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:
========

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.

Millennium Hotel’s eCommerce Strategic Action Plan for 2007

It's 29th November 2007, and I am on my holiday in beautiful Phuket, Thailand. This is a very nice downtime and gives me a bit of time to reflect on the past year thus far. I looked back at the Strategic Action Plan for Millennium Hotels’ eCommerce that I put together last December-January, which is as follows:

There were 4 main areas that I wanted to focus on this year based on where we were as we entered into 2007: Search Engine Marketing, Reporting & Analytics, Website Re-engineering & Development and Email Marketing.

1) Search Engine Marketing:

PPC Goals & Plans –
- Increase average worldwide Return-on-adspend to 15-to-1
- Increase generic, non-branded keyword spread
- Engage SEM Specialist to manage my PPC campaign

SEO Goals & Plans –
- Review existing search engine optimization that was being carried out by Profero under the existing contract
- Plan for SEO for the new website due out later in the year
- Plan and implement other strategic SEO projects outside of the current site
- Change SEO agencies or augment the work by existing agency with other agencies


2) Reporting & Analytics

M & C implemented Omniture into our websites in early 2006 before I joined. We were getting basic web analytics like pageviews, visits, and referrer domains as well as revenue and conversion. However, the eCommerce data did not tie up directly with our Synxis data, which was supposed to be the source of the eCommerce data. Anyhow, the plan for 2007 was to clean up the analytics and set up the following reports:

- Top Level Reporting for global and corporate users like myself. The data set is more general and aggregated up so that users get the “bigger picture” to make business decisions at that level.

- Regional Level Reporting for our regions: EMEA, US, Asia, and New Zealand. The data set would aggregated up to each regions’ level so that they can view how the region is doing, but also allow them to see top level reports for each hotel to see how they perform. These reports have not yet been developed so we may need a lot of work to implement the taggings needs. The plan is to develop the initial reports by mid 2007 and take it from there.

- Hotel Level Reporting for each of the hotels so that they can see how they perform online and how their individual websites perform as well. Again, these reports were not yet set up so the tagging needed to be looked at and the first reports to be set up. The individual reports will then needed to be set up by the regions themselves.


3) Email Marketing

Our email marketing was very disparate and is managed independently by the regions and also by the hotels themselves. To cut cost, get brand consistency, instill best practices and seriously manage our CRM, we should get everyone on the same platform. Since everyone owned their own list and wanted to protect it, it does not seem practical to ask them to just simply migrate over. The plan is to develop a best practices platform for one region and then show the other regions and the hotels the benefits of the platform – one which would still allow them to control their lists.


4) Website Re-Engineering & Development

The existing website was put together in late 2005 on a limited budget and was using Lotus Domino as a webserver. It has a content management system, but this was custom built and not very flexible or user-friendly. There was already a plan to upgrade the website to IBM WebSphere running on DB2. So we needed to relook at the whole implementation from tagging to site structure to search engine friendliness and even to a new content management system that could be scalable to future development plans.

So the plan was to redevelop the new site under a new system. At the same time, update the design and build country focused sites for our major markets - .com for the US, .co.uk for the United Kingdom, .com.sg for Singapore and co.nz for New Zealand. Future plans included meetings sites for the hotels with major conferencing facilities, destination guides for each hotel, and niche sites like weddings to target those markets as well as non-English versions of hotel sites to target source markets of each hotel.

This undertaking would be the largest and most ambitious activity of the 4 listed here encompassing Search Engine Optimization and Reporting & Analytics as well as Design, Development, and Technical Systems.


*****************

Here is a quick summary and rationality of the above 4 areas of focus:



...... Well, that’s it for now. Back to my holiday. (close the laptop and refocus my eyes on the palm trees, beach and sailboats!)

“Sawasdee Kap” from Joe @ By The Sea Residences, Cape Panwa, Phuket, Thailand.

Expedia's new hybrid OTA model

Last week, Expedia announce an agreement with InterContinental Hotels Group "under which consumers can now book IHG hotels on Expedia® sites globally." As we all know, IHG stopped distributing via Expedia about 3 years ago when Hotels.com was yield managing cities and killing rate parity. Hotels were checking hotels.com to set their "rate of the day".

But now the largest OTA and the largest hotel group have kissed and made up. And they have given birth to a new hybrid. From Expedia's press release:

"IHG is participating as the launch partner for Expedia, Inc.'s new media-based pricing model. The dynamic, two-part economic model will blend transaction pricing with media pricing based on clicks on specific IHG properties in Expedia.com and hotels.com search results. Expedia and IHG collaboratively developed this innovative approach to distribution marketing -- a first in online travel -- where IHG will receive significant benefits from value-added media placement throughout the Expedia network in addition to the bookings they receive from Expedia."

This is about as clear as mud. I am not clear what this means from an implementation perspective. It sound a lot like the restatement of Expedia's "Marketing budget recontribution" in which 2% or so of the commission from the hotel is put back into a Marketing kitty so that you can use it to boost your presence in Expedia's own site. This is of course going to direct people to booking your hotel on Expedia still and hence contribute back to Expedia.
Markus Busch from Hotelmarketing.com offers an explanation:

"The media pricing element is part of a dynamic, two-part economic model that blends transaction pricing with media pricing based on clicks on specific IHG properties in Expedia and Hotels.com search results.

When a customer clicks on a hotel in the Expedia or Hotels.com search results, they are taken to that individual hotel’s customized info-site that contains not only rates and availability and the ability to make a reservation, but also rich and deep content, such as traveler opinions, virtual tours and photos of the property.

IHG hotels will be shown just like all the other hotels on Exepdia, but the agreement differs from other partnerships in that the compensation structure accounts not only for the bookings IHG receives through Expedia, but also for the clicks on IHG properties in the hotel search results on Expedia and Hotels.com sites."

Hmm.... it still sounds like a different cut of the marketing contribution kick back. Expedia is incentivized to promote IHG properties and will collect commission. I do not think that is much of a significant change for most of us at this point, but yes, it is a hybrid model and it remains to be seen whether Expedia is a good as Google in list IHG in relevant searches (not!)

What is significant and unsaid, however, are the commercial terms of this deal. Expedia has been courting IHG for years, and IHG's hotels have been pushing Eric Pearson's department to do a deal as well. IHG would not accept any commissions unless it was around 10-15% (or less!), whereas a typical Expedia commission ranges from (18-25%). Expedia then tries to make up the revenue difference by getting on the PPC bandwagon; and in exchange IHG gets increased brand exposure on Expedia networks.

Hopefully, this opens the doors for the rest of us hotel groups to DECREASE our commissionable rates with Expedia. HOORAY!!!!!

Newsweek: Facebook unveils ad targeting program

So Facebook finally grows up... and gets a proper business model. Then again.. is it a good business model?

It is ridiculous that both Microsoft and NY hedge firms are valuing Facebook at USD 15 Billion. (yes that is a big "B" and not "M".). I mean I did not blog when I read that, but certainly thought to myself "uh... why? What's the business models?" Up to recently, they were selling banner ads that do not work as well as icons ... I mean "Gifts"... to the same people who buy ringtones online. But that is not worth USD 15 BILLION!

So now they have unveiled an ad targeting program.

According to the Facebook Press Release, "Facebook Ads, an ad system for businesses to connect with users and target advertising to the exact audiences they want." You know what? It sounds like Google Adsense: " With Google's extensive AdWords advertiser base, we have ads for just about all categories of businesses and for practically all types of content, no matter how specialized. Google technology matches the most relevant and highest performing AdWords ads to your website."

I was getting excited when Newsweek started: "Facebook is giving users some control over whether to share information on their buying habits and other online activities with friends."

But the reality according to the press fodder was: "Facebook Ads launched with three parts: a way for businesses to build pages on Facebook to connect with their audiences; an ad system that facilitates the spread of brand messages virally through Facebook Social Ads™; and an interface to gather insights into people’s activity on Facebook that marketers care about."

Viral marketing is great but is it worth USD 15 BILLION SMACKAROOS?

During the a Google Panel, I actually suggested to Google why don't they let the AdSense site owners decide exactly what ad or product they advertise? This would apply to all social network sites they have and any Adsense customers. So let the market decides what it want to advertise on its pages and split the commission. Not just the product, but even choose the "etailer".

What if Facebook did this: produced a "What's in my purse?" widget/gadget/fadget and let people load up their "purse" with actual branded items. The brand marketers pay for this advertising AND facebook splits the ad dollar with the person. Extend this to "My mobile", "my watch", "my shampoo", "my computers", "my underwear", and even "my wallet" (including what type of Trojans and what flavor.). Imagine the freaking market research!!!

Now that is a business model. Not some silly "ad system that facilitates the spread of brand messages virally". This model is not viral. It is mainstream marketing and branding. And that's where the money is. It is not in viral marketing which is for product launches and market studies.

Besides transactional sites, all other web publishers are like any other media (print, TV, radio): Their main revenue comes from advertising. So get a proper business model to make the most out of that. Google currently gets the lion's share of my online marketing spend, because they perform and because I can track exactly how much money I make from the ads. And until Yahoo, Facebook, Myspace, etc get their collective acts together, they are still going to get left overs... if anything at all.

Peace. Out.