Does the billboard effect work? And what if it doesn’t?

When calculating the high commissions paid to OTAs, hoteliers have long drew comfort from the so-called billboard effect. Unfortunately, the phenomenon probably doesn’t exist. What now?

The concept of the billboard effect came to life in 2009 following the famous research by Chris Anderson from Cornell University. The study seemed to prove that a hotel’s visibility at OTA websites alone boosts bookings through the hotel’s own channels by 8-15%. 

Unfortunately, many subsequent studies have shown that it’s not so simple after all. In the case of the U.S. market, the hotel guest visits 38 websites on average before making a booking (they really do!). That’s why it’s difficult to determine which part of the merits of direct bookings can be attributed to the guest’s earlier contact with the hotel offer at OTAs.

The billboard effect cannot thus be measured now and, perhaps, it never existed at all. That’s what the results of the unpublished study from 2014 presented during the recent Revenue Strategy Summit in Washington seem to suggest.

A study conducted on a sample of 50,000 of online travel shoppers shows that those who visited an OTA at some point during their search tend to finalise their booking via the OTA.

However, one serious limitation of the study should be pointed out - it doesn’t take into account the activity of mobile device users. Even though it cannot be definitely stated that the billboard effect doesn’t exist, there’s convincing evidence that it’s at best modest.

What should you do then? Still work closely with OTAs but double the effort devoted to brand building and direct sale. Tools useful for hotel brand building include:

• content marketing,
• traditional advertising,
• social media.

When preparing the offer, it’s important to consider the following:

• best rate guarantee on the hotel’s own website,
• ​discount programme for regular customers
• widely promoted short-term deals and special offers available through the hotel’s own channels.

Based on Is the billboard effect really dead? Watch this space… / Tnooz.com