Phocuswright Europe: Secret Escapes works out equation for return on TV advertising

Phocuswright Europe: Secret Escapes works out equation for return on TV advertising

Advertising on television still works but only if brands take a scientific approach to assessing return, according to leading private deals site Secret Escapes.

Alex Saint, co-founder and chief executive of the UK-based publisher, said when it started TV advertising in 2012 it was convinced it could be measured on the same basis as digital marketing.

“When we started there were very few companies spending [on TV] at scale. We could see these big very pronounced spikes which corresponded to our TV slots so we realised we could optimise it like a digital marketing campaign.

“We had a whole layer of analysis around TV we never had before. Now there’s been a huge explosion of people advertising on TV because the agencies everyone was using got their heads round how to use that methodology.”

Saint said the TV creative used by Secret Escapes was a strong factor in its success using TV to acquire new members, but he said the firm has been able to replicate results in other markets using different creative.

“It boils down to having a framework to allow you to replicate the campaign. You can burn an awful lot of money on TV,” he said.

Secret Escapes first major funding round in October 2011 allowed it to increase its marketing in the UK market and test out new methods.

“We knew if we could acquire a member at a certain cost we could drive that lifetime value. We needed to fill that top of the funnel at a certain cost.

“TV was the channel that could do that for us and allowed us to double our marketing spend. Investors knew we would take a scientific test and learn approach to it.

“We raised just under £3 million and in the first month it cost us £50,0000 which was a big chunk of money but it enabled us to learn very quickly.”

Saint said Secret Escapes has a very different position in the market than the large OTAs with its 50 million members often inspired to buy something they were not looking for.

“When we broadcast our products to our members we are trying to put something inspiring in front of them that will tempt the to do something that they would not otherwise have done.

“Nine out of ten of the trips we sell are completely incremental. The vast majority of hotels get that we are bringing them incremental customers.

“They need to shift that 20% of rooms they can’t shift themselves as the best available rate. By selling through us they can get into that remaining occupancy without cannibalising their sales.”

As a result Saint said the sites retention rate of supplier is “huge”, in the nineties per cent.

As one of the original flash sale sites born out of the boom that coincided with Groupon entering the, Secret Escapes has survived in a sector in which many others failed.

Saint said a significant factor in the brand’s survival was its focus on obtaining great product.

“The difference between standard hotel product and something that’s inspiring is hugely important but we really focussed hard on execution. We prioritised absolutely ruthlessly.

“Lots of people piled in after Groupon and copied what they saw, coming in blind to something they didn’t understand. We ran it like a chemistry experiment.

“Everything we did was rooted in data and logic. If you look at the people who ran the business, we all have a very scientific background and we really believed in the power of data.”

Saints said today the sector is much more mature. “The market has massively simplified.

“There’s not anywhere near the same number of poor quality sites out there all trying to do the same thing but doing it badly.

“It’s a much cleaner environment now that’s much better understood and the hotel industry rally understands how it fits in that ecosystem.”

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