Having a brand isn't as simple as it was in the good old days of the Wild West, when you simply heated it up and shoved it against your new cow. But, rather like owning a few hundred head of prime beef, it doesn't end there.
As the likes of Starbucks and Wal-Mart – or Starsbuck and N-Mart, as they have been in China – will attest, the brand must be protected. And what good news for lawyers globalisation has been.
A report by MarkMonitor (which provides solutions to threats of online fraud, brand abuse and unauthorised channels) has estimated that up to $2.2bn is being lost every year by the hotel sector as a result of brand jacking.
Brand jacking was described as when hotel brands see their search traffic being intercepted by online travel agencies, where it is potentially diverted to competitive properties. As a result, hotel brands lose customers and revenue to their competitors or pay unnecessary commissions. MarkMonitor said that as many as 1,750 online travel agencies had purchased keywords using major hotel's brand names and that more than 580 million visits were syphoned away from the hotel brands. That cost the hotel industry an estimated $1.9bn in lost revenue and $270m in unnecessary commission payments, as brands pay their channel partners for business that could have reached the brand directly.
The study examined five global hotel brands, running the gamut from economy to luxury, during the early spring of 2011 and scanned various e-commerce sites, consumer marketplaces and email campaigns promoting those brands. The study also examined over 1.3 million search ads triggered by nearly 4,000 keyword combinations containing the brands, estimated the traffic stream that was generated and annualised the results in order to develop the estimates.
The leisure travel industry spends $1.8bn annually in online advertising, with 46% allocated to search advertising, according to the Internet Advertising Bureau.
Hotels use a variety of online channels to capture leisure and unmanaged business travel with their own websites delivering the majority of bookings, or roughly 55%, according to Forrester Research. In addition, there are online travel agents that offer a variety of travel properties including airfare, rental cars and hotel brands.
Add to these the aggregators that present options from both hotel and travel agency websites and the affiliate marketers that offer content relative to travellers. All of these share one common characteristic: they use online advertising, including paid search, to drive traffic and bookings. In effect, each of these legitimate channel partners are competing with the hotel brands themselves to attract customers.
For hotel brands, who were coming to terms with the role of the OTAs and had developed the knowledge to utilise them in a way that worked for all parties, this has the potential to set relations back again as they find themselves being potentially double-crossed by unscrupulous operators.