Programmatic advertising helps hotels personalize their message

NEW YORK—One of a hotel’s greatest assets when it comes to driving bookings and creating revenue is digital advertising. But are hotels doing it right?

Everyone knows that mobile is important. According to Phocuswright, one in five online travel bookings in the U.S. are made on mobile devices, and mobile bookings are growing at a faster rate than any other channel. JB Brokaw, president of North America for Sociomantic Labs, which helps advertisers grow reach and increase customer loyalty with programmatic solutions for online, mobile web and in-app display advertising, said that this is influenced by a variety of factors, from people spending more time on smartphones and tablets, to manufacturers increasing the size of mobile screens, to travel companies putting additional investment toward more intuitive mobile user interfaces.

“Mobile also gives travel companies opportunities to connect with consumers during the consideration stage,” Brokaw said. “The majority of U.S. travelers use their mobile devices to research and plan their trips, whether they’re reading hotel reviews or searching for vacation packages. As a result, travel companies are investing more heavily in mobile ad spend to influence these mobile-forward consumers.”

And that isn’t likely to change anytime soon. “Looking ahead, travel companies will continue to allocate even more of their digital spend to mobile to keep up with consumers’ habits,” Brokaw said. “Younger travelers, who are the most likely to book from their mobile devices, will have increased spending power, and consumers of all ages will grow more comfortable with using their mobile devices to book travel. This will have a direct impact on mobile sales, so it’s crucial that travel companies adapt their digital strategies accordingly.”

Looking at the current landscape, Brokaw noted that there are several mistakes many hoteliers make when it comes to their digital advertising strategy. For one thing, consumers certainly can get too much of a good thing. While some hoteliers believe a higher volume of ads across channels will drive more brand awareness, Brokaw noted, “On the contrary, overexposure of ads can greatly annoy individuals and cause harm to how the brand is perceived. This is why frequency caps, which restrict the number of times an individual sees an ad from the same brand within a certain amount of time, are so necessary. Hotel brands should speak with their agency or technology provider about what frequency caps they have in place and what types of respectful advertising tactics they are employing.”

The biggest blunder he sees? A lack of personalization. “Brands need to connect with consumers on a personal level and by showing messaging and offers that are relevant to them; otherwise, they run the risk of blending in with the rest of the online noise,” he said. “Improving this level of personalization can drastically improve brand awareness: A Phocuswright survey found that over one-third of travelers were able to recall ads that showed offers for a brand and/or destination that were specific to them. This can also have a big impact on performance, as more than 50% of travelers today demand that brands customize ads to them. The good news is that it’s easier than ever for marketers to provide personalized ads to travelers with programmatic.”

Programmatic advertising, Brokaw noted, “enables hotel brands to reach travelers with ads that are custom-tailored to them. This is often done through dynamic creative banners, which can be populated with different products (like various properties within a hotel’s portfolio) and offers (a 10% off sale) based on consumers’ preferences and purchase history.”

Another aspect of programmatic is real-time bidding. “With real-time bidding, a demand-side platform can bid on ad placements on behalf of the hotel, he explained. “The optimal price for the bid is determined using the brand’s first-party data, and the bid is placed in the milliseconds it takes the page to load. This helps brands ensure that their budgets are going toward the right individuals at the best price.”

Audience segmentation is another way that hotels can use programmatic advertising. “Hotel brands can create segments of travelers according to their online behaviors; for example, hotels can create a new segment of travelers that typically add extra services to their room reservations, like breakfast or late checkout, or even segment out business travelers from leisure travelers,” Brokaw said. “Hotel brands can then target these segments of travelers with eye-catching ads that are specific to their needs. While retargeting campaigns are the most common type of programmatic campaigns, hotel brands can also engage with new customers and build loyalty with existing customers through dedicated prospecting and loyalty campaigns.”

Marketers should invest in a mix of both in-app and mobile web campaigns in order to maximize their budgets, according to Brokaw. “Frequent and loyal travelers are more inclined to use a hotel brand’s app, and we all know how much more valuable it is to invest in a loyal customer than a new customer,” he said. “Mobile apps can be a major competitive advantage for hotel brands, especially amid stiff competition from online travel agencies that typically allocate higher digital spend to mobile.”

Hotel brands can also see strong ROI from their mobile web campaigns. For example, one of Sociomantic’s travel clients, a global hotel portfolio, wanted to increase its mobile presence. “Together, we ran parallel smartphone and tablet retargeting campaigns and created dynamic banners that were optimized for mobile screens and showcased a variety of properties within the portfolio, dependent on which destinations each individual traveler had previously viewed,” Brokaw said. “The campaigns successfully performed at a lower cost-per-booking rate than initially requested and the hotel allocated more ad spend to drive additional bookings and revenue. Overall, the hotel chain doubled its mobile investment, and earned an average 30% mobile booking rate.”

The most important thing hoteliers need to do—particularly to increase personalization—is to make the most of their CRM data. “Hotel companies are sitting on a wealth of first-party customer data, from room preferences to frequency of travel to whether travel is predominantly for business or for pleasure. Knowing how to tap into this trove is crucial for an efficient return on ad spend,” Brokaw said.

These days, most hotel companies are focused on integration—making sure the revenue management system, CRM, loyalty program and other tools in their kit are working together to optimize revenue. “By combining revenue, CRM, loyalty and other valuable data sets, hotel brands will be able to become more sophisticated with their ad targeting and provide a more granular level of personalization,” Brokaw said. “For example, hotels that combine revenue and CRM data can determine what a leisure traveler typically pays for a hotel room while on vacation, based on their previous booking history. From there, they can estimate what the traveler would likely pay for a room upgrade and send them personalized offers that advertise the upgrade at that price point. Having more integration will also give hotel brands more control in their programmatic advertising tactics, whether it’s personalizing content at the user level, or creating audience segmentations to reach groups of travelers that have similar online behaviors.” HB