One billion dollars. That’s big bucks. It also happens to be the amount that’s being spent on Google advertising by Priceline, the owner of popular travel sites booking.com and kayak.co.uk. All to ensure that you see – and use – its own sites first. And the strategy is working. One in every two bookings on travel sites across Europe is now made on a Priceline site, and in the US Priceline recently became the first stock ever to trade above $1000 on the S&P 500.
Owned
Okay, so it’s hardly big news that big advertising bucks results in big sales – doubling down on advertising was one of the first things Steve Jobs did when returning to rescue Apple back in 1996. Advertising works, especially when you have something worth advertising.
What is big news, however, is that Priceline’s billion dollar advertising strategy reveals the power of digital marketing to transform both markets and marketing. In the travel industry, a consolidation and concentration of power now lies in the hands of Google and a few other mega booking sites. It has transformed the industry. When was the last time you used a hotel’s own website to research and book a weekend away?
For travel brands, whether hotel groups, airlines or car hire companies, this is not just big news, it’s bad news. Whatever Hilton now chooses to say online about its own hotels will be less important than what booking.com says about them. And there’s not a lot Hilton can do about it – how could it possibly compete with a billion dollar digital advertising budget? As booking.com might say in colloquial webspeak: ‘Hilton, we just owned you’.
Attack of the aggregators
For marketers the billion dollar lesson here is all about power and the sobering realisation that brands no longer have any. However brilliantly products and services market themselves online, it will be Google and the attack of the aggregators that will win. The dice are loaded, and the cards are stacked. Digital is killing brands.
And it’s not only in travel we’re seeing this power ebb away from brands. If you’re a retailer today and what you sell has a product code, then you are powerless and Amazon will kill you. Not just online, but in-store too. Last year, Amazon showed us the future of retail; use a smartphone to scan a product in any of 1800 Target stores across the US, and Amazon will ship the product to you for 10 per cent less than the in-store price. If you’re in retail today and you’re not Amazon, then you’re a zombie retailer.
The same power-game is being played out in other industries too – and brands are losing. As a result of investing heavily in Google, a handful of comparison sites now effectively own the digital space in financial services, utilities, real estate and beyond. In space nobody hears you scream; but in cyberspace nobody hears your marketing. Marketers used to talk about the power of digital to ‘disintermediate’ markets, allowing brands to have a direct relationships with people. But we were wrong. Very wrong. Digital doesn’t disintermediate, it intermediates. A new generation of online intermedairies powered by Google Juice are killing brands one by one.
When you combine the attack of the aggregators with how digital technology is empowering audiences and shoppers to use online reviews rather than logos and campaigns to inform their decisions, then brands and branding have a big problem. The problem is so big, so structural, so disruptive, that it needs a name. We call it the ‘Digital Shock’.
Dealing with Digital Shock
So what should brands do about Digital Shock? Are Google-friendly intermediaries killing the brand? Should we pack up our digital bags and go home to traditional branding? Some experts think so. Marketing guru Seth Godin has said that digital marketing for tradional brands is like mixing meatballs with ice-cream: the only thing you’ll get is indigestion. Leave digital marketing to digital businesses. But perhaps that’s the point – the future of digital for brands is not e-marketing, it’s a revival of that old-fashioned and under-loved term, e-business.
By James Briscoe, international CEO of Unique Digital.
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