To better understand the big marketing challenges facing travel brands in an age when consumers are in control, Skift’s What Keeps CMOs Up at Night will talk with the leading voices in global marketing from across all the industry’s sectors.
These interviews with leaders of hotels, airlines, tourism boards, digital players, agents, tour operators and more will explore both shared and unique challenges they are facing, where they get insights, and how they best leverage digital insights to make smarter decisions.
This is the second interview in the series.
Pepijn Rijvers, who’s been Booking.com’s chief marketing officer for nearly a year, has a marketing budget at his disposal that is the envy of just about every other online travel brand on the planet except one.
Expedia actually outspent Booking.com’s parent, the Priceline Group, in online and offline advertising in 2015 by a hair — $3.38 billion versus $3.36 billion — but only because Priceline.com’s TV advertising deliberately went silent for a period as it reorganized.
Rijvers points out that Booking.com spends the vast majority of the Priceline Group’s marketing dollars, and both Expedia and the Priceline Group would admit that the latter gets a lot more bang for the buck in their respective marketing efforts.
As CMO, Rijvers spoke to Skift about the skills required in digital and offline advertising, how Booking.com became so efficient at it, and marketing trends within and outside the travel industry.
“The way I look at it is that performance marketers are data scientists,” Rijvers says. “They are incremental, agile, scrum-like, velocity-oriented people. Very collaborative, very tech-checking in their approach. Let’s pose something to a real user and see how they perform, ideally in an A/B environment, and then we’ll be able to learn something from that. Based off of that learning, we’ll create a couple of new hypotheses. That’s how reality works, and then we’re going to put some experiments in place against these hypotheses so that we learn more. This is typically how we’ve built Booking.com as a business.”
But Booking.com is increasingly using TV advertising and targeting to engage with consumers at a much higher part of the travel funnel — sometimes even before they realize they want to go somewhere or book a hotel, Rijvers says.
For the travel industry and marketers in general, this requires CMOs and their staffs to have a different array of skill sets. “I think today’s CMOs need to be good at both, Rijvers says. “I think they need to be able to really build that bridge. You need someone that both has a lot of appetite for the creative process, and also has the attitude toward the creative process where he’s still daring to take risks and daring to basically be pulled down and say, “This is what I believe in, this is what I stand for, this is what we’re going to do.”
Skift spoke with Rijvers about a variety of trends taking place across the travel industry and at Booking.com in particular:
Skift: Priceline Group CEO Darren Huston says that the company has “a competitive moat that is deep and wide.” In other words that Booking.com’s competitive advantages protect it somewhat from other companies trying to catch up. Are Booking.com’s marketing activities part of your competitive advantage?
Pepijn Rijvers: It’s definitely true as you grow larger as a business and you have more impact, more customers to interact with, that also your opportunity for marketing needs to grow. There’s a bit of a size does matter effect there. A simple example, I think, is in our strategic partnerships; the deals that we’re able to do with other companies as we’re the market leader on hotel retail, hotel bookings. Then you become a no-brainer choice for other brands to work with you if they want to service their customers, their traffic, with a hotel product. We’re seeing this mostly in Europe, the Middle East and Africa because that’s where we have our longest history.
Other examples include our partnership with China Merchant Bank that’s created a branded credit card with us that is targeted towards their international travelers that are members of the bank. They want to reward those customers with additional benefits to use China Merchant Bank products for their spend overseas and they felt Booking.com was the best brand to do that with. We have international appeal and are very well-known for this in the Chinese market, as well, for outbound travelers. That’s an example of something that five years ago wouldn’t have been possible simply because we weren’t a well-known company and we did not have that position.
Skift: And how does it play out that you’re so well-known in Europe but you’re not as well-known in the U.S., for example? How does that impact your marketing efforts?
Rijvers: It affects our marketing efforts for sure. In the U.S., we’re very much a challenger brand. Obviously, Expedia Inc. has basically almost monopolized hotel retail and of course Priceline’s still in the mix. There’s Airbnb, there’s VRBO for the vacation rental space, HomeAway maybe, but certainly Hotels.com, Expedia, Travelocity and Orbitz [Expedia owns all of these brands other than Airbnb]. These are big household names in the U.S. with brand awareness well above 80 percent. Then you take Booking.com and we’re a challenger brand. We’re relatively new to the category in the eyes of U.S. consumers so that totally changes the way we market and talk about ourselves.
We’re actually in the process of building a completely localized marketing approach where we’re working with Wieden+Kennedy out of Portland to do our U.S. creative work and our campaign there for 2016. We’re currently looking for a brand director to own our brand communications specifically for the U.S. We’re looking for additional media, social, and digital people to build a marketing team in the U.S. to do this. We need to really let it be driven by U.S.-specific insights, U.S.-specific creative, U.S.-specific moments in time and reasons of communicating. Otherwise, it will be very hard to win the battle for the hearts and minds of consumers.
Skift: Do you take that local approach in every market that you’re in? Is the U.S. a special case?
Rijvers: A little bit of both. Typically, for any global company, how you do your marketing, what’s your mix, what’s your balance between being completely local versus being completely global? The tension is there for any global company. We’re no different. We went to Japan in the summer. Also for Japan, we’ve chosen to have specific Japanese creative working with, again, Wieden+Kennedy out of their Tokyo office for a campaign that has had a very positive feedback. For China, we’re thinking that’s a market that warrants specific Chinese creative and a specific Chinese approach.
These are our three core growth markets where we’re going local with our marketing efforts. Then if you take Brazil, for example, we’ve taken global work, we’ve localized it a little bit differently into Brazil. So for the first time, for instance, we were featured in sitcoms in Brazil. They’re a very popular formats also to do product introductions. We localized the global format more so Brazil sort of sits in between local and global. Whereas the U.S. and Japan are fully local. Everywhere else right now we do mostly a global approach.
Skift: I read that in 2015, the Priceline Group spent $2.8 billion in online advertising, and that was up a bit from 2014. The cost of offline advertising declined by $230 million. I assume Booking.com’s a big portion of all of this. What are some of the trends you’re seeing in Booking.com’s marketing in terms of online versus offline, and how’s it all changing?
Rijvers: That’s a great question. Indeed, Booking.com makes up the vast majority of the marketing spend of the Priceline Group. We’ve built our business always through performance advertising, very low in the funnel, who clicks on Google, working with Bing, Yandex, with any search engine in the world really, to find customers at the moment that they have a very clear intent. Given that we’ve spent so much time on making our front ends really well-performing from a conversion point of view and really being able to answer consumers’ questions in the most granular and most detailed or most perfect way, has helped us to convert those customers onto our platform. Also, at the same time, make them loyal bookers. This really has been what has been driving the business for the past decade. We did quite a bit with strategic partnerships, as well. We do a very significant amount of business through SEO (Search Engine Optimization). We take a very significant amount of traffic also from price-comparison websites. You guys have been writing of course quite a bit about that as well. These are all great-performance marketing channels.
What’s relatively new to our journey is a more upper-funnel or mid-funnel communication. We started with offline advertising in the U.S. in 2013. We now have three years under our belts of doing traditional, above-the-line marketing communication, and I feel that there is a big opportunity for us still ahead to make sure Booking.com becomes a household name in travel. Particularly that booking.com becomes a very well-known and loved brand in travel. This is, today, for us still a big opportunity.
Skift: Is there any let-up in your TV advertising? Will there will be much more to come?
Rijvers: We will be launching our new work in Europe early March. We’ll be launching our work in the U.S. a little bit later than that. We will have very serious investments against those and certainly growing compared to last year. Simply because we also believe that this is a very nice, additional way for us to build a brand and to build also lower-funnel consideration. I think the U.S. is a great example of how if you create lots of awareness up in the funnel, you’re also then able to do better performance-marketing at the low-end of the funnel.
Skift: It goes hand in hand, pretty much?
Rijvers: Yes, definitely.
Skift: How does Booking.com’s marketing approach the same or different from your sister brands?
Rijvers: I think it’s very different from our sister brands. I can’t comment too much on how they do their marketing, but typically none of the brands are as deeply involved in product advertising, particularly with Google and Bing, on both a global and strategic and collaborative level. We’ve basically been working with the Google product managers for either search or some of their other ad formats from the start in order to help them help us and us really informing their product strategies. This has been crucial in our relationship. This is not something that typically the other brands do, also just simply given their size. I think we announced that our international revenues represent something like 85 to 90 percent of the gross margin. The majority of that is Booking.com so that shows the impact that we have as one brand compared to our sister brands.
Skift: How do you view some of the other channels, such as Facebook, Instagram, and Snapchat?
Rijvers: What’s interesting for us — and this is definitely something that I am pushing for really hard as CMO — is that I think those channels, even though they represent less-dense traffic, I think they’re great to engage with customers more on an inspirational level. They are inherently way more content-driven platforms and I see a very big opportunity actually for us to really drive a ton of content- marketing strategy into these platforms. If you look at how much of the conversation today on Facebook is about travel, how much on Instagram is about travel? I think on Instagram you even find it more than half of the conversations there are travel-related. Consumers are craving for sharing travel experiences or discussing travel in social channels.
Particularly in being the largest, global travel brand, we can add so much value to those conversations if we find the right north star or the right formula to participate or to actually seed that conversation. This is what you’ll see once we launch our work in EMEA. This is at the heart of our campaign and at the heart of our strategy. I think 2016 will be the year where we’ll be seeing a lot more mid to upper-funnel activity by Booking.com than ever before.
Skift: You say you are pushing for engagement in some of these newer channels. Is it sometimes hard to get colleagues to go along with some of these new marketing opportunities?
Rijvers: Yeah, and this is probably the case as well for the overall marketing industry. The way I look at it is that performance marketers are data scientists. They are incremental, agile, scrum-like, velocity-oriented people. Very collaborative, very tech-checking in their approach. Let’s pose something to a real user and see how they perform, ideally in an A/B environment, and then we’ll be able to learn something from that. Based off of that learning, we’ll create a couple of new hypotheses. That’s how reality works, and then we’re going to put some experiments in place against these hypotheses so that we learn more. This is typically how we’ve built Booking.com as a business.
This is why we have so many A/B experiments going on; this is why we have such a collaborative, bottom-up culture. This is why I think we’ve been able to be as successful as we have been. Then if I look at the world of brand marketing, and particularly if you go to the Proctor & Gambles of the world, the role of marketing is way less about agility and small steps. It’s way more about big bets. It’s way more about a certain belief that something will work. A certain belief that we think, “Yeah, this is the message that we want to go out with.” Then just going for it, like Big Ben. These two worlds are almost like polar opposites of each other.
I see a lot of struggle in the marketing agencies on how to bridge the gap between these two worlds, and I see the same thing also within our own organization. The brand teams that we’ve built up are still relatively new, and performance marketers want to make every brand communication measurable, which is inherently impossible. If you’re marketing up in the funnel to people that have zero travel intent, you know. It’s almost like both parties want something from the other, which they’re unable to deliver. For me, the crux of the collaboration sits in the fact that we are inherently a digital service. Communication is inherently more digital than ever.
Therefore, metaphorically, I talk to my people a lot about how we as consumers, we as people, you, me, we’re having conversations with online tools. We go to a tool like Google and we say, “Hey, Google. Do you have hotels in New York?” If Google’s answer is, “Yeah, sure dude. Here’s 27 hostels by Hostelworld.” I go like, “Yo, are you drunk?” That’s not the answer to my question. Immediately I go, “Maybe I should be going to this guy, maybe I should go somewhere else.” The takeaway would be use another search engine. Similarly, in our conversation that we have with a user, both in our front end, but also in our marketing, also more mid-funnel, also on Facebook and on Instagram. We just need to understand how we can really help with our communication, how we can really help the conversation that we as a brand have with consumers.
For example, I might be able to understand that you are in your hometown. I might be able to actually understand from your device that it’s now midnight and you’re still somewhere downtown in the area that I know for its nightlife. Maybe that’s the point where I target you with, “Hey, Uber right now is on surge pricing. There’s this 3-star hotel just 50 meters away that has a great deal for 60 bucks, you can actually spend a night right here. What do you say?” Maybe that kind of communication, being so inherently targeted, is actually a great answer to a question that the consumer didn’t even know he had. It’s an ability that you as a consumer have today with modern tools that would just surely be impossible 10 years ago.
Skift: I hear you. We’ve seen the hotel chains, starting towards the end of last year and this year, really getting aggressive now in terms of telling consumers they have the lowest rates, book on their websites because you’re going to get the free Wi-Fi or mobile check-ins, all these perks. How does that impact your marketing?
Rijvers: Not so much, I’d say. Again, we’re very focused on the value that we bring to our consumers, which typically is great pricing, room selection, and a product that’s just super-easy and intuitive to use and gets the job done. I think that’s really what we would focus on from a unique selling points point-of view, or reasons why you should use us. I don’t really look at that a lot.
Skift: How do you approach marketing Booking.com to the hotel industry versus marketing Booking.com to consumers? Is there a big push to market yourself to the hotel industry or how does that work?
Rijvers: As we are getting larger, this is becoming more and more important. What’s interesting is if you look at Booking.com’s history, I always metaphorically refer to it as we were basically a bunch of entrepreneurs that saw lots of online opportunities to fix something and remove friction in a marketplace that was pretty fragmented. Again, with the example I just gave about being out at night in town trying to find an available hotel in a quick and fast way that 10 years ago was impossible. That’s enormous friction in the industry, right? This is typically where platforms like ourselves are removing so much friction that we see that the amount of travel actions we do on a per year basis I think is only increasing. Going away for a weekend was never as easy as it was today, particularly across borders. In the states, for a road trip 10 years ago you would just stay at whatever motel you run into. Whereas if you were to do this in Europe, you might actually just be stranded out on the streets because you didn’t have the information at your fingertips that you have today.
I think that’s really the value we drive to the industry and we need to make that more clear to our hotel partners, as well. I think there’s this misconception where some hotel partners — you refer to the chains — think that we’re in competition with each other, whereas I really feel that we have a different role to play in the customer journey. That is just to make it very easy and remove friction for people to actually perform the act of traveling. In that sense, we almost have a marketing function towards our property partners. That marketing function is very hard for the property partners to build up themselves.
We are in 42 languages, we are with hundreds of millions of keywords, really going off of any kind of traveling intent that we can possibly find anywhere on the Web, 24/7, and then also being able to convert that intent. I think a fundamental mistake some people make is that it’s not a serious end game, and I’ve said this before. If there’s 100 people with a vague intent to go traveling, maybe it’s Valentine’s Day, you want to surprise your wife, maybe with a quick night out on the town, go see a musical or some nice thing to do. Maybe have some nice food, spend the night in a nice hotel and then go back home Sunday and just enjoy life together. Now, if I make it really hard to do that, so I have a website that doesn’t work, I need to scan through 50 different websites to find the available places in the town that you want to go to, and they all work differently and they all cost me a lot of brain time to make the booking, I might at some point just go, “You know what? Forget it. I’ll just take her out in my own town to a nice dinner and go to the movies.” Then that’s it. That friction actually stopped me from doing it. Therefore, I think if you look again at what’s the value that we bring, it’s that we’re able to basically make sure that more people actually perform the act of traveling than they did before.
Skift: What are the kinds of skill sets that it takes to be a great CMO these days, and how is that changing?
Rijvers: I mentioned the two different worlds between performance marketing and rev marketing. I think today’s CMOs need to be good at both. I think they need to be able to really build that bridge. You need someone that both has a lot of appetite for the creative process, and also has the attitude toward the creative process where he’s still daring to take risks and daring to basically be pulled down and say, “This is what I believe in, this is what I stand for, this is what we’re going to do.” While at the same time, also has a ton of passion for data science and for the more mechanical approach towards landing pages and how you craft online experiences, and how these can really be sticky and create loyalty and create following in order to get skills. You need to like growth hacking and everything that comes with it equally much.
Skift: That sounds like a really tough combination to have. Do you find that your typical CMO at a big corporation has those dual skill sets?
Rijvers: No. The way I look at the industry, both the online industry and also just generally advertisers, I think that you’ll find the combination hard to come by. Going forward, it will become easier. Finding people who were able to leverage radio when it was invented was probably hard because they were completely in print and billboards and doing all those kinds of things. They were probably questioning themselves, like, “Yeah, I put something on radio, but who do I reach? What should my message be? The format’s so short, it’s not colorful. It’s not rich creatively, there’s no pictures involved. How can I possibly do that?” Whereas then fast-forward 30 years and then radio certainly was very important and a very meaningful tool or channel to reach customers and convince them to try you. I think the phase we’re in is no different.
Skift: Interesting. Anything else you’d like to add about challenges or successes, or things that need to be improved as we go ahead?
Rijvers: I think regarding that capacity to capture and analyze data for the marketing industry, there is still an enormous opportunity ahead of us. I think that today that platforms like Facebook’s Atlas or DoubleClick, they’re great platforms. But at the same time, it is so early on in this digital targeting journey. I think that in the 10 years to come, we will see quite a lot of disruption and innovation in the marketing science arena particularly, and I’d welcome that tremendously, by the way. Still today, the how we think about data and using data and data models and machine learning, our expectations are not on par with what the industry so far has been able to deliver.
We’re in constant communication and talks of course with our technology partners as to how we think we should drive product changes. They’re very receptive to that, so I’m confident that we’ll land in a place where we will be very happy. It’s just so early on in the journey. It sometimes reminds me, I had a software development firm building websites, transactional large website, in 1996 I still remember how hard it was. Words like “usability” didn’t exist at that time. UI design was a skill that was undiscovered yet. I think what we’re doing in digital social channels around marketing reminds me, and mobile, reminds me quite a bit of that period of the Web.
This series is presented by Boxever. The Skift content team maintains complete editorial control over these interviews and the selection of subjects.
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