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.   

Microsoft Finally Kinects with its Audience

With the Christmas shopping season fully upon us, Microsoft’s Kinect motion-sensing game device is expected to be at the top of the gift list for many consumers. Last year, Microsoft sold 1 million Kinect devices for its Xbox 360 in 10 days, and in a recent poll it was at the top of the wish list for children 13 and older. But what you might not expect is that some of those orders are going to be coming from businesses.

Early this month, Microsoft launched Kinect for Windows SDK with a brilliant, new ad called “Kinect Effect.”

Microsoft is pushing Kinect hardware for Windows SDK for business applications.  As staff writer Jason Kennedy fromPCWorld states: “SDK will make it possible for programmers and dreamers from the world over to tinker with the system and make it do things Microsoft hadn’t thought of, and push the development of NUI [natural user interfaces] to the next level.”

What is noteworthy about the Kinect Effect ad is what it took for Microsoft to make it. Six years ago, in an interview with CMO magazine, Microsoft CEO Steve Ballmer confessed to a problem long known by many consumers of Microsoft products:

"During Microsoft’s climb to the top of the software industry, rapid-fire product cycles often happened without much front-end input from the folks in marketing. Engineers would develop new software, pack it with bells and whistles, decide on an acceptable number of bugs and toss it over to marketing for a press release and a launch event."

At the time, Microsoft had set out to change that course through an expansive and expensive relationship marketing initiative. Internally, it aligned marketing with product groups, created a "mea culpa" marketing campaign to reach out to past customers, and targeted loyalists hoping to turn them into advocates.

But because of its past transgressions, and a perception that many of its products were “necessaries” with little to pique the desire of consumers, Microsoft struggled with finding an ignition point, or something to connect customers with the brand and ignite their passions.

Well, those days appear to be over. With the Kinect Effect, the tech titan proves that it can be relevant, even desirable, with a campaign that is expansive, inspiring and incredibly human. The campaign asks audiences to dream about how they might use Kinect by inspiring them with images of people playing air instruments, a doctor flipping through X-rays, and a student deconstructing DNA with only hand motions.

The expansiveness of the idea allows Microsoft to successful reach, and hopefully inspire, all three of its targeted audiences, including consumers/users, businesses and developers.  Any one group can have the dream, but all three are needed for it to become reality.

Perhaps the most significant point of the ad is that it is evidence that the relationship marketing effort was worth it, Microsoft now understands the strategic importance of the "front end" as Ballmer calls it.  The appeal of the ad is not the "bells and whistles" of Kinect but rather what Kinect can enable, which is virtually unlimited as long as there are dreamers.

If Microsoft can continue this connection with the customer while retail store openings continue into 2012, it could transition itself from the company that makes the “have to have” product to the company that is the “want to have” brand.

Why Sex Sells

This post is featured on Forbes.com
Years ago some colleagues of mine built what we thought at the time was the “holy grail” of business marketing.  A sophisticated analytical tool that could tell a marketer where to invest, why, and what the return would be in sales productivity.  It could also tell them where to cut dollars, why and what the impact would be on the business.

It was an incredible feat of analytical modeling and technology.  Built for one of the most respected and well known companies in the world, so the CMO could answer with absolute certainty the CEO’s question: “What am I getting for my marketing spend?” We thought that it was our ticket to the big time and the rocket to ride to explosive growth, but that was not the case.  

To continue reading click here.  

The Top 200 Brands Ad Budgets

Ad Age kindly sent me this interesting graphic of ad budgets by brand. They say a picture is worth a thousand words so, enough said. Enjoy the view.


Designed by Marketing Degree, to see the research please click here