Industry Update
Opinion Article 8 February 2018

How Programmatic is Transforming the Hotel Industry

By JB Brokaw, President, North America at Sociomantic Labs

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Technological advances have not only made it easier for people to stay connected across continents, but they have also made travel more accessible for the masses. Between hotels, online travel agencies, Airbnb and other vacation rental sites, there are endless options for every destination and budget available just a few clicks away. Consumers truly have their choice of accommodations. To stay relevant, hotel brands are focusing on enticing consumers to book direct through their sites, and they are investing more heavily in programmatic advertising to capture their attention.

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At its core, programmatic enables hotels to deliver customized ads based off a person's unique online behavior, where and when it matters most and at the most competitive pricing. This is done through real-time bidding, which is hard at work behind the scenes vying for the optimal price of each ad placement – all in the time it takes a webpage to load. With programmatic advertising, a hotel brand can use its first-party data to create personalized recommendations for individuals. The more information a brand has about its audience, the better, and this is where having a loyalty program in place can be extremely valuable. Backed by a loyal customer base, hotel brands tend to have a robust first-party data set, which can give them an edge over the competition.

Types of personalized hotel recommendations that can be built into banners include previously-viewed properties, additional properties within the portfolio that the viewer may also be interested in, or compelling extras such as complimentary breakfast or free parking. It's precisely this personalization feature that makes programmatic ads so effective: in fact, Adobe's 2017 Digital Advertising Report found that 50% of adults between 18-50 value ads that are personalized to them.

We are just starting to scratch the surface of what a strong programmatic strategy can do, and advanced programmatic tactics can be applied for those looking for a more targeted approach. With audience segmentation, brands can build out user segments to target different groups of people with ads that cater to their needs. For example, segments can be created based on how far in advance of a trip people typically visit a hotel site and/or book a reservation. This can also be quite useful in differentiating between business and leisure travelers who generally exhibit different online behaviors. The possibilities are endless, and I recommend that brands sit down with their programmatic partner to determine which types of segments would make the most sense and best align with their business goals. Keep in mind that having too many segments can also hurt results. Also, it's always a good idea to test different types of segments to see what performs well, and optimize accordingly.

Making an Impact on Mobile

Last year, Marriott revealed that about 60% of its website traffic comes from mobile. This shouldn't be too much of a surprise since U.S. adults now spend roughly five hours a day on their mobile devices, thanks to increased smartphone adoption, larger screen sizes, and improved mobile and in-app user experiences. While the majority of hotel bookings still come from desktop, more people are researching and booking travel accommodations from mobile than in previous years. This is especially true for last-minute hotel deals, as travelers are more likely to take advantage of these offers on the fly instead of waiting to be in front of a computer. Travel research company Phocuswright also found that over half of millennial business travelers are making hotel bookings from their smartphones – a number that will only continue to rise.

We've also seen strong performance from our client's mobile campaigns: one global hotel chain we work with was able to successfully drive incremental bookings through its smartphone and tablet campaigns by showing dynamic creative ads featuring multiple properties within its portfolio. These banners were optimized for mobile screens and the brand achieved an average 30% booking rate at a lower cost-per-booking than originally requested, strengthening its return on ad spend.

With eMarketer estimating that mobile travel sales will surpass desktop travel sales within the next three years, it's clear that mobile cannot be ignored. Hotel brands must have a strong cross-device and omnichannel advertising strategy in place if they want to stay ahead of the competition, and they need to put a priority on personalized ads if they want to continue to be relevant to travelers. Otherwise, they run the risk of getting locked out by the competition.

JB Brokaw

Mr. J. B. Brokaw, also known as JB, has been North American President of Sociomantic Labs since 2013. Mr. Brokaw has been Chief Client Officer of iProspect.com, Inc. since September 2012 and served as its Chief Revenue Officer since March 2011. He served as an Executive Director of Market Development at Mindset Media, LLC.

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