What Comes Around, Goes Around

Call Center Is No Longer A Cost Center

A couple of weeks ago, I was at a client dinner with a major online travel partner. After introductions, the gentleman sitting next to me asked "have your clients changed their view of the call center recently?" Funny you should ask....

I'm lucky. I've been involved with digital marketing and e-commerce since 1998 and during the last 17 years, I have seen a lot change and a lot stay the same. For example, one thing that will not change is that inquiry based marketing (search box) will always be the best way to target users and drive measurable marketing ROI. What has changed is the role of the call center...

From 1998 to 2009, one goal of e-commerce was to reduce the call volumes and cost of the voice channel. Give the user the information they seek so they won't need to call your business. The cost of an e-commerce booking was dramatically lower than call-center booking, etc. Then, in 2009, Steve Jobs introduced the iPhone and, from that point forward, the role of the call center was never the same. It's a mini super-computer - yes.  But, it's a phone and when users experience any friction or when driving their cars, they will default to calling.  Even true for the those tech-savvy millennials.

Call Center As Mobile Sales Engine

As a consultant, I get to see a lot. I attend and speak at business reviews, board meetings, conferences, client annual meetings, etc.  Each quarter, I produce a Key Trends presentation. Since 2012, like a broken record, I've been talking about M&M = Mobile and Meta. DMW realized early that mobile conversion rates will never approach desktop conversion rates. In fact, 3 years later, we still see mobile conversion rates that average 10-40% of desktop conversion. Motel6's (DMW Client) new responsive site has the highest conversion index at 40%. We were early to identify the need for a call-tracking solution to attribute call revenue from digital media and roll into the e-commerce results. In Sept 2012, I spoke on an Eye For Travel Panel at Caesars Palace in Las Vegas. I made crazy proclamations like "Voice is the new sales center".  "Call center conversion rates are 30x higher than mobile". "TV advertising is in trouble". I was, and continue to be, passionate about the need to track and measure call revenue from mobile media.  

3 years later, unfortunately, very few clients are doing this. Why? There are technical solutions that aren't cost prohibitive. But, some clients haven't even tested them yet. As frustrating as this is to me, my experience has yielded insight to help explain this. It's due to organizational bias. The E-commerce teams get zero credit for call center revenue and therefore are not motivated to figure this out. The solution is to break down the barriers between departments and reward teams based on overall business results (for example, gains in market share and profitability).

The next day, during our meeting, the major online travel partner shared some interesting data with me and my client. Their mobile ad placement drove 100,000 calls to their call center over the last few months! And, they used call duration to estimate that yielded about $2 million in additional revenue, thereby doubling the media ROI. As we move to programmatic mobile marketplaces, we will all be under-bidding until we figure how the break down these silos and attribute voice revenue alongside e-commerce revenue.  

Please share any comments below.

Comprehensive Mobile Strategy Drives Competitive Advantage

Since the release of the first iPhone and App store in 2008, there has been an ongoing debate about the Open vs. Closed Web and which will ultimately win out.  Almost four years ago (August 2010) Wired published a view that “The Web is Dead”. Those in the Search marketing space joined with Google in taking the other side that the Open Web will prevail.  

We don’t view this in terms of binary winners, however, but rather a debate about the direction of user behavior and the resulting marketing and competitive implications.  The way we see it, the last four years have shown us that while the Open Web and Search continue to drive trial and customer acquisition (which is incredibly important), the Closed Web, and mobile apps specifically, is key to user dialogue, frequency and loyalty.  The winners will be the first to master both the Open and Closed Web. We see this already in Travel, where Online Travel Agents have demonstrated the keen ability to marry both sides of this mobile world for competitive advantage and to grow their share of e-commerce bookings.

In this post, we will examine both sides of the argument, but then show how they are really two sides of the same coin.

Apps Offer a Superlative User Experience

The following chart shows users prefer Apps. Apps offer a faster, simpler and personalized UX.  This utility increases for logged in users due to easy form filling, more relevant content and access to user data. 

The fantastic UX that apps can offer through convenience and reduction of service friction has launched a new category of App-based businesses: “On-demand mobile services”. When their apps are superlative, some of these new brands have become successful very quickly. Uber and HotelTonight are leading examples – so successful, in fact, that they can upend traditional Search for specific needs. This point of view is shared by Cathy Boyle, a senior mobile analyst at eMarketer, who says “Search engines are not necessarily the first place smartphone and tablet users turn. The explosion of mobile app development and usage means mobile users have more – and more specialized – alternatives for finding information.”  

At DMW, we believe that app design, technology, marketing, and data are becoming an important combined factor in certain M&A activities, including last week’s announcement that Priceline is buying OpenTable and last year's acquisition of Kayak.

Mobile Browsers Drive Convenience & Discoverability

Despite the better UX of apps and users’ preference for them, we see from this chart that mobile web traffic out-paces mobile app traffic 3:1.  

Mobile browser traffic vs. app traffic for top 50 mobile sites

Given what we know about the superiority of apps’ UX and users’ preference for this experience, this is surprising. What’s going on? Despite the better experience, users still have to search for, download, and go through first-use steps with apps. In many scenarios these initial hurdles are outweighed by the need for a more immediate experience or an experience that invests less in a given brand. 

This is all relatively common knowledge, of course, but is usually used to play one side of the Open vs. Closed argument or the other. DMW’s point of view, however, is that this is not a mutually exclusive (nor permanent) decision for users. We believe this 3:1 ratio to be a very clear demonstration of a typical agnostic / loyalist customer mix. The 3:1 traffic ratio implies an average 33% retention rate, which is reasonable. Our takeaway: Businesses most adept at leveraging both the open AND closed web will win.

Indexed Travel App Ratings

To help further understand opportunities for travel brands, DMW studied customer ratings of apps (in Google Play and Apple Store) and indexed OTAs (7), Metasearch sites (5) and Suppliers (9) against the entire group.  Our findings have further informed our “open + closed” strategy. The headline is that OTAs and Metas index at 105 and 104, while Suppliers index at 92.

OTAs' and Metas' mobile apps have much higher ratings than Suppliers' apps

Highlights - OTAs and Metas:
  • The Rating range for OTA and Meta is quite small indicating 1) inherent value through scope/choice and 2) e-commerce businesses: they get it (strategy, management, culture, resource allocation, etc.)
  • Scale Advantage -- In the travel vertical, users find much more utility with OTAs and Meta apps due to the scope of services offered versus hotel or flight only apps.  Not surprisingly, TripAdvisor, offering the most choice, content and reviews, is the download king with an estimated 100 million downloads
  • DMW Takeaway: How you market the App will also determine how quickly you can scale downloads.  There are organic (free) and paid (sponsored) methods that are emerging be best practices. 
  • DMW Takeaway #2: We expect PCLN to leverage the OPENTABLE app downloads with Kayak, Priceline and Booking apps to gain further scale advantages.  It will be interesting to watch this potential synergy unfold over the next few years.

Highlights - Suppliers:
  • Among the supplier brands, the range in index scores, from 77 to 109, is much greater than the OTAs and Metas.
Avg. user ratings vary widely within the Supplier set
  • Kudos to Starwood SPG for their 109 Index (4.3 stars) and the booby prize goes to Hyatt (77 Index, 3 stars).  
  • DMW Takeaway: The enormous variance in app ratings for hotel brands is due neither to the strength nor size of their loyalty programs. Example: Marriott ranks towards the bottom but has the largest loyalty program.  What drives better ratings is a combination of better strategy and resource allocation, along with the expertise to design, build and market a superior app experience.

Advice for Suppliers: Strategize for the Virtuous Cycle

Suppliers who are looking to get ahead must factor in the CPA of bookings made through apps vs through third parties: Bookings made through apps are akin to bookings from direct website visits in terms of margins – the CPA is very low (need to factor in install and app marketing costs, subject of future post).  Aggressive brands will understand that ROI calculations for an improved app experience must include these higher margins as guests channel shift (in reasonable numbers) from intermediaries to the direct channel.

In turn, the combination of great UX, scope, and scale is a power play that creates a virtuous cycle of more downloads, usage, and profits -- which fuels greater investment in the app platform and marketing.  This virtuous cycle quickly becomes a competitive advantage: you will find more frequent updates and improved UX with app winners such as Booking.com and TripAdvisor.

What to Expect?

We expect this intermediary app advantage to enable further indirect e-commerce share gains over direct e-commerce.  OTAs and Metas will leverage these advantages to grow more traveler wallet share -- which will drive greater reach, downloads, investment in better updates and less hotel brand loyalty.   Unless the fragmented hotel industry (brands, owners, franchisees) starts allocating much more capital to this important area, they will continue to lose online revenue share.

Google has begun building a massive database of app pages and this will be very important going forward.  It will enable app marketers to leverage “pull marketing” through Google Search and “push marketing” through Google Now, Google Maps, and other Google apps.  The major OTAs and Metas are seeing their percent of traffic and bookings from Google decrease as a result.  The intermediaries’ traffic level from Google is down to 10-12% versus the hotel Brands with Google contributions over 20%.

What do you think about Mobile and App marketing?  Are we on the verge on of a new marketing frontier? DMW would love to hear your comments below.

By Jack Feuer -- Founder & President, Digital Marketing Works

How to Avoid Being Commoditized By Empowered Consumers

Consumers’ passion for and rapid adoption of technology presents both opportunities and risks for all businesses. As the time we spend with various screens reaches new highs (over 5.3 hours per day, eMarketer July 2013), the imperative to re-evaluate your marketing strategy and resource allocation intensifies. The largest risk is a drastic uptick in commoditization, especially if you are targeting or catering to the millennial generation. The opportunities include a social and mobile led retention strategy.

Even before the millennial generation, the winds of change, disruption, and consumer empowerment were underway.  Let’s take a look at the hospitality vertical and how empowered all consumers have become over the last 20 years.  Before 1996 (the year I started business school, referred to as BBS, before business school), planning a trip could include reading magazine, travel books, using your landline phone to dial a travel agent or call a travel provider directly (if you could find the number in the phone book). We had to book by using the travel agent, calling hotel directly or calling HRN (predecessor to Hotels.com).  Since we had no idea if the price being quoted as the lowest, we tried to negotiate (some baby boomers still try to do this). We would use paper maps and stop frequently to ask directions. Word of mouth was in person – not very viral.

Around 1995, everything changed when the Internet was born. Netscape went public. Bezos drove cross-county and founded Amazon.  In 1996, Expedia (then part of Microsoft), Booking.com and Travelocity were founded. Hotels.com launched a website to complement their 800# service. This was the beginning of empowerment. Consumers could log on to one site and view rates from my hotels in a market, view photos and book online. E-commerce was born.

Google started the year I graduated business school, 1998 – let’s call it ABS (after business school). This period is marked by the fast adoption of search and, later, comparison-shopping. This intent based, pull marketing changed marketing forever. Businesses who adopted search marketing gained a competitive advantage. Marketing accountability was born and I started DMW (Jan 2003). Consumers loved the immediate access to information and answers to their questions. Google quickly became a verb. TripAdvisor was founded in 2000 but really hit its stride during the next phase of empowerment. Compare the ABS to the BBS period – wow, what a difference. We could make better travel decisions while saving ourselves a ton of time.

The real period of empowerment began between 2004 when Facebook was founded and 2007 when Apple released the first iPhone.  Apple delighted consumers with an unbelievable user experience and ego-expressive design. TripAdvisor user reviews started to drive the choice of hotels along with rates and location. DMW began our user review optimization practice. Consumers became passionate about their smartphone – finally, an all-in-one device that was fast and really worked. The app community continued to fuel this passion by releasing great apps. Consumers were now in the driver seat. Twitter was founded in 2006. Next came the iPad in 2010. Mobile and social where building on themselves and consumers were more empowered than ever to make great travel decisions. By themselves. With their smartphone. They can share their experiences and opinions with friends and strangers. Meta-search on Kayak and recently TripAdvisor and Google further empowered users to compare hotels with real-time rates, availability, reviews, maps, etc.

Other important changes that lead to further empowerment included the growth of auctions for consumers and media buyers (Google, etc.), best rate guarantees, rate parity (or not), etc. With one click, consumers can sort results by price. All of this technology and change tilted the hotel buying process toward price, thus fueling commoditization. Disruption was all around with OTAs stealing share from each other and suppliers. Mobile apps and an intense focus on UX increased the scope (choice) advantages of the OTAs.

An important result of all this change is that Mobile app usage has become the new loyalty paradigm. Google is terrified of this as consumers can search their iWhatever and bring up their favorite app – bypassing Google search all together. When Google is under assault, so too is the competitive advantage that many of us established with search marketing. The "open" world of Google, browsers, and most websites (including mobile web) remain very relevant. Marketing winners, however, must continue to adapt. They must learn how to navigate the "closed" digital world, too: all iOS and Google Play Apps, as well as much of the social world (including Facebook). Understanding this “closed” universe and it’s relationship to the “open” Web is key to your next marketing strategy.

Millennials are defined as those born between 1980 and 2000, today 13 to 33 years old.  Their behaviors and needs are very different from the prior generations due, at least partly, to the new paradigms of mobile and social. They have grown up with technology and are extremely comfortable with it. Recent studies suggest they are open to learning, experimentation and are great sources of innovation. According to The New York Times, “Social media permeate the personal, academic, political and professional lives of millennials, helping to foster the type of environment where innovation flourishes. So when compared with older generations, millennials learn quickly — and that’s the most important driver of innovation.” These consumers are more transparent in their communication with peers (social media) and businesses (user reviews). This is very different behavior than baby-boomers, many of which are uncomfortable with change. In fact, compared with GenX and Baby Boomers, Millennials are open to personalization through data analysis and targeting.  Here are the results of an interesting study:

Unfortunately, due to these factors, Millennials also tend to be less loyal. But, they are open to trial and are a great acquisition opportunity.  Just make sure your user experience is optimized - both on property and via mobile devices.

Here are the key implications for marketers.
  • Understand your target audience. Whom do you need to reach and cater to achieve your business objectives.  Does your target include Millennials?  If so, adjust your market resource allocations appropriately.
  • Actively listen to your current customers and optimize their ratings and reviews.  This is foundational and will create marketing option value.
  • Increasingly move resources from offline to online. Rapid device proliferation and the empowered consumer dictate.
  • The Open and Closed web should be central to you marketing strategy. How do you win in a Web that is increasingly divided by open sites and closed app and networks?
  • Don't underestimate Social media.  How does social media feed your retention strategy? Acquisition strategy?  Mobile strategy? 
  • Be willing to cannibalize yourself....before you're cannibalized by a competitor or distributor.
  • Understand that customer experience is key to loyalty. Break down silos and collaborate with your peers in operations.
  • Really understand your metrics.  What’s your customer acquisition cost?  What’s your cost to retain a customer?  How do you drive increased frequency?  What’s your lifetime value of different user segments?
  • Use media and device attribution to measure and/or estimate return value (versus last-click measurement).  Ironically, digital marketing has become harder to finitely measure.  Learn to be comfortable with this and follow your customers.
Gotta wrap it up.  We are happy, however, to continue this conversation with you. Please comment below or contact DMW.

By Jack Feuer -- Founder & President, Digital Marketing Works

A Post That's Not (really) About the iPad

In choosing “Digital Street Smarts” as the name of our blog, Jack and I wanted to emphasize that we’ll be providing thoughts on social media, mobile, and digital marketing from a practical, “lived it,” point of view. This kind of work ethic led me to unexpected places this week when I took a short vacation to my parents’ house so that they could spend some quality time with the grandkids. It was good to get my head out of my laptop (and phone), and I found myself making note of events that really brought to life all of the stats and trends that we read/write about on a daily basis. Stepping back like this allowed me to focus on real-life social media + mobile experiences for a few days. Here's what I saw...

My 60-ish Year Old Dad: Dad is a champion of traditional media consumption. In addition to going through a new novel and several magazines each week, he reads an actual local newspaper every night while simultaneously watching movies/sitcoms/news on TV. On my first night there, he said to me “If this isn’t a sign of the times, I don’t know what is,” and showed me the local newspaper. It was a thin, flimsy thing. I’ve seen junk mail that’s thicker. We all know that newspapers are going out of business, but to see a newspaper that serves a metro area of over one million people in such a weakened state really hit me. I could almost hear it gasping for breath over the background noise of the TV...

My 22 Year-old Sister: Like most people her age, my “baby” sister silently texts to friends constantly, even as she engages in conversations that are right there in the room with her. No surprises there. The poignant moment came at night however, when she passed out on the family couch (she had generously given up her old room so that my kids would have a quite place to nap and sleep at night). For four nights in a row, my sister literally fell asleep with her phone in her hand. In the same way that she dozed in and out of late night conversations with her siblings who were in the room with her, she also talked to friends via text – that’s how fundamental her phone is to her life experiences.

My Three Year Old Son:  My older son just turned three and has been spending increasing amounts of time online. It has recently evolved from simply watching videos (robots or construction videos on YouTube) to more interactive content related to what he watches on TV (Sesame Street and Sid The Science Kid). At first, he needed more time than I expected to learn how to use the trackpad and mouse. As intuitive as we think these devices are, the truth is that using a mouse is an unnatural and learned behavior. He repeatedly reached out to touch the screen when we first started using my laptop and still occasionally does so. His behavior certainly makes sense and is probably influenced by his use of my Droid phone.

The part where I talk about the iPad: So where's all of this lead? In light of the iPad, I’ve been talking a lot with colleagues about the death of purpose-specific hardware, and you can easily see how a tablet device would serve each of the above users extremely well (and upend a few business models in the process). Today’s post was initially about the iPad device, but instead, I want to make this point: You can’t learn everything from a book. Or even an ebook. Or even from Mashable.com. As our relationships with our technologies become ever more intimate, remember that some of the best learning re: media/social media/mobile/internet can occur right under our noses. Our modern lives play out in a rainforest that is rich with technology; playing Jane Goodall for a few days and getting in the weeds can really bring to life and add context to all of those statistics and numbers.

Starting tomorrow, we'll be hit with another deluge of iPad related announcements and commentary. As you wade through that, remember this: Steve Jobs allegedly delayed development of the iPad for several years because the experiences (via the larger iTunes ecosystem) were not yet in place. Jobs knew that if he couldn't replace Dad's newspaper, the iPad was just another thing.

We can all learn from this. Social Media is not about the thing (the platform or the device) itself. It is about enabling and improving experiences. I encourage you to get in the weeds and make some observations of your own and to think about towards where those signposts are pointing. Share in the comments!

Mobile Adoption Changes the Revenue Model of TVs in Hotels and Resorts

Today’s post looks at a major effect that mobile adoption has had within hotels and resorts....
  • The Trend: Communication and content-serving technologies are on the brink of total ubiquity and portability. We’ve covered this several times in this blog -- basically everyone will have a smartphone within five years and everyone who would want a laptop already has one. (See this report if you require convincing of this point.)
  • The Effect: Hotels have been cut out as middlemen that provide access to content and communication. Such services are now provided directly to customers via wi-fi internet (for now) and mobile.
  • The Result: Hotels can no longer expect meaningful revenue streams from delivering or providing access to content and communication. Not even for internet access.
Here’s a real-life example: Several resorts will need to replace their ageing in-room televisions within the next 24 months. Unlike in the past, however, the new TVs will have almost no ROI if traditional models are pursued. Why? Because the bottom has fallen out of video on demand revenues. Nobody watches video on demand anymore, not even pornography, because everything that the guests want is already available for “free” via internet or DVDs that guests bring along and access via laptops.

The natural progression from dwindling VOD (video on demand) revenues was to deploy and charge for internet access. Customers demanded this service, and it certainly made sense from a long-term revenue perspective, but mobile is already siphoning off this stream, too. The current generation of mobile phones operate as internet access devices in their own right and enable tethering for laptop internet access, too. As with land-line telephones and TV content, hotels are about to be cut out of the “wi-fi as revenue stream," too.

But all is not lost. Here’s the opportunity: Hotels must define new ways to curate and access content for the specific hotel/resort experience. Specifically, TVs and their programming need to be rethought from the ground up to act as tools that enhance guests’ exploration and sharing of the resort (here are a few ideas from a mobile point of view). TVs will remain very valuable to guests (for now) because they improve the viewing experience from guests’ phones and laptops. That is, they improve guests' ability to view their own content, along with anything of interest via the internet or created for exploring the resort. Special thought should be given to helping guests to connect their devices to TVs and to how guests will be interacting with content. The days of simply viewing content are coming to an end, and resort-specific programming should be proactive on this front.

In the end, TVs will still generate revenue but via different services like facilitating service orders, offering games, and promoting the hotel through social media, as opposed to watching first run movies and some content that just isn't appropriate for home or office.

Search Fragmentation is Coming - Be Prepared to Capitalize.

This week, a Google representative declared "in three years time, desktops will be irrelevant".  In December, Morgan Stanley stated "more users will likely connect to the Internet via mobile devices than desktop PCs within five years".   According to Compete.com Facebook now has more users than Yahoo.  This rapid increase in mobile and social screen time is changing user behavior and creating new types of searches - apps, friends,  music, photos, etc.  These changes will fragment new search queries away from Google and other universal search engines.  Google will continue to dominate desktop-based searching, but new smartphone and social searching will fragment to a host of players including Apple, Google and new companies.  These new entrants, including Twitter, have an opportunity to adopt Google-like PPC ad model to complement search behavior on their services. Some will simply copy Google and design an even better mouse-trap and APIs for ad/bid mgmt. Digital marketers need to follow these trends, begin testing and measuring new models and start gaining insights, revenue, profit and, most importantly, a marketing competitive advantage.

On this blog, I've labeled the last decade "The Google Decade".  Despite predictions of vertical search and resultant search fragmentation, it never materialized. In 2005, I remember search pundits predicting huge growth for vertical travel search. We have seen the emergence of meta-search sites like Kayak, but have also seen failures such as Yahoo's Farechase.  Vertical search never came to pass as Google added incremental features to their popular search service and creating Universal Search - local, images, blogs, maps, real-time Tweets (recently), etc.  For practical matters, Google's ground-breaking business, AdWords, only faced one competitor during the decade - Yahoo's Overture.  It's nice to be a fast-follower.  But, Google really focused on user experience and having the best search experience before they even added a revenue model through AdWords.  This is precisely the strategy of Facebook, Twitter and others.

Google and Apple are in an epic battle for smartphone market share that will continue through this decade.  Google hasn't faced competition like this since the early days with Overture.  Based on this chart, both Android (Google mobile OS) and Apple are gaining smartphone market share and, most probably, will win.  As I spoke about in my January post, Apple is focused on a new user experience and Internet navigation model that is not centered around Google search. Also, Google's launch into Social through Buzz has been challenging and could contribute to a loss of trust and Google's looming privacy bubble this decade.  So, will these trends and new user behaviors lead to the search fragmentation others have been predicting years ago?

Let's look at some predictions of things to come, how this will affect the way we search for things and how advertisers can capitalize on these changes.  
  • Apple iWords - In a recent blog post, I wrote about the proliferation of mobile Apps.  I posited that on Apple smartphones, we are being trained to navigate the web through apps and Apple's App Store.  In fact, the screen area dedicated to search in a fraction of what you see on a typical PC browser.  Just like Google trained us to use Search to navigate the Net through a PC, Apple is training us to use their storefronts. Apple's PPC solution will tie relevant search ads to app searches. I am sure their are plenty of App developers and businesses that would love to reach this highly targeted user base.
  • Twitter Search - Rumors abound that Twitter is about to launch a PPC model to compliment an improved Twitter search experience. This could work and provide a revenue model that doesn't interfere with the micro-blogging experience.
  • Facebook Advertising - Facebook has already launched a Google-like self-service, auction-based advertising service.  While the user feedback has been bumpy, the hyper-targeting opportunity remains.  Facebook has wisely exposed their API allowing bid-mgmt and attribution tools to add Facebook to their systems.  It is not a stretch to see Facebook improving their on-site search experience and adding these targeted ads alongside the search results.
  • Digital media mgmt technology will add new PPC platforms and optimize accordingly using holistic attribution tracking, measurement and optimization.
How should digital marketers prepare for these changes to come?  Let's look at a few recommendations. 
  • Ramp up your knowledge about mobile, social, apps, etc.  Talk to experts, immerse yourself, read blogs.
  • Launch Social strategy.  Target social search PPC at your target social profile based monitoring, listening as well as technographic and socialgraphic research.
  • Launch Mobile strategy. How will users find your company from their mobile device?  What will the experience be like?
  • Utilize a 3-pronged media management approach for Owned, Earned and Purchased media. Use media attribution and optimization.
  • Test, measure and learn from everything.
What do you think about this blog?  Do you agree with my take on how this will upfold?  I don't have a crystal ball - just enough experience to have a point of view.  This is a process of collective learning where we all benefit through dialogue and debate.  Please add your comments below.  Thank you.