What Booking.com’s marketing budget shift means for hotels and the digital advertising landscape

November 21, 2017

The Priceline Group recently announced that they intend to shift marketing strategy away from performance-based advertising for one of their key brands, Booking.com, with an intended 55% increase in TV advertising spend.

One official reason? According to Skift, Priceline Group is evaluating whether their significant investment in performance-based efforts, like Google AdWords (they spent $3.5 billion in that arena in 2016) and hotel listings on TripAdvisor and Trivago, really help or hurt in attaining a key goal: getting more direct traffic and one-to-one relationships with customers.

The reason for the shift: Building loyalty through emotional appeal

We see the impact of OTA competition on branded keywords, but their billions of dollars in budget are primarily invested in directly capturing non-brand searches. Non-brand keyword support is a valid part of their paid search strategy because it supports users in the researching/planning stage of the funnel and serves to drive more searches and ultimately more bookings for the brand—what we call “brand lift.”

The latter point is where a heavy-hitting, non-brand-centric PPC strategy is problematic for OTAs. It’s difficult for a user to form a loyalty to OTAs once they’re sure of what they want because loyalty is built on a combination of function and emotion. OTAs can easily tout their function through a performance-based advertising strategy, but emotion is harder to convey. A lack of brand lift leads to a lack of bookings and revenue, resulting in the Priceline Group’s evaluation of this strategy from a return-on-ad-spend (ROAS) perspective.

Both hotels and OTAs share the functional aspects of building loyalty, but when it comes to reaping the fruits of awareness tactics, hotels have an upper hand because they can establish emotional appeal easier than an OTA.

In other words, there isn’t a natural emotional appeal to an OTA. If anything, the OTAs’ tendency to market themselves based on choice and price sensitivity actually pushes consumers away from the one-to-one relationship that OTAs desire to have with them.

On the other hand, a hotel has the opportunity to create a story and carry it out from search to stay. From the ad copy that uses the brand’s voice, to the inspirational imagery and videos on the website, to the special offers that serve a clear purpose for the hotel’s target market, there’s plenty of ways to thread the hotel brand’s story through all stages of the booking journey.

Booking.com wants to build more brand emotion with its customers, and the increased TV spots are intended to give them the platform to do so. But will they be able to convince consumers that they have something more to offer than just hotel bookings? Will they be able to achieve the same brand recognition as say, the Priceline Negotiator or Airbnb?

Plot twist: TripAdvisor & Trivago pull back

Booking.com’s push into TV advertising comes as other major travel brands are evaluating the effectiveness of their own foray into television. TripAdvisor has seen some admittedly lackluster results in advertising its hotel booking product, seeing a reduction in hotel revenue even as its non-hotel revenue picks up.

Trivago also announced this year that it would reverse course in advertising strategy after having to revise downward its 2017 revenue forecast. The company had for years prioritized a heavy-hitting TV advertising budget over digital advertising.

Takeaways for hotels on digital marketing

As a digital marketing agency for hotels, we’re naturally excited about the prospect of a strong competitor lessening its presence in the digital space. From a paid search perspective, this could result in reduced costs-per-click for brands (particularly for those subject to OTA aggression on their brand keywords) and more room for digital marketers to strategize where OTAs capitalize: on non-brand searches. Outside of this opportunity, hotels can take away the below in response to this shift:

Own the sense of your brand from all angles.
Know your brand’s voice, understand who your ideal customers are, and use that to your advantage in everything, from the ad copy a user sees when searching Google to the checkout process on property. So much value comes from repeat guests and loyal customers, and this move by Booking.com shows that OTAs are vying for that same recognition. Still, hotels have the power to build a stronger relationship based in killer customer service and trust online and on-property—an advantage that OTAs aren’t designed to have.

Avoid rate disparity at all costs.
A no-brainer. It’s essential for the hotel to eliminate any potential excuse for a user to find a cheaper price. Ensure rates are always in parity, 100% of the time, especially on price-comparison advertising channels like metasearch. Even better, try to add value to direct bookings without breaking parity, such as offering a free upgrade or additional perks.

Diversify advertising channels you use.
Too much of one advertising tactic can have adverse effects, as both the TripAdvisor and Trivago have seen. On the flip side of the coin, there’s a fine line between having a presence on every channel and being strategic about the channels you are using. An independent property most likely doesn’t have the dollars to earmark for expensive TV spots or grandiose awareness plays, so it’s important to communicate your goals so your digital marketing team can build a media plan around them within your budget.