CNET: Gartner warns against Social Networking hype

According to CNET, "Many companies are thinking about how they can take advantage of social-networking technology, but analysts at Gartner are warning against getting caught up in the hype." See here.

I thought they meant warning businesses against advertising or working with a Facebook or myspace. As I mentioned in my post about FaceBook, there is no solid business model in this space. The best they can do is Google Adsense.

But what Gartner really meant was "Businesses are advised to consider certain issues before investing in or developing internal social-networking tools."

Yes.. DEVELOPING internal social-networking tools. I guess in hopes of replacing the water cooler crowds, the photocopy pests, and the late lunch laggers? May be to help those busy bees find the right mate in their cubicle-land? Or find those colleagues that they haven't seen in 3 weeks? Will my yearly review depend on how much I corporate twittered since that is how my boss will keep up with what I do?

"But the Gartner report says the hype around social networking doesn't necessarily mean it's a mature enough technology to make it a critical business requirement... There is also little evidence that social networking will be as beneficial for businesses as other Web-based communications technology, such as instant messaging."

It takes a STUDY to find this out? Shouldn't the study look at how much productivity is WASTED on social networks. Whenever I log into Facebook (which is not often and usually during lunchtime only BTW), I see VPs, Directors, and Managing Directors "poke", "superpoke", playing "texas holdem poker", giving "gifts" or writing on "Funwalls"... all during business hours.

And since when did a social network become a "Web-based communications technology"? See the wikipedia definition of "communication" here. According to Wikipedia, key to communication is an exchange between the parties and "Exchange requires feedback." Instant messaging fits this definition, social networking does not. Even twitter does not. My Facebook "friends" answering "My questions" could almost be considered communication.. almost.

"The analysts recommend that IT departments think very carefully before committing to expensive 'social-networking white elephants.'"

Actually, don't think of it at all. Forget it completely. If you do, consider it a moment of madness... then forget it completely.

Evolution of OTA vs Direct Marketshare

I ran across an article on Hotelmarketing.com by Neil Salerno that reminded me of a slide that I used in the recent OTA panel. The article was titled "Supplier direct hype: Who needs third-party travel aggregators?" - see link here.

"...it amazes me that there are still many hoteliers who reluctantly participate in third-party travel portals."

But that reluctance is due mainly to the fact that they are worried about the loss of control of their rate. Even if they don't work directly with travel portals, they put their rates to wholesalers who then resell to travel portals and any hope of rate parity goes out the door. Check Kayak.com and Sidestep.com and you see so many cases of OTAs selling cheaper than hotel direct. So they are worried that this would get worst.

That is understandable, but obviously, not engaging aggregators is not the solution. The hotels must tighten up their contracts with wholesalers and engage directly with the OTAs to cut out the wholesalers from selling to those guys. Not easy, but it is a start towards rate parity.

"I read another article which stated that supplier web sites are gaining more ground against third-party sites in overall market share; they state that like it’s a really big deal. Don’t these people realize that hotel supplier sites had nowhere to go but “up” in market share? They are now where they could and should have been several years ago; that’s nothing to celebrate. "

In M & C's case, we are still not there. We are only crossing the 50% mark for online between OTAs vs direct. Here is a repeat of the chart that I posted earlier:

(Click to see a higher resolution). Here is the original post.

So I do celebrate as we break 50% and start going to where the rest of the industry is heading. I celebrate because we are winning the war and clawing back marketshare that should be ours. There is a place for OTAs and there is a share that is fair. This "share" varies hotel to hotel depending on a hotel's brand, location, and infrastructure.

A few more of Neil's points:
- While the hotel industry was in Internet denial during the late 1990’s, third-party aggregators like Expedia, Travelocity, and the rest were already actively promoting travel on the Internet.
- Since the explosion of a new hotel Internet awareness in 2002, hotel suppliers have been playing catch-up on the Internet
- third-parties do what most hotel franchises cannot do; they aggregate or combine air, hotel, and car rental, and market them to all corners of the world.

Sounds good to me:


"Every hotel needs to be actively involved with all forms of electronic marketing to have a complete and balanced marketing effort... supplier sites and marketing efforts are improving, but that fact doesn’t lessen the need to work with all business sources, including third-party travel aggregators. Get business from as many sources as you can. "

Agreed, but the main issue at play is rate parity and revenue management. If a hotel is not actively using analytics to optimize its relationship with OTAs, then there is a higher risk in working with them.

PPC: Getting a Google Direct Account

Millennium & Copthorne has spent a lot of money this year on Pay-Per-Click keyword bidding. Roughly I would say close to USD 1 million. Google gets a lions share of this budget, because they get us good to great return-on-ad-spend. So we are a half-a-million dollar account for them.

Earlier in 2007, I found out that we "qualify" for a Google Direct Account. This mean that we enter a contract with Google directly and are invoiced by them and pay them directly, bypassing agencies. Our UK-based PPC agency did not like this very much as they get a rebate (i.e. kickback) from Google UK and also they get the volume tier.

I looked seriously into doing this and am currently in the process of moving my account to direct. Why?

BENEFITS:
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1) The account belongs to me rather than the agency which is how the normal set up is. The agency will transfer the account to me if I change vendors or take it in-house. While this should be ok, it can be messy.

2) I was informed at one time that an account transfer will keep historical data but not retain the quality score of the keyword/destination link combo. This is a serious problem if I lose quality score when I switch vendors. So if I have my own account, there is no account transfer and my campaign will not miss a beat. However, more recently I have been told that the quality score will be retained if you do the transfer correctly. In any case, I would rather be safe than sorry. Such policies may change in the future.

3) We manage multiple campaigns with different vendors. So rather than dealing with 3 different google accounts from each vendor, I would rather consolidate into one.

4) Any direct engagement with Google is good. Why should the agencies bask in the glory of spending my money with the advertiser? Why should they get invited to the parties when I pay the bucks?!?!?!?! hehheehhe...... But seriously, it can't hurt for Google to get to know your company better.

5) As part of Google Direct Account, Google will assign a "Maximizer" (yes that is the official job title) to my account optimize my account. They will even run the campaign for me instead of the agency and I will not have to pay any agency fees!!!!

CONCERNS
=========

1) My Finance is perpetually late in paying accounts receivables. With the agencies, they are used to this and will let you slide. Google, with its USD 15billion a year in revenue and USD 300Billion market cap, is a stickler for systems. So what's the big deal about a half a million dollar account? If they don't pay, shut them down until they pay. Where else are they going to advertise with this kind of reach and revelancy and results?

2) Do I really want a "Maximizer" managing my account? Do I really want a media owner to be the media planner? There is an inherent conflict of interest no?

3) Also, I still want the agency as I am still running campaigns on MSN and Yahoo! And soon Baidu and what not. I need the objectivism of a third party. Though the trick is finding the right agency.

======

So within the next few months or so, I should have all my PPC campaigns around the world under my own account. Will let you all know how that goes....

Emarketer says "Do Not Fear Customer Reviews"

According to EMarketer, businesses need not fear the Web 2.0 reviews because "They're usually good." They say this based on a couple of studies which they listed in their article. This is quite an interesting take on things....

"Consumers generally had good intentions when writing reviews." They are trying to help out others to make decisions apparently. (Though I would suggest that there is a bit of "wanting to be heard" as well... kinda like writing a blog).




As you can see from the Baazarvoice survey, most people say they are either "positive most times" (51%) or "positive everytime" (36%).

I am still skeptical of this though as I have, more often than not, come across "negative most times" or "equally split". Perhaps this is because the hospitality industry is different from other online retailers. We are not just selling products or services, we are selling experiences. And expectations of those experiences vary from person to person.

When we meet those expectations, the customer is "satisfied" and does not blog or write about his satisfactory stay at so and so hotel. Especially if he/she stays at hotels 30 or more nights a year.

When we do not meet those expectations, they are unhappy and will bluster and complain and can now do so on tripadvisor or whereever.

When we exceed those expectations, they walk away happy and may tell their friend, family and colleagues about it. And may even put it into some Web 2.0 site.

However, it seems that people are to be more driven to write about the bad experiences in hotels than the good.

But rather than "fear" them, we hoteliers should embrace them and take them as feedback. We need to put a role within our hotels to deal with this just as any other complaints that we get from a guest standing in front of us.