Wednesday, November 4, 2009

Expedia Billboard Effect: Cornell agrees that it is real

Expedia and other OTAs have long touted what has become known in the industry as "the billboard effect" whereby they have claimed that positioning on their sites generates not only bookings through the OTA but also a halo effect on the hotels' own sites by generating brand awareness. Non-loyal consumers start many of their searches at an OTA to gain a perspective on the options available, relative costs and positioning of the hotels in a given market against one another. Then, they often check other sites to compare pricing - usually including the website of the hotel they are interested in.

Personally, I saw strong evidence of the billboard effect while I was at Starwood and Expedia has long claimed that for every booking generated on Expedia, another booking is generated on the hotel's own website.

In a new whitepaper, Cornell assistant professor Chris Anderson has measured the billboard effect with a several branded and unbranded hotels. The results are striking, particularly for the independent hotel in the test.

For the study, Prof. Anderson worked with Expedia and JHM Hotels, an ownership group with hotels under the Starwood, Marriott, Hyatt and Hilton flags to cycle specific hotels on and off of Expedia over a three month period. That is, the hotel was listed at the top of the search results when the hotel was participating on Expedia and and removed altogether from search results listings when the hotel was dark on Expedia. By the conclusion of the study, each hotel was listed on Expedia for 40 days and dark for 40 days.

The results are below:

According to the study, the hotels saw a boost in reservations ranging from 7.5% to as much as 26% for the inde hotel when they were listed on Expedia vs. when they were dark.

Prof. Anderson suggests that the branded hotels may not have seen as large of a boost because when consumers go the brand websites they are presented with other "in-chain" hotels, e.g they are searching for a Marriott but upon arriving at they are presented not only with the Marriott they saw on Expedia but also a Courtyard where they may actually end up booking.

We'd like to see an expanded test at some point with some slightly different parameters. For example, what happens if the hotel isn't listed at the top of the search results on Expedia? Could the brand numbers be further refined if the test was conducted in markets without sister hotels nearby? What would the results look like for resort hotels? How did the booking curves differ? And the cancellation rates? Could leveraging the billboard effect actually be cheaper than buying google key words? And of, course, what do the bottom line ROIs look like after all distribution costs are taken into account. Those questions may be ripe for another study - any of you OTAs or chains reading ready to sign up? Lets talk....


  1. Great post Tom. Thought provoking stuff. The thing that concerns me the most about the study is that Expedia could have that level of impact on search. Did it impact both organic and paid results?

  2. Good post. Agree that there in a need for larger study that has larger sample size and compares all distribution costs for OTA (incl billboard affect res), Travel Agent (incl GDS fees)and Google non-branded PPC (incl credit card fees) reservations.

  3. Terrific Study Tom,
    Being in The Hotel/Resort Internet Marketing Vertical for 10 plus years now, we have long championed our clients to actively participate with the large OTA's for Brand Awareness,as you mentioned and to drive Sales to their most Profitable Channel, "Their Proprietary Website". Hence the importance of Rate Parity
    across those channels to gain share.

  4. Tom,

    Thanks for sharing this. I am going to reference it in my blog too. The halo effect is interesting. Have you seen any other pieces of data out their supporting this?

    We recently saw an offshoot of that... a boutique independent hotel saw a dramatic increase in visitor traffic, online reservations and phonecalls from buying their brand name in Pay-per-click (Google Adwords). This was attributed towards their increased participation in large OTAs.

    We actually STOPPED buying the brand name ads as a next step (not for too long!) and saw a online reservations and phonecalls drop during that time period.

    The theory is that consumers see them on Expedia and then search for them by name and then clicked on their PPC ads.

    Why PPC ads over Organic? We didn't measure organic in this study, but, we believe that the customized messaging in the PPC ads appealed to those "peel away" searches.

    Thanks again, Trent

  5. Do the number of bookings made exclude those made on Expedia?

  6. very interesting

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