From fuzzy vision to clarity: exploring the evolving role of digital marketing to build meaningful relationships

At PACE Dimensions, we turn market insights into a competitive advantage for clients. We unravel market insights through our series of executive interviews with industry leaders who share their experience and insights of hot topics, trends and predictions on hospitality and travel. The below article is an interview with Mark Rabe, a digital marketing titan and CEO of Sojern, who shares his thoughts on the evolution of digital marketing and the future opportunities it holds.

The need to increase direct bookings is something of a holy grail for the travel sector, and one fraught with complicated technology, customer relationships and distribution platforms that are also competitors. This complex environment means that when newer direct channels such as digital media come into play, they have some work to do in order to be more efficient than traditional distribution channels. 

Mark Rabe, CEO at digital marketing travel specialists, Sojern, refers to a ‘fuzzy vision’ that has hampered the industry for some years. In fact, it’s only recently that clarity has become attainable, “An evolution of technology stacks, machine learning and cloud computing has all come together in the last few years. What is happening today in the industry is the result of true convergence between distribution and digital media, and the magic of digital media is only just being realised.”

COMING TOGETHER: THE EVOLUTION OF DIGITAL MARKETING IN THE HOSPITALITY INDUSTRY TO BE SOPHISTICATED, COMPLEX AND RELEVANT

The travel and hospitality industry has constantly been investing and pushing to find the next feasible channel for distribution. For Sojern, their latest new proposition is adding metasearch into their digital marketing platform so that marketers access all major channels from one provider. Rabe explains, “Covering all bases in one place is now possible, and it’s ever-more important for hoteliers who are in need of accessing all demand channels in an efficient manner. Our metasearch product was in beta pre-Covid, and we’ve been building our functionality during this difficult year to ensure that our clients can pick up whatever demand there is in the market.”

“The evolution of technology isn’t about switching hoteliers to nurture and find demand in one channel over another, it is about having better distribution options in all the places that a booking may come from. The need to boost new customer acquisition has been accelerated by the Covid-19 crisis and the technology to do this didn’t exist a decade ago. Today, the technology is sophisticated and complex, and importantly it can be stitched together.”

For hoteliers, this means the ability to rely less on some traditional, more expensive distribution channels. The power of owning a greater share of direct bookings opens up new upselling opportunities for hotels, who can begin conversations with their customers and serve up offers and added-value that is linked to past behaviour and booking patterns. Ten years ago this journey was focused on keywords and search, today digital marketing has become more powerful and sophisticated to empower greater customer segmentation, delivering the right content for one particular guest’s booking journey and travel needs, each time they research an individual trip. 

PERSONALISATION AND PRIVACY: CAPTURING LOYALTY WITHOUT COOKIES

Intrinsically linked to customer segmentation is personalisation, and Rabe highlights the big impact for digital marketing that the depletion of the cookie has. Google’s Chrome is the last of the large web browsers to phase out cookies and these changes will take effect by the beginning of 2022. “Digital marketers need a clear strategy for managing what comes next.” Outlines Rabe, “Personalisation goes hand-in-hand with privacy, and organisations need to be looking at what is next, what technology can be built to deliver great one-to-one marketing in a privacy-compliant way.”

Serving up relevant ads online will still be possible, but Google – and the other web browsers –  are preventing marketers from tracking users across the web. Browsing history will no longer be accessible information, and user privacy and security is being brought to the forefront. The online advertising ecosystem is changing and it’s a major crunch point for the travel and hospitality industry. Rabe sums up the challenge, “These changes mark a fundamental shift in digital marketing, and businesses will be judged on how they react. There has to be a capture mechanism that brings new customers into the loyalty fold, and a path for having conversations with past customers.”

CRM AND LOYALTY: NAVIGATING THE INTEGRAL RELATIONSHIP TO DELIVER PERSONALISATION IN DIGITAL MARKETING

Rabe’s passionate advice to hoteliers is to ‘lean-in’ aggressively on their CRM infrastructure and set about truly understanding the needs and booking patterns of past guests. “The big brands have done a really excellent job in the last 10-15 years of their loyalty schemes, but getting under the skin of customer ownership is an expensive business. Large hotel chains have several hundred people dedicated to this area alone, and this isn’t possible for smaller, independent businesses. But everyone can be really mindful of having a clear CRM strategy, and loyalty must be a key component of that,” Rabe explains. 

The demand shock caused by the Covid-19 pandemic highlights to smaller hotel groups that they need to think about their distribution strategy moving forwards, and how their integrated CRM and loyalty approach will be a central part of that. “The reality is that most businesses have spent a bulk of 2020 fighting to stay alive,” said Rabe. “Looking at the bigger picture right now, with possible ways out of the pandemic on the horizon, there is pent-up demand for travel in the leisure sector.”

“Those businesses that have survived to-date need to pay attention to how they are going to own the customer relationship when that demand comes back. At this point, there is no clear indication for how long and in what shape that demand will return. Being ready when it comes is key. Loyalty should be a key component of any CRM activity – both past and future customers – and that is not going to change anytime soon. Technology allows smaller players to be incredibly efficient in this area, but there is a big ecosystem out there, and having a partner to help navigate what are the right platforms for your business type is essential.” 

Read more: understanding the opportunities presented in the Digital Markets Act ‘The Digital Markets Acts: opportunities for the travel industry

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FRENEMIES AND FRIENDS: THE OTAS AND GOOGLE’S COMPLICATED RELATIONSHIPS

Hitting a sweet-spot between direct customer relationships and those that are via an OTA has hit ‘fever pitch’ according to Rabe as the power players in these segments battle to drive incremental bookings. He says, “The big media platforms such as Google, Facebook and Amazon are a huge component in the direct booking journey, and certainly right now Google is a friend to the hospitality industry for the foreseeable future. They currently say they have no interest in crossing over and becoming OTAs and I believe that – running an OTA is expensive, they would need the infrastructure to drive in-direct demand, and their business models are not built for high-service industries where most functions cannot be automated.”

“Where the media players are good is in discovering traveler intent, and the key is working with them to have ways of capturing this,” Rabe continues. Conversely, it is the relationship between hoteliers and the OTAs that is moving to ‘frenemy status’ according to Rabe. Large hotel brands have divested from real-estate and become more like management companies, with direct marketing a key component of the proposition to franchisees. Today, an OTA looks very similar but has huge scale advantages. Each party is fighting for more incremental bookings and to have a meaningful relationship with the customer, and this is where the friction lies. Rabe summarises, “OTAs are both a friend and a frenemy to the hospitality sector right now. Only time will tell how this will evolve.” 

What’s next: the evolution of meeting new business and travel needs 

Rabe is not optimistic about a demand return in business travel and urges hoteliers who were previously strong in this area to figure out a strategy for capturing a different customer segment. “I’m not sure corporate travel will come back in the same form as it was historically. Not least because many businesses – Sojern included – have reduced their international office footprint and there is an immediate reduction in the need for our own people to travel. But, we still require places to do business face-to-face, and the prevalence of hotels in business districts presents an immediate opportunity,” he explains. 

Looking at the example of a recent business trip to LA, Rabe found the hotel lobby shut down in order to manage check-in and check-out in a Covid-safe manner, but wanted space to have meetings and work. He adds, “If my hotel had offered, for example, an upgrade for my two-night stay to include four hours of meeting room use, it would have been a really attractive offer. Hotels in business districts have something to take advantage of here; I’m not travelling to an office any more but I still need some of those facilities. There is a really big opportunity for the hotels who are creative with added value offers that tap into the changing circumstances of those still travelling for business.” 

The challenge, Rabe points out, and one that everyone in the business is acutely aware of is that traditionally after major market disruption it is good businesses come out stronger. No one is sure that will happen this time. It has never been a more uncertain market for travel and hospitality, but the opportunities for digital media and distribution are far-reaching. 

“The improvements over very recent history in what we can deliver in terms of growing direct bookings are dramatic. As an industry, we are constantly pushing out the next feasible channel, and harnessing advocacy for business owners in the process,” explains Rabe who understandably is excited about the future potential. “Technology is empowering a fast evolution of what is possible when it comes to digital marketing. It is fascinating to watch, get ready for the next iteration.” 

The PACE Dimensions’ executive interviews feature the hospitality and travel industry latest insights from experts. These interviews are an extension of the ways that PACE assist clients with tapping into market insights, unpacking these, and finding the opportunity for competitive edge. For more on PACE Research services please click here

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