Google Confidential

Rethinking Travel Touchpoints in a Digital Age

Dylan Bolden Partner and Managing Director The Boston Consulting Group

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In the past 50 years, the fundamental reasons for travel have not changed ...

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And in this new digital age, brands are still the primary drivers of choice

30

20

10

0

+96%

+72%

Contains user-generated content

Has third-party endorsements

Sells branded products

Personal recommendation

Operated by a well known brand

Choice drivers (%) 40

Source: BCG Travel & Tourism Digital Marketing Survey 2012

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What has changed – with the advent of "Digital" – is the way brands interact with their customers

2006

40

60

2008

20

2010

80

2012 1998 2004 2000 2002 0

1992 1994 1990 1996

Digital "Voice of the brand" (%) 100

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Let's put this into more practical terms ... meet Sandy, a typical Leisure traveler

• Age: 41 years old • Marital status: married • Children: 2 • HHI: $65,000 • Social networks: Facebook • Hotels last year: 6 nights ($700 total) • Flights last year: 3 roundtrips (1

business, 2 leisure, total $1200) • Attitude toward travel: enjoys traveling

and wants to make sure she makes the best choices for her family

Source: BCG Travel & Tourism Digital Marketing Survey 2012

JUN 21 1971

SURELEI

SANDY

Note: All data presented is "average" customer data for "Sandy". Significant variance a segment level.

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For Sandy, the drivers and influencers of choice have changed dramatically

Dream Plan Book Experience Share

... and lines have blurred

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And while Sandy has to use many fewer devices (and documents) in the digital age ...

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... it still takes a lot of time to get the job done Hours spent per activity (number per person)

30

20

10

0 Total

42.3

Share

9.8

Book

0.6

Plan

13.3

Dream

18.6

40

50

Source: BCG Travel & Tourism Digital Marketing Survey 2012

Just think, 42 hours for a trip that is only four days long

"Sandy"; Leisure) only; last trip

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... and the time she spends is fragmented among many types of travel websites

Dream Plan Book Share

OTAs Aggregators Provider websites Online travel guides Social media Search

6 websites 7 websites 1 website 3 websites

Visits 17 of the major websites

on average

"Sandy"; Hotel (leisure) only; last trip

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With all the noise, who does Sandy trust? She is likely to trust user generated content and select branded content

80 60 40 20 0

Textads on mobile phones 24

Online banner ads 33

Online video ads 37

Radio 55

Billboards & radio 55

Newspaper 61

Brand websites 70

Consumer opinions online 70

Personal recommendations 90

Brand sponsorships 64

Consumers who trust the channel (%) 100

User generated content Branded content

1. Indexed to provider website set average Source: National Association of Broadcasters, Nielsen, April 2009: "Global advertising: Consumers Trust Real Friends and Virtual Strangers the Most.", Driving word of mouth advocacy among business executives", Keller Fay Group, BCG Travel & Tourism Digital Marketing Survey 2012.

54 94

x

x

Least trusted brand Most trusted brand

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Building trust with Sandy on your site dramatically increases the chance of meeting her emotional needs

Customers whose needs were satisfied (%)

0

40

20

100

I trust this website

somewhat

I am unsure about this website

I trust this website fully and completely

80

60

Note: Respondent was asked, "Overall, how satisfied were you with your online booking agent?" and "To what extent do you trust your online booking agent?" Source: BCG Travel & Tourism Digital Marketing Survey 2012

"Sandy"; Leisure) only; last trip

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...and, not surprisingly, the more satisfied Sandy is, the more likely she is to rebook

Source: BCG Travel & Tourism Digital Marketing Survey 2012

60

Rebooking rate (%)

40

20

0

+36%

Satisfied

57

Dissatisfied

42

The question is, how do we satisfy our customers?

"Sandy"; Leisure) only; last trip

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Customer satisfaction ultimately comes down to meeting our customers needs by delivering a suite of benefits

Emotional benefits: way the brand makes customers feel

Functional benefits: purpose the brand serves

Technical benefits: touchpoints of the brand (product or service characteristics)

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Business Leisure Business Leisure Leisure Information on local

attractions Quick, easy

booking Video content Quick, easy booking Ability to compare

across brands

Pictures of destination/property

Description of hotel by brand Quick, easy booking Number of

schedules/routes Ability to post questions/reviews

Ability to compare within a brand

Suggested itineraries Pictures of aircraft "One stop shop" for

research & booking Ability to book a specific cabin

Flexibility to change plans at low/no cost Transparent pricing Ability to compare

across carriers Content from trusted

third-party Quick, easy booking

Additional products available for

purchase on site Customer reviews Information on local

attractions Ability to book a

specific seat Suggested itineraries

Air Cruise

1

2

3

Note: customers who book through brand websites Source: BCG Travel & Tourism Digital Marketing Survey 2012

Hotel

Content Speed and ease of booking

4

5

Tech

nica

ls: d

river

s of

cho

ice

Sandy's preferred attributes

And technical benefits – the base of the ladder – present a difficult set of tradeoffs

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Those touch point tradeoffs must be made in a way that ties in with the overarching emotional benefits

Functional benefit

Emotional benefit

Functional benefit

Functional benefit

Technical benefit

Technical benefit

Technical benefit

Technical benefit

Technical benefit

Technical benefit

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However, the essence of the brand is ultimately defined at a level above Digital Marketing

CMO

CEO

COO CFO/CAO

Traditional Marketing IT Operations "Digital" Finance Investor

Relations

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Brand voice

Brand

Brand delivery

Resource allocation CMO

CEO

COO CFO/CAO

And the overarching organization serves as the delivery mechanism of that brand

Traditional Marketing IT Operations "Digital" Finance Investor

Relations

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In summary, Digital is becoming the voice of the brand (and needs the commensurate resources)

Digital Marketing is becoming more than just an ecommerce channel – It must: • Have goals that extend beyond purely driving

transactions • Link to rest of org given the whole brand is at stake • Begin to consider brand-driving Digital Advertising

(a la television advertising) • Improve attribution modeling

Digital Marketing will require more resources from Traditional Marketing to get the job done (beg, borrow, and steal from traditional mktg) • Will need more dollars to accomplish goals • And more people to optimally spend those dollars

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Ultimately, need to align the entire company around holistic roadmap

Digital / brand consumer needs •Target need states •Touch-points, functionality

Organization •Structure, capabilities, ftes • In-house vs. outsource?

Operating model •Decision rights, budget, execution

Digital roadmap

3

1

2

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Getting started: 10 questions for your organization address to better capture the upside

We have brought some handouts today to help you think about how to get started We would also enjoy the chance to hear your thoughts and feedback – feel free to come find someone from our team

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What are you going to do with your Sandy's 42 hours? The opportunity is ENORMOUS!