Measuring online travel – Scoring a conversion

Measuring the performance of online travel companies has become a dark art in recent years as marketers look for better data to target consumers. Lucia Cockroft investigates


In the short history of the Internet, web metrics – measuring how customers navigate and use a website – is almost an ancient science.


Travel companies have used systems to measure the effectiveness of their websites since the birth of online travel in the mid 1990s. Back then, companies kept track of only the basic information: the number of people visiting a website, how many pages were viewed and the conversion rate into sales.


But the web landscape has changed rapidly since then and businesses need to analyse how customers are using their website in as much or little detail as they wish. Indeed the skill of web measurement has become increasingly sophisticated, mirroring its importance both as a determining factor for marketing campaigns as well as its contribution to a company’s bottom line.


Cheapflights.co.uk commercial manager Kam Rai says that without web analytics, an understanding of what is driving, or preventing, outstanding business performance is limited.


“The importance of the justification of marketing spend will not go away, and one of the principal advantages of Internet marketing activity is its accountability,” he explains.


Thomas Cook director of multimedia Carol Dray says online is the most measurable and instantaneous of all the mediums. “You can see instantly if your site is not getting the volume and you can then do something about it,” she explains. “For example, if the market is buying Greece really well one day we can boost the country’s prominence on our home page.”


Thomas Cook uses two systems to monitor its website activity: online measurement company Hitwise, which breaks down what the market is doing on a daily basis, and Omniture, a piece of tracking software that tags the site so you can see the amount of traffic using it, and the booking conversions taking place. The latter is checked every hour.


With so much instantaneous data to hand, Dray says it’s not difficult to become swamped by statistics.


“The important thing to remember is that the information will only be as good as how it is used,” she explains. “For us the important thing is the continuity the systems provide: using the information we have access to every hour helps us make informed commercial decisions.”


So what are the measurement tools used by today’s major online travel players? Though the terminology surrounding web metrics is often intimidating to those outside the research department, there are a handful of key systems common to most companies.


Multicom managing director Robert Howell – which lists Thomas Cook, First Choice and Travelocity as clients – pinpoints pay-per-click as the travel industry’s single most important measurement system.


“Someone once called PPC a bit of a drug”, says Howell. “It seems to give such results that you become dependent on it. It delivers more users to your site, and users that you know are looking for, say, a hotel in New York.”


While PPC is crucial for driving traffic to a site, other systems are key to establishing how many people are converting lukewarm interest or research to hard sales. Looks-to-books – also referred to as conversion – measures the ratio of users going on to book, rather than just browsing.


In exceptional cases, Howell explains, conversion rate can be as high as every three people looking to every one who subsequently books. A typical figure is closer to around 10 or twelve lookers to every booker. Rather gloomily for some, the figure can be as high as 400 people browsing for every one who books, and industry averages are almost impossible to gauge.


Cendant web metric analyst Seth Brody says the company uses looks-to-books to focus on conversion rates from search sessions. In other words, from the dates and destination a user gives.


He explains: “We also look at funnel conversion, which is a measure of how customers progress through the steps of our purchase and shopping process. The future lies in using that information to devise a personalised site experience.”


However, no two measurement systems will give the same results for the same data, Brody warns. Some firms use an IP address; others use cookies. “The key is to focus on a single system and measure trends and progress more than concentrating on absolute values.”


Hotels.com director of marketing for Europe, Middle East and Africa, Patrik Öqvist, says the company uses Omniture and Fireclick as its measurement tools, as well as analysing data that comes off the server logs.


“We use all three systems because it’s important to always corroborate what you’re seeing”, he says. The company also keeps a daily watch on patterns such as how much the user spends, the path they take through the site, where they drop off, and conversion rates.


Another important measurement area, öqvist believes, is conversion by channel: traffic acquired from sources such as banners, ads and affiliate schemes, a massive area for both the marketers and the bean counters. He explains: “It’s important to look at how that traffic is converting so marketing spend can be adjusted accordingly.”


Many online travel operations are reluctant to explain exactly how web measurement systems impact on their financial bottom line. But clearly the greater detail a business has about how its site is being used, the easier it is for a marketing strategy to be adjusted and see its effect on the company’s revenues.


Cendant’s Brody says conversion rates from visits to purchase is the central metric used – one that encompasses marketing effectiveness, site design, technology performance, and usability all in one. “If a company uses measurement tools to focus on improving conversion, the benefits of those conversion improvements fall right to the bottom line”, he says.


Cheapflights’ Rai believes web measurement influences a company’s bottom line in many ways. Examples include improving a website’s ability to predict the revenue of potential customers; understanding how to acquire and convert customers; and increasing the effectiveness of search and e-mail campaigns.


Web measurement can also improve client retention and experience of using a site; allow a company to make decisions based on user behaviour; and know the level of activity on a website every hour of the day.


Öqvist says the field of web metrics is still evolving. But as consolidation and competition gather pace, the online travel world will scrutinise the efficacy of different channels, and methods, in ever-closer detail. He says: “When I went into dotcom in 2000, it was all about establishing a brand and going online. Online was the poor cousin. Now it’s the other way round.”


Öqvist is undoubtedly right. And as online moves into its next phase, both in terms of technology and how much advertising spend is expected to swing its way, measurement will become an even more complex science.



Web metrics terminology


Pay-per-click: payment based on click-throughs from other sites. Popular PPC advertising options include per-click advertising networks, search engines, and affiliate programmes.


Looks-to-books: percentage of visitors who take a desired action, such as browsing to purchase.


Impressions: a single instance of an online advertisement or page being displayed. However, there is no standard way to count impressions.


Unique visitors: individuals who have visited a website at least once within a fixed time frame. 


Cost per thousand impressions: the CPM model refers to advertising bought on the basis of impression.


Source: www.marketingterms.com


 


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