Circos Brand Karma

As I noted at the Web-in-Travel Conference last October, Facebook was already the most visited website in many Asian countries, and according to Hitwise, for the first time ever more people visited Facebook than Google in the week ending March 13 in the US.

Hitwise also noted a consolidation of web traffic as the 2 sites accounted for 14% of all US internet traffic.  Further Facebook’s growth YOY vs the same week in 2009 is 185% vs Google’s 9%, showing that Facebook still has a lot of upsides.

For brand marketers, the major takeaway is this: if your 2010 marketing plan is essentially the same as your 2008 plan, your emarketing strategy is operating in 2^nd gear in today’s world.  Your brand has likely fallen behind, or soon will, in its ability to effectively engage with customers.

Also, with the online landscape consolidating, the longer you wait, the more resources you will need to invest just to catch up and stay relevant.

Furthermore, it’s time to have a conversation with the owners about how social media is shaping consumer expectations more quickly and forcefully than industry or brand communications.  For owners that are building new properties, social media can be especially illuminating to help developers build a product for tomorrow as opposed to yesterday.

Finally, please don’t hire a junior person to run your social strategy.  Facebook is a powerful communication platform with over 400M members worldwide.  Senior brand marketers are needed to understand how your brand should be represented.

The good news is that there is still time, particularly because social media favors creativity.  Due to its viral nature, your brand can go from unknown to superstar quickly (think Susan Boyle).

But your brand has to be good, authentic, and different.

Will social media go from a cultural phenomenon to a commercial force?  Yes, I believe so.  If last decade’s new new thing for marketers was SEM, I believe this decade’s new new thing will be SMM (social media marketing).

However, for SMM to become legitimate its efficacy must be measurable, otherwise it’s tough to justify devoting any resources to it, particularly because in the last decade marketers learned how to calculate ROI by looking at conversion revenue from CPC traffic referred by their Google (and subsequently, other online) campaigns.  Not only did ad budgets shift, discipline was instilled.

We advise our clients to think about ROI of SMM in 4 major categories:

Brand satisfaction – how do operational improvements and investments increase your overall guest satisfaction over time?  In Brand Karma it’s the Guest Satisfaction Index, which is a composite index of your perception from various public sources, but if you don’t have Brand Karma you can also use something simple like your ranking or ratings on a review site.  When your guests post reviews about you, they’re giving you feedback on their stay.  Because their reviews are public, their words also shape how favorably viewed your brand will be for consumers researching your property.

Brand loyalty – related to overall brand satisfaction, the loyalty measurement lets you know if the guest stay experience is compelling enough that it moves your guests to recommend your brand.  Like satisfaction, this is a measurement that needs to be trended over time as well.  In Brand Karma it’s the Loyalty Index, but again, if you don’t have Brand Karma you can look at the “recommendation” rate on reviews that are written about your brand.  Different sites do this differently, but most have a way for their reviewers to recommend a property.  This index and the Guest Satisfaction Index gives you a good idea of how favorably the public perceives your brand.

Many internal guest surveys also measure satisfaction and loyalty.  Just keep in mind that the surveys guests 1) give you solicited feedback — i.e. questions you ask, not necessarily what the guests want to evaluate, and 2) aren’t viewable by the general public — so they don’t give you insights into how public perceptions may be impacted.

Guest Satisfaction Analysis in Brand Karma

Brand awareness – how do sites with social media increase the awareness of your brand?  In the social media world, in addition to the traditional metrics having to do with volume, awareness metrics must take into account the idea of relative frequency.  Relative frequency lets you know how recent is the content about your brand vs. your competitors.  This is important because if people haven’t been talking about your brand recently, then either you’re not interesting or your competitors are more interesting than you, neither of which is good.

Campaign performance – the ultimate metric that measures ROI.  Suppose you run an ad on Facebook, you’ll want to see what is your ROI for every dollar spent.  This means that you must have a way to measure what you’re advertising.  For example, to execute you can set up a landing page on your ecommerce site so that you can track the referrals and conversion rate from that specific campaign.  Use the traditional ROI formula to calculate what your return is (should be no different than your calculation for search engine marketing).  As you get more advanced, try to establish a link between your brand satisfaction, loyalty, and awareness to your campaign performance.  For instance, how much better does your campaign perform after your brand satisfaction has increased by 10 points?  If you have lower brand awareness than before, do you have fewer click-throughs?  Is there a correlation between guest loyalty to your campaign responses?

In a way, the above points are the fundamentals of marketing, and that’s precisely the point.  Brands wanting to leverage social media for marketing should measure what they’re getting out of their investments in it.  However, like traditional and other online marketing tactics, SMM takes a bit of trial and error to perfect into a strategy, particularly because the ability to micro-target is superb, and so brand owners should consider developing an expertise over a few marketing campaigns.

Some progressive brands are considering hiring a marketing manager to focus on social media in 2010.  Once again, this person’s salary minimally should be considered an investment to improve brand satisfaction, loyalty, and awareness.  List the activities that your social media manager engages in with your fans, followers, and friends, and see how much time they take.  From there, you can calculate the dollar investment (percent of time to salary).  Over time, see what activities lead to gains in satisfaction, loyalty, or awareness, and what activities don’t make a difference.  If you’ve established a link between increases in satisfaction, loyalty, and awareness to increased campaign ROI, then you’ll know how much your social media manager can help you improve your bottom line and guide him/her to engage in activities that increases your key metrics.

The one-to-many branding paradigm favored and perfected by advertising agencies utilizing traditional media changed irreversibly in 2009 with social media going mainstream.  Hundreds of millions of people shared their brand experiences in social networks, generating exabytes (EB) of raw content about brands in text, photos, and videos in all languages (1 EB = 1 billion GB, or 1,000,000,000,000,000,000 bytes).  The world economy also accelerated business changes: giants had to be nimble or fell, small players had to differentiate to survive.  Everyone, including all of us at Circos Brand Karma, had to do a lot more with less.  Though recovery is widely forecasted to begin sometime in 2010, we all know that the twists and turns aren’t over.  As we close 2009, here are our parting thoughts on what to expect in 2010 based on what we saw this year.

Relevant Engagement is the new paradigm in branding — for too long brands have talked at consumers, with social media going mainstream, now customers are talking back.  The amount of time people spend on social networks like Facebook and Twitter make them places where brands should interact with consumers.  These interactions can not be forced; like dating, brands must be attractive to the consumers they want.  Authenticity is one of the most attractive quality a brand can have with its online fans and friends.  See my post on Taming the Social Media Beast for what to do, and what not to do.

Don’t bore me: commoditization is your enemy, and you can no longer afford to be just like everyone else.  People look for reasons to spend their dollars on your brand.  In other words, what defines “value” for consumers includes what your brand does that no other brand can do.  I wrote about this recently in my post about Finding Your Brand Differentiators.  And a word of caution for those who have relied on price as their primary differentiator: whereas in an economy with ample demands you can do that to attract business, in this economy where there’s an overabundance of availability and supply, using pricing as your primary competitive strategy might actually kill your business or prevent you from recovering because you can’t raise your price back up.

The demise of traditional retail travel agents is greatly exaggerated; the savvy travel agents will find a new niche and be even more relevant.  All the information available on the web can become an info-glut problem for travelers doing research.  According to Forrester Research the satisfaction level of online booking has gone down in the last 2 years.  This presents an opportunity for the traditional retail travel agents to filter out the noise and serve as a friendly and trusted voice to frustrated customers.  Further, while booking point-to-point travel is fairly efficient online, complex itineraries that include multiple stops or special needs are still difficult, if not impossible, to book online.  Robert Cole recently wrote an excellent post How Smart Travel Agents and Agencies Rise from the Ashes which is a must read for every traditional retail travel agent AND suppliers, who should explore what they can do to foster an even more intimate relationship with traditional retail travel agents to give their shared customers an easy way to have a holistic travel experience.

Who will come out on top in the battle between Brand vs. Search? Search has become an integral part of the discovery strategy, with billions of dollars being spent yearly on SEM, mostly benefiting Google, the dominant player in this space.  Getting a higher search result placement organically is also a vexing issue confronting brand marketers who don’t have the traffic of say… Expedia.  Executives in the Board Room are already questioning whether 1) it’s wise to rely on search as the primary driver of brand discovery and website traffic, 2) is the industry overall feeding the G beast to become ever more powerful by training consumers to always go to Google first, and 3) if all competitors are optimizing for search, has Search marketing become “tax” and therefore, non-differentiated?  To which we answer 1) No, 2) Yes, and 3) Yes.  To wean themselves off Search, some brand owners have already moved budgets away from SEM/SEO to develop favorable awareness the old-fashioned way: by creating exceptional experiences for customers who then positively recommend the brand to their friends.  Except this time around, by leveraging social networks, the word-of-mouth takes minutes not months, and the page on the other side of the click is not Google or another OTA, but their own branded site.  Bravo to them, and to all who do this in 2010!

Say hi to Facebook, your new Frenemy. Much as Google has helped your business in the last few years, Facebook will help in the years ahead.  Yes — it’s still run by a 25 year-old, but the team that surrounds him is also serious about making money now… which means that there are lots of opportunities for you to benefit from their focus to monetize the online attention of over 350 million users worldwide.  Facebook will become the new titan in distribution (you can check out Facebook’s impressive current stats and think of the possibilities).  So if you haven’t done it already, it’s time to set up a fan page on Facebook for your brand and start engaging with your fans.  At a minimum treat Facebook as an extension of your CRM.  For some extra credit, you might want to consider Twitter as well, though if you could only focus on 1 social network, start with Facebook.

Have you thought of HR lately? The new branding paradigm, where social media is a fundamental pillar alongside well-crafted agency/brand communications, requires an update to your corporate policies  For example, how, if ever, do you expect your employees to participate?  If you’re a hotel management company, how do you ensure brand integrity when a property goes rogue locally?  Who in the organization should be responsible for brand perception in social media?  Where do you find the talent that can understand and bridge how you think v. how the social network thinks?  Because social media has become mainstream, 2010 will present scenarios that will put your HR and corporate policies to the test.  You must be proactive about setting expectations and diligent about learning from your own and other people’s best practices or epic fails.

And last but not least, Cloud Computing isn’t just for startups anymore.  The amount of computing power and storage that is now available at bargain basement prices has helped startups like us keep operating costs down.  But now that most of the security and reliability issues have been ironed out, cloud computing is a game changer enabling technologists everywhere to innovate cheaply.  This means that there will be more disruptive technologies coming faster on the landscape.  But it also means that your IT departments might need to migrate its technology from the client/server model of the last 10 years to the new, more powerful AND cost-effective distributed computing model to stay current.  Since technology is the backbone to most businesses, it behooves brand owners to have at least 1 person in the IT department whose head is “in the clouds” to ensure that backbone isn’t becoming quickly obsolete and more expensive to maintain.  Ouch.  But consider this: legacy technology systems have a way of sucking budget away from other departments when its migration is not carefully and proactively planned.

And… that’s a wrap for 2009.

From all of us at Circos Brand Karma, we wish you happy holidays and a prosperous new year.  See you in 2010!

Like swing voters, swing travelers could hold the key to your hotel beating this economy.

Most hoteliers’ performance is measured not only by absolute revenue, but also market share.  Swing travelers can make all the difference in market share.

Let me use a simple example to illustrate the importance of swing travelers.  Let’s say there are 10 travelers making a reservation today and 2 hotels in your city, yours and your competitor’s, and normally you’d get 5 travelers each.  That means you and your competitor each have 50% market share.

If your hotel wins 1 traveler from the other hotel, then your market share would be 60% and your competitor at 40%.  That’s a 20% difference in your favor.  Now let’s calculate RevPAR.  Assume that both hotels have 10 rooms, all travelers stay 1 night, and the ADR for is $100/night.  Your hotel would achieve a $60 RevPAR vs. your competitor’s $40 RevPAR.  In fact, for your competitor to achieve the same RevPAR as you they would have to increase their ADR by 50% — to $150/night to achieve the same RevPAR as yours just to make up for the loss of 1 swing traveler.

Now, let’s suppose that your competitor manages to attract 1 new customer to the market, the market share would be 6/11 vs. 5/11, which is 55% vs. 45% in your favor.  To achieve the same RevPAR as you they’d still have to raise their ADR to $120/night vs. your $100/night.  In fact, your competitor would have to attract 3 new customers to the 1 that you swung over originally to win market share back.  In other words, in this simple example your competitor would have to grow the market by 30% (increase the number of travelers from 10 to 13) as a result of 1 swing traveler, in order to win against your hotel.

No wonder brands like Holiday Inn and Hyatt are not slowing down to win share despite the downturn.

How many swing travelers are there?  According to loyalty research and consulting firm, Colloquy, the total number of memberships from US travelers in hotel loyalty programs increased 26% to 161.9M memberships from 2007 to 2008.  This increase happened despite a sharp drop in demand in the second half of 2008.  While I believe first-ever loyalty memberships might account for some of that increase, the remainder comes from travelers that registered for their 2nd, 3rd… nth membership, making them swing travelers.  And remember, this is just amongst the segment already considered to be most loyal.

Carroll Rheem, Director of Research at PhoCusWright, recently said,

“The era of transparency ushered in by the Internet evangelizes faith in content, not faith in brands.  Companies need to understand the Long Tail of travelers and how its disloyal constituents make decisions: they don’t care about miles or points, can easily find another flight and don’t need a hotel flag to tell them what their experience is going to be like.”

Swing travelers are looking for stay experiences that fit their personal needs.  Because most hotels are using pricing as a strategy, impressive discounts are now the norm, not the exception.  What swing travelers are looking for then are the differentiators that give them the value they seek within a comparable price range.  Do you know what your differentiators are and are you communicating them loudly and clearly where travelers are researching where to stay?

Just for fun, I pretended to be a swing traveler looking for “hotels san francisco” on Google to see the ads that come up from hotel suppliers (I excluded the OTAs because they all uniformly tout discounts).  Removing identifiable info, below is the text of the first 8 hotelier ads I found:

1. There’s more to enjoy! Book unique offer. Instant Service 800-XXX-XXXX
2. Official Site. Book Now for Great Rates & Our Exclusive Packages!
3. Official Site. [brand name] San Francisco Hotel. Book Online.
4. Stay at [brand name] in San Francisco. Best rates online. Book online now!
5. Boutique [brand name] Hotel in Downtown San Francisco. Book online now!
6. Book a luxury hotel in the heart of San Francisco & enjoy access to all
7. Why pay high prices downtown? Free hot breakfast & airport shuttle!
8. San Francisco. Great locations. Free internet & breakfast bar.

What’s remarkable to me is that half of them (1-4) are virtually indistinguishable because they don’t offer anything meaningful other than to let the consumer know they can book online.  But the fact is these ads come from 3 different hotel suppliers (2 and 3 are different brands from the same hotel management company).  The other half offers some differentiation, but boutique and luxury are much less specific than free breakfast, free internet, and free airport shuttle.  Incidentally, 7 & 8 are actually from the same brand, 7 is an individual property where 8 is the brand ad.

I don’t think swing travelers would be convinced by the non-specific ads.  The way consumers think about the total price isn’t just the room, but all the costs associated with a stay.  Breakfast, internet, and transportation all make the value greater because it means less additional money out of a traveler’s pocket.  In recognizing their short attention span, those ads clearly communicate the differentiations that really matter in a direct and concrete way.

A swing traveler would almost always follow-up by reading reviews about the quality of the breakfast, the speed and reliability of the internet, and the timeliness of the airport shuttle.  Hence communicating the differentiations is only half of it, hoteliers need to make sure they’re backed up by solid reviews from previous guests.  Or alternatively, communicate in these ads what their guests have already complimented them on.

We’ve looked at one channel to win the swing traveler’s attention, and hopefully, their business.  But there are other ways.  The biggest paradigm shift that hoteliers must undergo is to market to and win the swing travelers one at a time by focusing on their specific needs.  Massive blocks of reservations and contracts with corporate clients, both fundamental business drivers in the past, are becoming increasingly rare and don’t deliver like they used to.  Like the swing voters that determined many elections in the past… swing travelers will be the group that determines who wins in many markets.

This used to be Ford’s slogan, and I think couldn’t be more appropriate to describe ad trends.  One of the panels at Ad:tech in San Francisco talked about the state of advertising and how it’s evolving.  I found a couple of things interesting.

1. Higher CPM goes to content sites that fit the advertising, not necessarily sites with the most reach.  According to Scott Symond of AKQA, “tier 1 inventory is artificially high.”
2. Search marketing can be used as a response and measurement tool for offline media campaigns, but current players are too stuck on PPC.

I couldn’t agree more.  The driving factor behind these 2 points is that ROI/conversion accountability will be key for media buyers.  Google has clearly caught on to this as they’re trying to improve the quality of their click-throughs.

Referring quality traffic to advertisers is the holy grail.  By quality traffic I mean consumers who have a high likelihood of buying once they get to the advertiser’s site.  Today, during a meeting with an ad agency, we were reminded that if the consumer is new, then that traffic is even of a higher value.

Seems like quality is on a lot of people’s minds these days!

This is a scary post:

…My first big mistake: posting to a search marketing blog about how much I love StumbleUpon. Friends soon pointed out that long-time members of StumbleUpon were publicly calling for my suicide by methods I choose not to republish here. The feeling was reminiscent of historic book burnings because of violent and Nazi-laced symbolism and hyperbolic rhetoric.

Turns out that bands of longtime-member roving thugs, angry that search marketers have diluted the StumbleUpon content pool (which is true), leave violent and obscene public reviews in droves. SU is slow to react, if at all. After chronicling the experience in several StumbleUpon blog posts, the attacks on my public SU profile increased (must be logged into SU to view). Moderators stepped in and booted a single user for an unrelated TOS violation.

Then all hell broke loose.

There’s more to this when you read the entire post. There are definitely better ways for advertisers to get the attention of consumers without having to resort to tactics that infuriate them.

Where have I been? I just heard about the Google Online Marketing Challenge.

According to SearchEngineWatch,

Search marketing firms and in-house teams often have a hard time finding qualified PPC employees. Now Google may change all that by challenging students all over the world to compete with others in an AdWords marketing competition, indoctrinating college students to the PPC culture and boosting SME participation in local search.

Professors and over 8000 students (724 US teams) from all over the world are already signed up to participate before the Feb 1 deadline for entries.

According to Google, the competition goes like this:

Given my previous post re: SEM Haves and Have Nots, I think in the short term it’s good that in this contest Google is helping local businesses by tapping into the energy and intelligence of the academic community. However, I don’t know how good it is that they’re also raising the bar for future businesses to require even more expertise in SEM.

My concern is that more SEM expert will create ever more sophisticated hacking of the PPC model, raising the bar higher for efficacy. As a result, the need for expertise is even greater, driving up the price for SEM experts, meaning small businesses will be unable to afford them. This makes the divide between those with resources… e.g. the current SEM Haves, vs. the Have Nots even greater. And it’s still not about how a business performs for their customers, except, I guess, how they get people’s attention online.

At the unofficial Circos hangout, Central Park Bistro, I met a small business owner who was having a hard time with SEM. This particular gentleman was in the hardwood floor business, and he had a couple of complaints which I thought were interesting.

1. Picking the right keyword was too difficult for him. He gave the example of the trouble he had with trying to adword “hardwood floor.” The keyword tool gave him a long list of synonyms (including plural and tense permutations), almost all of which were highly sought after by competitors, and therefore, expensive.

2. National advertisers drove up the local rates. He asked me to look for “hardwood flooring, Woodside, CA” to see what I found. The last I did this, in the sponsored link section I found LumberLiquidator (which is national), Pacific Custom Flooring (which serves the Bay Area), and NY-Floorman (guess where their office is?). The ads on the side had SimpleFloors (national), iFloor (national), and VortexFloors (national). What’s also interesting is that the top sponsored link, LumberLiquidator’s stores in the Bay Area was in Berkeley and San Jose.

(to further underscore his point, I found pretty much the same results in the Sponsored Links on top and on the side when I switched location to San Mateo, CA, San Francisco, CA, Los Angeles, CA, Reston, VA, and New York, NY!)

While lots of people are asking him to install hardwood floors in Woodside, CA (and surrounding areas), he’s relying mostly on word-of-mouth referrals for new businesses these days. He says he simply can’t compete because he doesn’t think like a marketer, and even if he came up with all the right words, he doubt he’d be able to afford them. He says the Yellow Pages days were so much simpler for him, and he feels, fairer, though he also recognizes that the number of new businesses that he’s getting from Yellow Pages means that it isn’t as effective as it used to be.

Now if you think this guy is perhaps a technology laggard, you’d be surprised. He’s younger than me, and not only did he pull out his laptop to do some email at the bar, he was connected via a Cingular aircard.

His experience drove home what I’m feeling is problematic with the current model: it’s optimized for the “SEM Haves,” not the best-in-class. Think about it, for small business owners, their expertise is in their line of work, not marketing. They’ve traditionally relied on word-of-mouth referrals and directories to get their name above or alongside their local, regional, and national competitors. As more people turn to the web as a resource for finding service, their lack of marketing expertise (and time/money resources for it) hurts their visibility, turning them into “SEM Have Nots.” While they may provide the best service, they may go out of business anyway because new customers don’t know about them or can’t find them. On the other hand, big players that have the know-how and the money end up with more exposure, and benefit from the rise in consumers relying on the web as a resources to find things. They come out on top in the results because of their marketing prowess, not because they’re necessarily the best-in-class.

I think the problem of the Haves v. Have Nots in the SEM space will have larger implications if this advertising model continues to dominate. No one wins if the best-in-class can’t be found. There’s got to be an alternative.