Will the Rise of Daily Deals Signal the Decline of Brand Advertising?

Hotel ads featuring palm trees and white sandy beaches start to look very appealing during the winter months. However, according to recent research, the imagery and copy does little to motivate travelers to book hotel rooms

Hawk Partners research on Hotel Channel Usage find that 65% of travelers who booked a recent stay are most likely to have used Online Review sites, such as Trip Advisor to select their hotel rather than those picturesque ads of beach scenes.  74% of the 1200 travelers surveyed said that Advertising (defined as TV and Print) had no impact on their selection. 

Asked to comment about which channels had the most influence on hotel selection, travelers responded with Promotions (Groupon, Living Social, Reward Sites) and Social Media ranking highest, with advertising coming in a distant forth.

Has the struggling economy and the rise of daily deal sites like Groupon and Living Social given rise to a new breed of consumers who put a premium on price over brand? Bryan Gernert, CEO of Resonate Networks states that “It depends on what consumer segments you’re looking to target [however]…and as this is election year you may even want to think about their party affiliation.

For example: consumers who identify themselves as Republicans 35-44 are 41% less likely to buy based on brand, and 38% more likely to buy on price, compared to boomers.   Boomers, on the other hand, still value brands regardless of political affiliation.  Consumers 55-64 are 35% more likely to buy on brand than any other consumer segment.“  The trend was mirrored in the Hawk Partners research, which found travelers under 45 to be more influenced by promotions.  

Brand does still matter and so does price.  As channels continue to expand and evolve, marketers need to have deeper insights into audience behaviors and influences, in order to understand which segment to target with what offer.   As a result, the Digital Advertising Alliance has just launch a new campaign promoting the benefits of “interest based advertising” and companies, like Resonate Networks, are providing deeper insights into buyers psyche based on their attitudes, beliefs, and values.

Why is that important?  Because consumer behaviors are constantly changing, often shaped by new technologies and channels.  While the study findings only apply to the travel and hospitality industry, the data could be a signal for a broader trend worth following.  Specifically, the surprising find that Promotions’ channels are impacting what have traditionally been considered key brand advertising oriented metrics. 

Those travelers using promotional channels for selecting hotel brands are more likely to recall that brand top of mind on an unaided basis than guests who used other channels.  Additional, they are also more likely to stay at the hotel again and recommend that brand to friends, compared to those who used other channels. 

“What we may be seeing is a “halo” effect of the deal” says Rob Duboff, CEO of Hawk Partners, “Consumers like the deal, and as a result, the brand.”   And that is significant, because personal recommendations (77%) and online review sites, (65%) which are shaped by personal experiences, have the largest impact on influencing hotel selection.   

As the authors of the research note, advertising has “significantly more influence than guest give it credit” which has long been the case.  Brand advertising does provide a lift effect that has always been hard to quantify, but given the importance being placed on ROI, the impact of Promotional channels is worth noting and watching…as well as, the consumers who use them.