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.
