Frederic Gonzalo’s Blog


What is the ROI of Social Media in travel and does it matter?

In Marketing, there is a truism that holds a certain consensus: if you can’t track something, don’t do it! This explains mostly why many marketers and advertising agencies have been shifting marketing dollars from traditional mass media, i.e. magazines, television, newspapers and radio, to embrace online strategies over the recent years. When you place a radio ad, you can never be sure of how many people are really listening, or paying attention. Your call-to-action may be to a dedicated phone line, so you would actually know how many people “took action” following your ad, but it’s very little to justify most campaigns. Same can be said about billboards on the side of the highway, or advertising on buses or bus stations, commonly called Out-of-Home (OOH) media buy. Great stuff to build awareness for a brand, a product or a travel destination, but how do you measure its effectiveness? How much of your advertising dollars should be allocated to “building awareness” if this means you can’t measure these efforts?

Half the money I spend on advertising is wasted. The problem is I don’t know which half!

John Wanamaker (1838-1922)

In the past two to three years, many travel companies have jumped on the web bandwagon. One of the first destinations to actually transfer 100% of its advertising efforts towards internet was Tourisme Montreal, in a bold move back in 2009. A few months later, Vail Resorts unveiled its new digital marketing approach, whereby it would no longer invest in long-lead magazines such as Conde Nast, GQ, SKI, Powder and the such, to invest more strongly into video, web banners and last-minute media that offers more flexibility in order to address the changes in booking patterns and behaviors. In the summer of 2010, Vail continued its digital efforts by pushing the envelope some more with its EPIC campaign and social media efforts across multi-platforms, as explained by their CEO in this video:

There are more than 180 airlines on Twitter, not to mention the almost-mandatory Facebook page for hotels, no matter their size and location. USA Today Travel ran an article on this very topic, confirming the importance for travel companies to have a strong foothold in Social Media. Great, but as in the examples of Tourism Montreal or Vail resorts, how does one justify the investments necessary both in terms of time and people required to manage contents and conversations on these social platforms? What are some of the key performance indicators one should monitor in order to justify money and efforts put into this quickly evolving environment?

1. Define what you want to measure

While generating leads, sales and incremental revenue is the ultimate goal of any business wishing to stay in business, a social media strategy should not be just about sales! Some of the things you may wish to track for your travel marketing will include:

  • Number of people who fill a form, or redeem a coupon
  • Increase in PageRank
  • Number of people in a specific demographic following your brand, or liking your page
  • Reduction in support costs
  • Increase in positive reviews or conversations
  • Number of influential people who tweet about you, or that link to your blog

It’s not just counting how many followers you have, how many like your page or comment, nor is it simply about how many retweet your latest picture or blog post. This stuff is important, of course, but there is a need to go a step further if you want to gain deeper insights into who is following you, what effect negative reviews have on your brand, and how addressing the issues rapidly can actually help your bottom line by turning critics into advocates.

Calculating Social Media ROI should not be just about sales! And it’s not just counting how many followers you have, or how many like your page or comment.

Having said all that, calculating return on investment remains a business metric, not a media metric. Therefore, you will need to assign a dollar value to your social media efforts, and expect to return a certain yield on that investment. No senior management will invest 100,000$ on a social media strategy, hiring resources, monitoring and executing if it yields a return of… xx followers, yy retweets and zz increase in positive reviews! If you invest 100,000$, it needs to yield a return of twice this amount, or whatever your target is, but it’s measured in dollars too!

2. Establish a baseline

So how do you demonstrate the impact of your social media strategy on the company’s bottom line? Start by establishing the baseline, the starting point before you implement your strategy: as of today, what is the industry trend? slow growth or decline? How is your property trending in this environment? How many reviews are being posted on TripAdvisor? What’s the positive to negative ratio? How many comments and/or conversations are taking place on your Facebook page? How many refer to a given topic?

Once you have that baseline, your target can therefore be clearly identified that by a certain period of time, you expect for example to move the needle on customer sentiment towards your brand, or gain a higher share in “intent to travel” which both need to translate into increased revenue, reduced costs or a combination of both by the target date.

3. Monitor activities

As you are deploying your social media strategy and executing it on the chosen platforms, how will you monitor the impact of the increased conversations, mentions and questions? It depends on what you want to track. Volume of sales calls can be measured with traditional call center tools, while increase in online reviews, positive mentions, or influential bloggers would be best tracked using tools such as Radian6 or, to a lesser extent, free tools such as Twitalyzer, Tweetdeck or Hootsuite.

4. Analyze the data

This is the tricky part, but no doubt the most important one. What is the transactional data saying since the baseline was established? Can there be a correlation between a spike in sales and the social media approach? What if sales have been flat, yet the industry has been experiencing a decline in room-night or skier-visits for example? One of the challenges here is to isolate the impact of social media versus how the experience is being delivered on the premises. You may be flawless in managing your Facebook page, witty with your tweets and retweets, sharp in putting that youtube video out there… but if the customer experience is uneven or not up to par at your hotel, your airline or your ski resort, it makes it difficult to prove the correlation. The trick is to look at patterns, and seek to demonstrate given relationships between given facts, i.e. blog posting mid-week, in particular about week-end getaway specials, generates higher comments, which lead to more phone calls that turn into conversation rates above average.

What is your take on Social Media ROI? To what extent should marketers focus on quantitative metrics versus qualitative metrics?

Here are a few other links I recommend should you wish to read more about this topic:

Using a mix of both hard and soft metrics for evaluating social media ROI

Understanding the Social Media ROI Cycle

Social Media ROI for Idiots

Frederic Gonzalo

Frederic Gonzalo

Speaker and consultant with over 25 years of experience in travel marketing, sales and communications. Since 2012, I provide strategic planning consulting, website audits as well as digital marketing coaching for all levels of organizations, from SMB to large travel organizations.

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