Marketing initiatives: are they really worth it?

Tom Bacon shares marketing lessons from Choice Hotels, and taps his own personal experience to find that marketing spend is more complicated than you think

How do you assess the value of marketing spend? The ‘multi-touch attribution model’, a sophisticated attribution technique, was presented by Olga Nielsen, director of marketing and distribution analytics for Choice Hotels, at the EyeforTravel Smart Analytics conference in Atlanta earlier this year.

Rather than ‘last click attribution’ this model can assess both internet-based and more traditional marketing approaches and statistically separate the incremental revenue value of each. Every touchpoint can be incorporated in the analysis, which is increasingly necessary as customer purchase decisions flow across multiple sites and touchpoints (see Accurate attribution remains travel’s biggest headache, EyeforTravel June 5). The model can identify the value of the initial web ad versus the special offer versus the frequent flyer link.

Potentially, marketing initiatives have different impacts at different airlines. Southwest Airlines is known to use fare promotions more strategically and jetBlue relies more heavily on emails. Some airlines, on the other hand, are said to spend more on pay-per-click advertising. This raises important questions:

  • How sophisticated is each of these carriers, however, in assessing the value of their different approaches?
  • Does each fully exploit analytical techniques like the multi-touch attribution model (MTM) to optimise the level and allocation of their spend – as they seem to reach such different conclusions?

Of course, marketing initiatives themselves are often not the biggest driver of bookings. Factors that explain most of any growth or change in bookings include elements like: i) economic cyclicality or seasonality, ii) competitive factors like relative capacity growth and iii) market segmentation factors like growth in target demographic groups.

As Nielsen noted, the MTM model could attribute as little as 5% to initiatives.

Read rest of the article at Eye for Travel