customers don’t care much about channels. They’ll use whatever works for their needs at that time.

If you’re interested in learning more about the future of marketing on the social, local, mobile web, register to receive a special report I’ve produced in conjunction with hotel marketing firm Vizergy, “Digital Hotel Marketing in a Multiscreen World.” While it’s targeted specifically at hotel and resort marketers, the lessons apply to just about any business. You can get your free copy of the report here.

You might also enjoy some of our past coverage of the social, local, mobile web and what it means for your business, including:

Tim Peter

By

August 8, 2013

E-commerce? Retail? It's Just Shopping: Thinks Out Loud Episode 38

August 8, 2013 | By | No Comments

E-commerce is just shopping

E-commerce? Retail? It’s Just Shopping Headlines

As promised in the podcast, you can register to receive a free copy of my special report, “Digital Hotel Marketing in a Multiscreen World,” produced in conjunction with Vizergy, here. While it’s targeted to the hospitality industry specifically, most of the lessons apply across verticals.

And, here are the webinar slides from a few months back:

As well as the video:

Contact information for the podcast: podcast@timpeter.com

Technical details: Recorded using a Shure SM57 microphone
through a Mackie Onyx Blackjack USB recording interface into Logic Express 9 for the Mac.

Running time: 13m 26s

You can subscribe to Thinks Out Loud in iTunes [iTunes link], subscribe via our dedicated podcast RSS feed (or better yet, given that Google has now killed Reader, sign up for our free newsletter). You can also download/listen to the podcast here on Thinks using the player below:

Tim Peter

By

July 11, 2013