Stop measuring ROI & do this instead

Jack Henri
Jack Henri

Guest iQ Founder

So, you need to make a decision. It’s time to decide what you will invest in various segments of your hotels marketing activity. Once upon a time, you will have done this on ROI but in 2021, to do so will greatly mislead your budget and attention, leading to an overemphasis on direct response and not enough focus on the long-tail impact, leading to misguided focus and less profits over the long run. This blog aims to explain why we’re here and why things have to change for your hotel to win.

 

The traditional way

Traditionally, hotel marketers will have measured ROI or, ‘return on investment’. For example, you may have invested £1000 in Google Ads and Google Ads is telling you this generated £8,500 in margin from bookings, which is an 850% ROI (to be tracking margin, you’re already above 98% of hotels!). When it comes to budget season, this will be compared to the performance of your social ads. For example, you may have a themed activity focused on next summer, which had a 60% ROI. Naturally, by comparing these figures, the outcome will be less for social and more for search.

This paradigm of thinking leads to direct response marketing taking the lion share of budget and in a time where there is an increasing weakness of advertising platforms ability to provide full tracking solutions, this will continually lead to seemingly lesser and lesser results (as less is tracked so results appear lesser).

 

The future method

So, what do we do instead of measuring ROI? We believe the future will be one where successful hotel budgets are decided on guided faith. Both of these components are crucial to success. Let’s tackle them one at a time.

 

Guided 

We are in a data-heavy world where you could spend hours devouring data. Deciding budgets involves finding the signals amongst the noise. How do you find a signal? You have to first consider the ultimate objective for each piece of marketing and then you need to look for data that proves or disproves this assumption.

For example, your Facebook ads about booking a break this autumn may have the aim to drive website visits and repeat visits, which leads to bookings. In this case, we understand not all bookings will be tracked so, the measly 50% ROI isn’t worth paying attention to. The signal instead is that it cost £0.01 to get someone to visit your website and stay there for 5 minutes. From here, it’s up to the second component to allow you to fairly measure this against much (seemingly) higher ROI direct marketing activity.

 

Faith

As mentioned earlier, greater privacy laws and cookie restrictions have meant many conversions will not be attributed to marketing. Instead, it will appear as though they randomly found you via direct or organic traffic, when in actuality, you are just unable to track many of your marketings results. This has led to the need for faith.

When we talk about faith, we are not talking about blind faith, where you believe something with no grounding. We are talking about faith grounded in facts. Google & Facebook have designed pages dedicated to their brand awareness case studies (and before you say these companies are massive, remember the principles are the same with £100 as £100k). From these, we can see that greater awareness is the invisible force that raises the tide. So, in the earlier example, you can anticipate that you will see an uplift across the board from reaching people, leading to an ROI. Faith if this point is pivotal in allowing you to make the step into the future.

 

Striking the balance

So, when you’re looking at how much money to put towards organic social, paid social, paid search, email marketing, metasearch etc, we would urge you to consider the above two components carefully. The past is gone, let’s move forward into the exciting future.

Any questions, you can get in touch here 🙂