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Five golden rules of social media ROI in the travel industryFebruary 16, 2012 By Special Nodes 37 Comments

NB: This is a guest article by Marco Saio , director o f global research and pro jects at EyeforTravel.

Facebook page? Check! Twitter account and dedicated hastags? Check! Competitions, discounts and

giveaways? Check! Any real, measurable and abundant ROI from social media campaigns? Erm, guys?

A recent EyeforTravel survey o f APAC travel brands shows that despite 67% claiming to have deployed

social media initiatives, more than half admitted confusion or inability to effectively rack and measure ROI.

One respondent describes the ROI dilemma faced by travel marketers:

“For all its potential, social media keeps me up at night – it feels a little bit like jumping in at

the deep-end without arm-bands and being expected to swim like Michael Phelps.”

With this in mind, I took three social media experts to task on how travel brands can move beyond

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With this in mind, I took three social media experts to task on how travel brands can move beyond

deploying social media for “engagement” or to “raise awareness” and instead concretely generate

incremental revenue and real ROI.

Each gave me five po ints to consider.

Jo siah Mackenzie , direct o r o f business develo pment at ReviewPro (and a T no o z No de)

1. Ident if y where so cial media will save yo u mo ney

Social techno logy can increase efficiency. Data from SimpliFlying indicates its seven times cheaper to

serve a customer on Twitter than in a call centre.

Using social media and review analytics could also save you substantial amounts o f money in customer

surveys, business intelligence, and market research. Exposure from social campaigns could replace

some of your investments in advertising and PR, saving money from budgets there as well.

2. Co unt inbo und leads f ro m so cial media

Many hotels are using social media listening too ls to pick up on conversations with people looking to buy

what they are selling. Dan Sherman made a $70,000 sale o ff a Facebook referral .

Am m ad Diana Shelbey Al lan Sébas tien Nico le

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There are more sophisticated metrics related to sales – such as time to closing and average order size o f

a socially engaged customer – but begin with counting leads.

Hubspot research showed companies that blog generate 88% more inbound leads than those who do

not blog.

What does this look like for your situation, and on o ther social networks? How is social activity affecting

your lead vo lume?

3. Measure f o r sales co nversio n impro vement

Social media – and online customer reviews in particular – play a key ro le in optimizing sales conversion

rates.

Jo in the conversation

bit.ly/R1xdVT3 hours ago · rep ly · re tweet · favor i te

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rates.

PhoCusWright found that OTA shoppers who visit ho tel review pages in OTAs are twice as likely to

convert.

Jennifer Davies from Expedia had more specifics:

“On Expedia, good reviews o f 4.0 or 5.0 generate more than double the conversion o f a

review of 1.0 – 2.9 .”

Brian Ferguson, an EVP at Expedia, quantifying the ADR impact as well, adds:

“A 1 po int increase in a review score equates to a 9% increase in average daily rate (ADR).”

So, measure the increase in revenue directly attributable from using social media in the sales process.

4. Track pro gress t o wards business KPIs and st rat egic o bject ives

Insights from the social web can play a key ro le in reaching strategic business goals such as improving

guest satisfaction or increasing the percentage o f direct bookings.

When you understand the financial impact o f reaching larger business goals such as these, quantifying

the contribution o f social media towards reaching that goal becomes easier.

Luis del Olmo, EVP and CMO of Melia Hotels International, says:

“The online reputation o f each o f our brands is a key success indicator fo r us. Online reviews

not only give us insights into our daily operations, they also directly influence our revenue and

profitability.”

5. Measure campaigns

Driving email newsletter subscriptions? Need to increase the number o f inbound links to your website fo r

SEO purposes? Want to increase visito r time on your website?

Campaign or pro ject-based ROI might ultimately be the best measure o f return on investment. Especially

if you compare the cost associated with reaching a goal with what it cost you in the past using o ther

IN CASE YOU MISSED ITIN CASE YOU MISSED IT

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if you compare the cost associated with reaching a goal with what it cost you in the past using o ther

tactics.

Martin So ler at WIHP wrote a good article if you want to learn more about this.

Mo rris Sim, co -f o under o f Circo s Brand Karma

1. Get yo ur so cial business f ro m Friends o f Fans (Fo Fs)

There are a lo t more o f FoFs than fans, and your fans’ referral will mean a lo t more than if you try to target

them directly.

2. Pay at t ent io n t o user-generat ed co nt ent (UGC)

Monitor what’s being said with text, photos, and videos. Know how your brand is being perceived in real-

time as well as evergreen UGC.

3. Engage int eract ively

Content from meaningful conversation is king, and no one likes to be constantly reminded o f o ffers and

Tnooz-Amadeus FREE Webinar:How to market and sellunbundled travelSuppliers such as airlines and hotels

have ro lled out significant

merchandising strategies to boost their revenues

from ancillary travel products.

Read Mo re »

Tnooz-Travelport FREEWebinar: Making open traveltech ecosystems work to youradvantageToday’s travel industry is

characterised by an interconnected network o f

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business impacted.

Read Mo re »

Tnooz-PhoCusWright VIDEO:LIVE research with YOU as thesubject2012 – how is it go ing for you? Over

half way through the year, we decided

to find out how the industry is feeling and where it

strategy is on key topics.

Read Mo re »

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discounts.

Imagine if you’re conversing with your date and in every o ther sentence s/he tries to convince you to move

in and help with rent. A big turn-o ff!

4. Have a plan f o r dealing wit h emergencies

These days, crisis could occur at any po int even if you do everything perfectly. So it’s time to update the

emergency response plan and take into account the many-to-many nature o f social media.

Once the staff trained, make sure you do regular practice runs!

5. Develo p a re lat io nship wit h Gen Y and Z s

They are highly influential. More than half o f the world is under 30 and they are the new movers and

shakers.

Everywhere from Cairo to Wall Street they’re banding together to make their vo ices heard, and in some

cases, overthrowing institutions.

Get to know them. They’re your future customers and staff.

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Barbara Pezzi, direct o r o f analyt ics and search o pt imizat io n at Fairmo nt Raf f les Ho t elsInt ernat io nal

1. St art wit h a go al in mind bef o re yo u embark in any act ivit y

If you do not know what it is that you are trying to achieve, it becomes very hard to measure how

successful you have been.

The same applies to ROI. If your social media strategy does not have ROI in mind, it is very unlikely it is

go ing to produce any.

Ultimately, not all social media activities will have an ROI or a financial outcome. However, it is important

that all stakeho lders agree if a financial gain is expected and if so , a relevant strategy put in place.

2. Wit ho ut accurat e benchmarking it is very dif f icult t o est ablish co rrect ROI.

Take records o f your key metrics before, during and after your social media campaign so that you can

correctly establish the impact o f your activities.

Keep a written schedule o f all your activities on the various social sites for correlations and further

analysis. It make historical analysis much easier.

3. Keep wit h t he plan

Philosophical debate aside on whether social media should have an ROI or not, if you are required to

report on it, stick to its financial definition and financial metrics.

Makes sure you take into account savings in your pro fit calculation but do not create or use intangible

“made up” metrics like the ROI o f a Facebook like or a twitter fo llower. It is a simple case o f costs vs

pro fits.

If the investment is in $, then so must be the outcome, not fo llowers, likes or clicks.

4. Have a measurement st rat egy in place

It is almost next to impossible to accurately measure any activity if no tracking has been put in place in

advance.

Ensure you social posts and links are tracked with campaign parameters, as you would do with your PPC

campaign, familiarise yourself with the analytics too ls provided by each social platfo rm when available (ex:

Facebook Insights ), establish your Key Performance Indicators.

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You are not measuring the activity, like how many fo llowers did you gain this week or how many times you

posted, but the outcome.

5. Accurat e measurement t akes t ime and discipline

Start by utilising too ls freely available such as Google Analytics, before you start investing in a proprietary

too l.

Set actual numeric targets against your goals, measure accordingly and act based on targets and results.

Measurement is not the goal.

The goal is to derive actionable insights. If you do not have a so lid analytics strategy in place, and the

human resources to manage it, even the most expensive sophisticated too l will be next to useless.

NB: This is a guest article by Marco Saio , director o f global research and pro jects at EyeforTravel.

NB2: Pezzi, Sim and Mackenzie will be presenting more social media insights at the

upcoming EyeforTravel TDS Asia 2012 in Singapore this May 9 to 10.

NB3: Piggy bank, Hands and Target images via Shutterstock.

Related posts:

1. What one travel industry figure really thinks about social media

2. Socialnomics: Four vital social media tips for the travel industry

3. Behold the anti-social social media strategy in travel

Filed Under: How To Tagged With: circos brand karma, expedia, eyefortravel, facebook, fairmont

raffles, hotel, reviewpro, ROI, social media, social network, twitter

Abo ut Special No des

Special Nodes is the byline under which Tnooz publishes articles by guest

authors from around the industry.

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Comments

Ro bert Gilmo ur says:February 17, 2012 at 12:37 pm

I’ve read all this and ‘m none the wiser, sorry – they’re saying nothing much about stuff we

don’t already know, and even less than that about ROI , in fact hardly any o f these thoughts are really

anything to do with any usable commercial concept o f ROI.

People have talked round this subject till we’re all blue in the face, and clearly are continuing to do so.

We need ‘how to ’ bullet po ints, live examples, case studies proving satisfactory, independently

verifiable ROI calculation/performance. It is abso lutely no surprise to me that there is a problem here,

because social media, particularly Facebook is about engagement, not commerce, and its even hard

to measure engagement. We need to recognise where social media fits into the commercial scheme

of things, rather than trying to convince people that its the be all and end all, and if you don’t do it,

there’s something wrong with your business, even tho ’ you don’t know what social media is

supposed to /can do for it inn the first place

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Jo siah Mackenzie says:February 17, 2012 at 5:08 pm

I appreciate your thoughts, Robert, but when you look at metrics directly related to

sales – such as lead source/vo lume or sales conversion improvement – how is that not about

ROI? Also, cost savings is a very transparent measure as well. These numbers are as close to

quantifying a “return” as you can get. I’m just a little unclear on what you mean…

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Ro bert Gilmo ur says:February 18, 2012 at 7:33 am

Its not the what to do, its how to do it, including an attribution model, and practical

examples o f successful ROi calculations. That’s what i never seem to see. Also as ROI is

dependent on cost, how do you attribute a to tal cost to social media activity, another area that

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is almost without exception never addressed properly by the commentators, and an essential

part o f the ROI calculation, and a recent survey showed that only a minority o f firms actually

identify and attach a budget to it- o r worse still, plunder o ther budgets to fund it, no tably the

search budget.

The o ther issue I’m not clear about is what you identify as attributable to social media activity

alone. Social media experts try to attach it to every positive, successful marketing initiative in

every way, shape or fo rm it can, especially mobile. Mobile is mobile, social media is social

media. My company among o ther things builds successful mobile websites for hotels, The

so lution doesn’t need social,media to be successful, it needs to attract and make conversions

in the real world o f mobile space. I am still waiting on my first mobile booking referral from

social media.

My interest in this is that i have clients who have spent considerable money with social media

companies and marketers, fo r little or no identifiable return

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Fernando Ro dríguez Merino says:February 19, 2012 at 2:18 pm

Hello Robert,

Maybe you can give an example o f what it is a “usable commercial concept o f ROI” and

“successful ROi calculations”, as it is not clear fo r me. If you find one, I would like to check if it

has a separate and independent ROI.

Not only mobile web sites, but call center, ppc, o ffline adverting and many more are together

during the selling process and you cannot po int any o f them as abso lute responsible o f

conversion, despite every one wants to say that it is the so le owner o f the conversion.

As a hotel marketeer, I know what does it mean to be responsible o f budget and how tricky can be

metrics. My final conclusion is that every too l co llaborates on a certain level and has to be

measured separately throughout the marketing funnel.

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Ro bert Gilmo ur says:February 19, 2012 at 3:58 pm

Fernando, that’s exactly what i’m asking for!

Hotels are happy to pay OTA’s commission, no one is disputing they have a part to play in the

conversion – o therwise why pay them.

It is not good enough just to make excuses for social media when the leading Q’s are asked.

this is part o f the problem. Social media is like a house with no foundations. I have named it

elsewhere as a wannabe – rather like a a so lution looking for a problem.

Let me give you some practical examples – - – - – -

Hotel 1, spends £5K with a ‘social media expert’ – has had Facebook 28 referrals, 0

conversions over 3 months.(Google Analytics)

Large city hotel, 2640 Facebook ‘referrals’, 2 bookings (Google Analytics)

I had a call from a prospective new client asking me if I was a social media expert, when I

asked ‘why’ he said he wanted to increase his sales revenues by 20%. We really need to get

real especially with small businesses o f what social media can and can’t do for them and their

business before they plunge in and spend money which has an opportunity costs and might

be better spent elsewhere.

In this particular case, the client’s web site was one o f the worst i’d ever seen yet he wanted to

throw a big budget at social media – Costa Concordia comes to mind.

My po int is simple, until we can have reliable sustainable measures o f ROI we can benchmark,

then encouraging small business to spend budgets on, or worse still, divert budgets to , social

media activity is a potential po isoned chalice.

I’ve made my po ints on blogs and elsewhere re the risks and downsides o f social media,

these are conveniently fo rgotten,or not well enough understood, by – so called ‘social media

experts’

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Fernando Ro dríguez Merino says:February 20, 2012 at 4:55 pm

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Hello Robert,

I agree with you when you say that your client should fix their own website before thinking

in social media, mostly if he wants to increase reservations. However, maybe Google

Analytics is not the best too l fo r measuring social media performance. Regarding OTAs

many people tend to think that working with them is “free”, as they are only paying % per

booking, but the truth is that it could represent a big cost o f opportunity, and what it is sure,

their ROI (or interest on working with you) is directly related with the social media status o f

the hotel product they sell.

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Bruce Sweigert says:February 20, 2012 at 3:27 am

Agree with Robert here. Everyone has been talking about ROI citing huge numbers. Its

not a question o f whether it is there or not (it clearly is in many cases), but to date I’ve not seen

even the most basic attempt at an analysis that shows attribution.

Social media is now quite mature in the market. What is getting tiring is they every time somebody

launches a social media campaign and gets thousands o f “ likes” its just assumed that its a

commercial success.

Its time to move beyond the hype and start looking at it like real business people.

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Ro bert Gilmo ur says:February 20, 2012 at 6:07 am

The all talk and very little action approach to ROI on social media is go ing to be a

big cross to bear especially when in o ther areas o f travel and hotel marketing are being asked

to , and are, tightening up their ROI’s and metrics.

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David Ko lner says:February 20, 2012 at 8:31 pm

Agree with everyone that attribution modeling is the missing link for creating ROI

in Social (or staying on top o f the flood o f data from virtually every o ther digital fo rmat). There

is lo ts o f different trial and error o f these types o f models, but in my experience the leadership

in this area is from outside o f the travel industry – expect to see more innovation at SES and

SMX events where thoughtleaders are sharing actual results o f attribution modeling tests.

Until we get to true attribution modeling in any form, it’s go ing to be conjecture, best tips, and

‘the ROI on Social Media is that you’re still in business in five years’ – this isn’t criticism of the

conjecture, just pressure for innovators to lead on the next world o f analytics and attribution

modelling.

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To ny Champio n says:February 19, 2012 at 6:26 am

There are 15 good po ints here and I agree they should be taken on board when devising

your social media plan. I do understand Robert’s frustration at not having a clear ‘how to ’ guide but in

reality IMO it is just not possible to have a universal, one-size fits all approach.

Here, in brief, is my take on the issue as the former owner o f a small business for which, perhaps by

definition, budgets were tight. Everything had to be done for a reason and measured, no matter how

crudely.

Not enough company’s have adopted Barbara’s first po int as their Golden Rule number 1: start with a

goal – a proper business goal. Note: number o f Facebook fans or Twitter retweets is not (or

shouldn’t be) a business goal.

Once you have your goal, work out the best way to get there – it could be a Facebook page, a Twitter

account, a mobile website, a competition or any number o f o ther options. The too ls used will depend

upon your goal, your business and your customers. You can then work out your KPI’s, metrics and

ultimately discern your ROI.

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For me the key is not to view social media, or any o ther too l o r channel, as silver bullets to be shot

into cyber space without first asking why.

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Pet er Syme says:February 20, 2012 at 7:08 am

If you want to see how a hotel uses social media and measures it go and speak to the

guys at Citizen M. There strategy has SM at it’s core and it paying back in spades. They did have the

advantage o f not having history so came at it from a start up po int o f view.

How many business hotels do you see consistently at number 1 or number 2 on tripadvisor? These

guys, live and breath SM and they to tally understand their target customer, and implement to service

that target customer.

In my own small businesses I engage across many SM routes. Why? My clients past and future are

there, and I cannot see how a service based business can ignore the dynamic changes that are

happening at rapid speed. You have to be part o f the conversation. I just measure two things.

1. Enquires generated

2. Converted business

I could measure a heap o f o ther stuff, but as a small business with no marketing resource and limited

time I like to keep it simple. The only cost is my time.

Last year I generated just under 6 figures directly from social media, so far in 2012 we are on track to

do significantly more, however, figures skewed a fair bit because o f a $60k enquiry. Also had

significant marketing exposure via TV because o f SM.

I am not saying it is easy it is not, and it is not helped by a minefield o f “experts” selling the wares with

often very little hard facts to back up the sales spin. Ignoring it is not an option though in my opinion. A

combination o f great search results and great SM strategies will ensure tourism business thrive, if

they have the product/service to back it up.

In an industry with more and more services and middle men in between the customer and the

business who provides the service, SM is they way to deal direct, however, I do not think there is a laid

down model that fits all businesses, it has to be designed and tested for each individual business and

it is also a forever changing beast, which is why so much frustration happens. PDFmyURL.com

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Ro bert Gilmo ur says:February 20, 2012 at 11:58 am

Peter, delighted to lean o f your experience, most hotels would give their back teeth for

this, you are certainly the rule rather than the exception – and the fact that you can directly attribute

the conversions &c to social media is a very rare feat.

My contacts tell me Citizen M spend a huge amount o f budget on social media as do Roger

Smith. i’m afraid the bulk o f my clients cannot be convinced enough o f the benefits o f social media

to entertain such spends without concrete ROI predictions for the boardroom, at the very least.

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Jo siah Mackenzie says:February 20, 2012 at 12:06 pm

Robert, I work closely with citizenM Hotels and The Roger Smith Hotel, and the

difference that I see is not that they spend a huge amount on social media, but rather their

approach o f “social hospitality”:

http://www.reviewpro.com/social-hospitality-6746

You may see this approach as less driven by numbers, but I know the owners o f both

companies view this as strategically important fo r their growth.

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Ro bert Gilmo ur says:February 20, 2012 at 12:14 pm

I hear what you say, now i have about my thousandth definition o f social

media to add to my co llection. it gets itself into bed with anything that will hype it up.

These hotels are indeed lucky, to most its a numbers game, commercial viability dictates

that.

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There will always be stars, among huge clouds o f doubters, and small businesses who

hear all the hype and mixed messages from all these experts and feel like they are in no

man’s land with it.

Furthermore they’d love to have a budget like Roger Smith Life to try to be a social media

champion.

We need to get real about this, its about the equivalent o f the ‘main in a street’ ho tel’

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Pet er Syme says:February 20, 2012 at 12:44 pm

Robert

Surely it is the ” man in the street hotel” that has the most to gain as they now have a

way to compete without having the budgets o f the big boys to spend on marketing.

I to tally agree about the hype and the confusion it causes and to many experts do not

help. However, it is here it is not go ing away and it provides opportunity , loads o f it.

Here is another example afraid from my industry rather than hotels,

https://www.facebook.com/WesternRiverExpeditions

There average booking value is in the $3-5k range and I have seen in detail how much

they measure every part o f SM and how it is driving business for them, lo ts o f it!. They

have not thrown money at it they have just sat down and worked out a system that

puts the customer at the heart o f everything they do and then got on and implemented

it. They blow my efforts out the water.

Again not easy to copy or just do , it takes each individual business to work out what it

is really o ffering and then how it is go ing to enhance their customers experience via

SM. Experts have their place but what works for one business will probably not work

for another business and that is why the fog just keeps getting thicker.

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Pet er Syme says:February 20, 2012 at 12:15 pm

Hi Robert

As much as I can gather I think SM is the marketing spend for CitizenM at the expense o f more

traditional marketing routes. Like I said I think they had an advantage o f designing and

implementing from the ground up, due to being a start up. Not many traditional hotels have this

flexibility so it will be much harder fo r them to make the change and fully embrace the

customer. CM pay there staff 30% of their income based on trip advisor reviews using a clever

system! I cannot imagine many Scottish hotel staff teams embracing that!.

We can track it because we are small, but I am convinced any business can track anything they

want in SM if they put the systems in place and more importantly get the staff onside. To me

the whole thing is just part o f normal customer interaction now, yes more confusion, yes more

chaotic but yes more rewarding as well.

The hotel industry especially the small owner managed hotels and small independent groups

are struggling as we can all see, those that embrace customer service on every level possible

to them , as well as finding their niche will have a chance, those that do not will find life harder

go ing forward.

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Ro bert Gilmo ur says:February 20, 2012 at 2:59 pm

I hear all your remarks about CM. I have stayed ion one. it is one o f the most

dehumanising ‘hospitality’ experiences i’ve ever had in my life. it was horrible. it was a disgrace to

the destination with which it had abso lutely no empathy, and the only thing it was missing was a

robot. Its s nonsense to say CM have a customer centric approach – they have a numbers game

approach driven by techies. Mutton dressed as lamb doesn’t even come into it.

I’m not one o f these people that manipulate Trip Advisor, having been an ex (and very successful)

hotelier sufferer o f this lo t. So i would never have posted a review, i would have been insane

before i finished.

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The Scottish market will vo te with its feet, the only way the Glasgow CM is filling is because o f

price, and flash selling – so much for an amazing social media strategy they can accurately

measure ROI on. They are devaluing the already discount laden Glasgow market,. and i hear

about to unleash on Edinburgh apparently, if they haven’t already.

Scottish hotels who value the Scottish hospitality experience – stick to your guns, and don’t

robotise, i’d say…

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To ny Champio n says:February 20, 2012 at 3:51 pm

The Emperor is naked – there, I have said it.

The social media are means to an end and not the end itself: just like telemarketing, email marketing,

direct mail marketing. All can be measured – maybe not with 100% accuracy but respectably close

enough to gauge a ROI.

Social media too ls are shiny and new but they are not infallible.

They are only as good as the business, processes and strategies they are supporting.

Olivier Blanchard likens Social Media to an infrastructure: it is a set o f platforms and techno logies that

allow people to talk with o ther people. It is what sits on that infrastructure that is the real important bit

and perhaps many o f the social media experts that Robert’s clients have encountered know about the

platform but perhaps not so much about the (social) business that happens on top.

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Barbara Pezzi says:February 21, 2012 at 5:24 am

I am a web analyst, and not a social media practitioner. As such, I think, a neutral vo ice in

this whole debate.

To Tony’s po int, nothing can be measured with 100% accuracy, but with some efforts and a decent

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tracking strategy in place, it is possible to get an accurate enough analysis o f ROI. Of course one can

make it really complicated and come up with complex compound metrics, attribution modelling

systems, and so on.. but ultimately, to start with, it is a simple case o f identifying one or 2 main

business goals and stick to that, just like Peter Syrne mentioned in his comment.

Therefore, taking Robert’s example, if ho tel 1 spends 5k on a SM expert and gets 2 bookings out if it,

then the ROI is go ing to be what it is. It is then up to the business owner to decide, whether the

exposure, traffic, etc was enough to justify the cost in the absence o f a positive ROI. This is no

different from a business owner happily spending 10K on a glossing magazine spread or a PPC

campaign with no goal tracking in place apart from number o f impressions and clicks. And on the

same token, the so-called social media “experts” that Robert is so frustrated with, are no different

from SEO “experts” who to these days still promise 1st position in Google for 10k upfront or bad web

designers, dodgy SEM vendors and so on.

The issue is not social media or the complexity o f measuring ROI, but the lack o f knowledge,

incorrect implementation, and bad advice from vendors, which can happen in any o ther online

channel. Not all social media campaigns will work and not all businesses will benefit from it, but I

have analysed enough online data over the years to say that the same applies to PPC, display, email

campaigns, etc.. Ultimately, it is up to us as consultants (I dare not say experts..) to advise our

stakeho lders, clients, co lleagues as best as we can. If they then decide that 5,000 facebook likes are

good enough to justify a 5K spending, as misguided as that is, ultimately, it’s their money, but the

channel should not be the one to be blamed for incorrect business decisions or unscrupulous

vendors.

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Valyn Perini says:February 21, 2012 at 8:53 am

I agree with many here that attribution modeling is the way to prove channel value and ROI

but, especially in the hotel industry, that function is in its infancy. Hotels still don’t truly understand the

impact third party distributors have on their bottom line (the “billboard effect”), and social media

metrics are even less financially quantifiable.

As Barbara po ints out, attribute modeling is complex and expensive, but it may be the only true way to

measure ROI for large-scale online campaigns.

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Ro bert Gilmo ur says:February 21, 2012 at 9:31 am

Ok, all travel techno logy is expensive, and most o f it is over so ld, over hyped, you

name it. travel shoppers and travel suppliers (e.g. hotels)are already way over-marketed and

overso ld to , largely techno logy driven.. Do they all really want all this (techno logy) – o f course not.

Its way too expensive a situation to be in, in an already far too cluttered market,with almost

everyone and their granny o ther than the hotel and the customer co ining in the benefits. For

techno logy ‘creep’ – perhaps ‘race’ is a better description and its time it was stopped. PMS

vendors are a classic case- selling ro lls royces to hotels which only need minis.

ANOTHER attribution model – heavens the mind boggles. Lets get back to basics, fast – no sorry,

that’s impossible.

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Mo rris Sim says:February 22, 2012 at 8:47 pm

I tell my clients ROI should be measured in the traditional sense, which is,

($$ you get – $$ you spend) / $$ you spend.

Why reinvent the wheel on this one? That doesn’t make sense, especially when FC is already

measuring banner ads, PPC, OTA performance, etc. using that fo rmula. The same tracking techno logy,

either promo code, customer mentions, or a parameterized URL all can be used as ways to track

actual conversion from social media. If you’re spending advertising $$s, I simply would not alter from

this fo rmula.

It’s been our experience that social media advertising can return anywhere between 50% – 4000%

ROI using this calculation. For comparison’s sake, depending on your OTA commission percentage,

the ROI is almost always between 300% (for 25% commission) to 900% (for 10% commission)

using the same formula (and with no additional advertising spent on the OTA). So as it relates to ROI

from social, I don’t think the question is if it can be done but how to do it

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For those o f you that aren’t do ing social advertising but have someone on staff posting o ffers on

your Facebook fan page — great. Use a % of that person’s salary, full burdened, as the base for $$

spend.

For non-revenue generating things you do in social media, like monitoring your reputation,

responding to customer inquiries, etc.. That’s just general cost o f do ing business. I don’t think the

right measure o f whether you should do this or not is ROI, just as you don’t use ROI as the

justification to send guest satisfaction surveys or have a Guest Relations Manager in the hotel lobby.

One final thing: attribution models is an interesting approach but I personally think there have been a

lo t things wrong with it. For example, a popular practice is to set the ‘time to decay’ on the cookie

dropped to 30 days. This means that the first touchpoint from up to 30 days ago would get the credit

fo r the sale — Wow! This attribution gives a lo t o f credit to SEM. However, if I do last session

conversion on SEM campaigns, the ROI is abysmal; in the majority o f cases you lose money on SEM

campaigns. So I think that can’t be right either.

Google Analytics Premium has provided some too ls fo r you to customize your own attribution model

so you can better credit all the customer touch po ints. But this is complex and requires expertise —

which is lacking even today. Wrong attribution is worse than no attribution! So I think the attribution

model, while interesting and probably the way to go eventually, isn’t yet practical enough to replace the

simple ROI formula that someone very smart once figured out. It does a fine job o f evaluating the

efficacy o f your investment in most cases.

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Ro bert Gilmo ur says:February 23, 2012 at 6:09 am

Morris, are you able to share with us a social media campaign that got you an ROI o f

say 1000%?

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Mo rris Sim says:February 23, 2012 at 6:42 am

Sure — here’s one example.

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2 years ago during the time o f the Bangkok rio ts a client in Phuket was having difficulty with

occupancy. I worked with them, a 5-star resort on the beach, by looking at its seasonal

business during that time (it was low season), analyzing their social media perception

(contemporary, good getaway for adults), and constructed a complimentary upgrade o ffer that

we then advertised on Facebook.

The advertisings targeted singles/couples pink, Eastern Europeans, and regional travelers.

With $1,000 spent over about 4 days, the hotel received about $20,000 in booking specifically

for this o ffer. Further, the on resort spend from these guests were an additional $0.75 for every

$1 received in room revenue. It was the most pro fitable customers they had ever had.

Since then, they have been able to successfully replicate the results using the same

methodology we developed for the first campaign.

The people we worked with have since moved on to open new hotels in the region with better

pay. We all still keep in touch. Now that’s pretty good ROI for the individuals as well!

In any case, if I were to use my ROI formula, the campaign delivered:

($20,000 – $1,000) / $1,000 which gave them a 1900% ROI.

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Ro bert Gilmo ur says:February 23, 2012 at 12:14 pm

Morris, very well done you.

We need more success stories like this

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Bruce Sweigert says:February 24, 2012 at 12:34 am

Morris: This is as good example as I’ve seen, but herein lies the danger o f

taking distressed inventory examples as case studies. In these case, ROI is assuming that

any incremental revenue is 100% earnings. Since in your case, could have o therwise gone

unso ld, it makes a good case for using SM to clear out unso ld rooms.

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I know this article is focused on hospitality, but from an airline perspective applying such

ROI numbers would be problematic. Airlines continually suffer from yield dilution as

customers purchase patterns have adapted to anticipate distressed pricing.

For more steady-state examples, assumptions need to be made on channel shift (simply

moving the sale from one channel to another), cost o f goods so ld and dilution from other

o fferings.

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Ro bert Gilmo ur says:February 24, 2012 at 6:35 am

Bruce, great po int, but this is not unique to social media is it?

Mo rris Sim says:February 24, 2012 at 10:49 am

Hi Bruce, I think you’re right in terms o f taking yield management into

account. I’ll just add a coda to complete the hotel story. In the case o f the client, they ran

a campaign for the ho liday season (which is high season in Phuket as you know) and

the ROI was best on the FB channel fo r them. They to ld me that they achieved even

better ROI on that, which I wouldn’t be surprised given the higher room rates during the

high season.

This property does practice online parity, so it wasn’t a fenced-in o ffer. It was just that

through the FB distribution channel they were able to get a greater yield because the

business garnered was direct as opposed to go ing through commissionable 3rd

parties. In fact, higher room rates meant higher commissions, whereas the cost o f

placing an FB ad remained relatively the same during that period; hence the room rate

increase had no material impact on what they paid to advertise.

If they can replicate the results, this would actually argue for them to sell distressed

inventories on OTAs and go direct via Facebook advertising during the high season!

Anyway, your po int about airlines is interesting. Southwest, Jet Blue, and Air Asia all

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seem to be using social media to sell inventories all the time. Even a traditional carrier

like Delta and Lufthansa are fairly active selling on social media.

So there must be a reason why they’re do ing this — it doesn’t appear to be just

distressed inventories — although I would not know that fo r sure. Perhaps they’ve

figured out how to allocate inventories through the various channels to optimize on

yield and social is one o f the channels that yields well?

If they’ve figured this out, good for them! As Robert po inted out, this is really no

different than what you’d do for general revenue management anyway. Social just

became the nth channel that you’d consider in your channel mix — and if you do it

right, it could be a higher yield channel than what’s available traditionally online. If you

don’t do it right, you could end up disappo inted.

But then again, that’d be the same for any channel.

Ro bert Gilmo ur says:February 24, 2012 at 11:27 am

Guys, this has been a really useful and insightful discussion on a very

critical topic

Pet er Syme says:February 23, 2012 at 6:43 am

Always remember that the ROI % will be significantly higher if you have a product/service

that is suited to this means.

I would argue that all products/services are but some are much more suited than o thers. If you are a

hotel , you cannot be just be another hotel you have to have something special worth talking about if

you are go ing to make decent ROI.

In the last 2 weeks I have had over $70k worth o f enquiries and over £10k o f bookings via SM. ( PDFmyURL.com

In the last 2 weeks I have had over $70k worth o f enquiries and over £10k o f bookings via SM. (

different money signs due to location o f enquires) Twitter alone is a regular revenue stream now ,

month in month out. Facebook less so, but still pays. Other niche online groups much better returns.

Spend? my time and not a lo t o f it, zero cash spend. Last year I was on a expedition which recruited

every member at $6.5k per time via SM.

Now I am playing in the niches, so much more suited to this means, but on the o ther hand I am not

especially adept at what I am do ing so those with pro fessional resource should do better if they have

a product/service worth taking about. The only effect I am seeing over the last few years o f playing and

experimenting in this area is a reducing cost o f client acquisition. Now under £0.50 a client. The one

time I hired pro fessional help for 6 months on a FT basis the numbers did not look nearly so good,

but if we had scaled it would have worked.

I really think it is very difficult fo r business owners to get their head round this because their is no

system that has been designed that will work for all business. It is not like SEO where if you do the

right things you will get results. This needs to be uniquely tailo red for each business and I would

argue by the business. It takes lo ts o f trial and error to find what works, therefore, it does come down

to how much you believe in this being a future sustainable revenue stream.

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Ro bert Gilmo ur says:February 23, 2012 at 12:40 pm

Peter, all interesting, you’re so right about differentiation and proper channel

management, its amazing how many hotels don’t ‘get it’

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Fernando Ro dríguez Merino says:February 24, 2012 at 11:46 am

It is actually quite common that new channels need to o ffer better rates in order to get

clients. E-commerce web sites went through this process when they started, when buying online was

considered risky to put your credit card in. It is happening again, I think that it is a matter o f time

Business consultant Booz & Co. predicted in January 2011 that physical goods so ld through social

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commerce would balloon to $30 billion from $5 billion by 2015, with Facebook contributing a majority

o f sales.

While it is true that today buyers prefer to close their buy on a common channel, social Media and

channels like Facebook are playing a fundamental ro le during the entire selling process. Well

integrated facebook apps would use the best customer information to create a complete social entity

around each product or service.

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Bruce Sweigert says:February 24, 2012 at 8:13 pm

Again, attributing 100% of the revenue as “earnings” is why you can get such high

numbers. To say I can get 1000% ROI on an SM investment, if I were American Airlines all I would

have to do is come up with $1M and put it into twitter and Facebook campaigns and all o f a

sudden I’m pro fitable again. Would anybody believe this? If a travel agent or ad agency to ld you

that they could get 1000% ROI would you believe it?

Yes, SM is a very cost effective channel fo r both advertising, corporate comms and customer

engagement. Where we tend to loose sense o f reality in terms o f ROI is when we look at it as

something o ther than a new channel.

True ROI should be measured against its effectiveness vs. o ther traditional channels in terms o f

cost, reach, response, yield, etc. net o f any channel shift. The ability to target specific audiences

and drive direct sales will no doubt have significant ROI, but it won’t’ be 1000%.

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Calvin says:March 8, 2012 at 5:27 pm

Im not sure this is any more than thin link bait IMO agree that it just skirts the issues and

problems with no clear so lutions or methods for measuring this. This article itself and these

comments just show me we are still no t understanding how it works exactly. I didn’t find it very helpful

in saying you need to do x y and z apart from the obvious.

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Kevin May says:March 9, 2012 at 7:57 am

@calvin

Everyone entitled to a fair comment.

And, presumably, blog posts titled…

“Things To Do In Winter Or Summer In Australia” or…

“Great Places to Get Dressed Up in Melbourne”…

… would never be considered so-called link-baiting?

I’m happy to share where I found the headlines

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Trackbacks

4 So cial Media Benchmarks Yo u Can Use | Unmet ric Blo g says:February 17, 2012 at 10:47 am

[...] Twitter is fast becoming the inbound call center o f the 21st century and brands like @DellCares and

@XBoxSupport are embracing it like never before, infact data from SimpliFlying suggests that

providing Twitter support is up to 7 times cheaper than a call center. [...]

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