Future of Display Advertising – Is the Hotel Industry Ready?

Google recently presented their vision for how display advertising is likely to evolve by 2015…these seven predictions are something all marketers worth their salt absolutely MUST be informed and aware about.

To summarize, here are the broad predictions:

1. 50% of ad campaigns will include video ads bought on a cost-per-view basis
2. 50%  of ads will be bought using this real-time bidding technology to tailor experiences for different viewers
3. Smartphones / mobile is going be the number one screen for digital brands to engage users
4. There will be at least five metrics that advertisers will regard as more important than the “click”
5. 75% of web ads will be “social” in nature i.e. Ads will be  shared, discussed, subscribed to and recommended
6. Rich media formats enable great creativity and interaction – these will grow from 6% of display ad impressions to 50%, especially for brand building campaigns
7. Digital display advertising is going to grow to a $50 billion industry

Watch the excellent keynote address by Neal Mohan (VP Product Management) and Barry Salzman (MD Media & Platforms – America) at the Interactive Advertising Bureau’s MIXX Conference in New York, entitled “Display 2015: Smart and Sexy.” The video is about 39 mins long but worth a patient watch – it takes you through these predictions individually and with some demos of existing and coming tech from Google to make all this happen.

So this obviously raises some important questions for the hotel industry. Hotel companies have usually belonged to the late majority of tech adopters or where resources and internal “will” allow for it…in the early majority. But are we ready for the searing pace of development in the digital space?

A few questions that immediately come to mind:

1. What sort of resources will hotels need to start investing NOW in order to be fully prepared to embrace video (and high quality digital video ads in 4-5 years!)? In an industry that currently struggles with investments in an ample range of high quality photography, will video make the cut in hotel budgets?
2. Real time bidding and customer experience molding via ads – what changes would need to be made in hotel marketing or corporate digital / web departments to prepare for demands of responsive, super-niche marketing? Hotels often struggle to get segmental marketing right (often dependent on internal marketing expertise and lack of bandwidth to cope with the multitude of demands that emerging platforms pose)…will future hotel Sales & Marketing departments finally see a clear separation in roles (Sales vs Marketing – two different, distinct experts)? Perhaps chain hotels will see a growing and more specialized team when it comes to digital / internet marketing. Agencies and consultants are likely to reap a windfall from independent hotels and existing corporate hotel accounts too, as complexity and the need for fast reactions in the digital marketing space increase.
3. Mobile obviously represents an IMMENSE opportunity…one that hotels can exploit in more ways than one (a great example is this story we did over 18 months ago – Hotel Mobile Marketing – A Hotel Guest Story from the Future). Many hoteliers have woken up to the urgent need to be ‘mobile-accessible’ on the web but there are also tremendous opportunities in the areas of proximity marketing, in-stay communications, concierge / hotel info or service apps, near field communications, augmented reality and more…all of which are likely to go mainstream in the next few years. Hotels will need to ensure they have a strong mobile strategy in place before testing the mobile ad space, otherwise are simply likely to frustrate users by driving them to non-optimal mobile fulfillment or service platforms.
4. 5 metrics more important than the click? Hallelujah! In some areas the hotel industry does metrics tremendously well…one only needs to see the sophistication in ‘guest satisfaction’ measurement systems that many hotel chains employ. Certainly analytics are only as good as the use they’re put to…plus the initial vision leadership had in mind when setting up these intricate systems. As display advertising on the internet evolves, hotel chains will have exciting opportunities to find synergies between pools of data across the organization (for better insights into consumer behaviour and to improve overall ad experience & targeting). Again, here hotel companies need to work hard to make their disparate systems “talk” to each other and tap into the immense power and insights that lie within.
5. I love the fact that ads are finally going ‘social’ (in a way, though, some of the most creative ads always were and already are…just think of the viral video commercials you’ve been passed on by friends via email or on social networks). However, its only natural that as ad technology evolves, these content pieces become more interactive and portable…a HUGE win for advertisers in understanding how their efforts are working (or not). In order for hotels to take advantage of ‘social’ ads, they’ll first need to map out their social media strategy… most hotels still haven’t figured out why they do what they do in the social media space, which is rather frustrating to watch. Once hotels recognize their true identities (hopefully in line with guest perceptions) and start working earnestly on striking up meaningful conversations in the online social space, they’ll be in a good position to tackle social media (and in turn have the social media profiles in place to drive their target ad audiences to)
6. If Rich Media ads make up 6% of digital ad impressions today, then the lions share of this tends to come from other industries…so far it appears that only the major hotel chains have the budgets in place to produce and deploy appealing rich media ads. Ad formats and capabilities are rapidly evolving…hopefully companies like Google and Facebook will introduce tools to simplify the creation of rich media / interactive / intelligent ads at some stage and tap into the vast market of small and independent hotel advertisers out there (much like Google Adwords made PPC advertising accessible to all).  However, more likely than not, agencies will need to step in with relevant expertise and hotels will need to divert increasing portions of their budget to digital marketing as every year passes (not a bad thing, given the opportunities and accountability that the digital world offers!). It may also be interesting to see how collaboration (or a merging) evolves among the Hotel Marketing, Branding, PR, Sales and Web Development functions to come up with more engaging, interactive ads that serve different purposes.
7. How much of that $50b will come from the hotel (and travel) industry? 🙂

Of course there are a million and one more questions one could ask…but it is the answers to some of the big questions above all hoteliers need to be looking for. There’s no doubt that tech evolution today is nothing short of exponential (after all the Internet as we know it has evolved in the last 6000 days… how many more things have changed the world so rapidly?). The future is coming at us faster than we think… as hoteliers we need to dust off our binoculars, put on our marketing hats and start preparing for the inevitable shifts in technology and consumer behaviour (and we need to get started yesterday).

So much for my rant… what do YOU think? What are you or your company doing to prepare for the future? Leave a comment or tweet and let us know!

JJ