Expedia UK Marketing Mix Effectiveness Analysis

Google Confidential and Proprietary 1

Expedia UK Marketing Mix Effectiveness Analysis Evaluation of how offline and online media drive shoppers on

Expedia.co.uk

April 2010

Google Confidential and Proprietary

Overview & Context

2

Flight Hotel

Car

Package

Leading UK online travel agent

Average > 1.5 Million Visitors

to the website every week

Four main Lines of Business (LOB)

Note: Size of box represents the size of shopper

volume by line of business

Expedia has sophisticated attribution methods that primarily focus on the direct impact of

marketing and distribution channels

Source: Expedia & MarketShare Partners, April 2010


About MarketShare Partners

3

•! Strategic analytics firm deploying industry’s most advanced analytic

models for marketing effectiveness, ROI and allocation

•! Reputation of being the most innovative firm in the category, with

focus on advanced math, thought leadership and action

•! Significant experience with new media, including search, social

networks and display

•! Heavy emphasis on application of analytics to make better decisions

going forward

•! An independently owned company delivering 100% objectivity in

assessing marketing effectiveness.

Resource Allocation for the 21st Century

www.MarketSharePartners.com


Project Objective & Scope Advertising effectiveness models for Expedia.co.uk

4

Expedia Shoppers

TV

Radio

Outdoor

Online Search Press

Economy

Paid Search

Online Display/Advertising

Share of Voice

Competition

Partnerships

/Affiliates

Seasonality

Web Traffic

Key Project Objective

MSP was asked to build econometric

models quantifying the drivers

& synergies of Expedia’s advertising

resources in driving ‘Shoppers’ and online

brand search.

Total Shoppers across all lines of business (Jul 07 – Nov 09)

A shopper is a somebody

who specifies travel criteria

on the Expedia home page and then selects search

Shopper Visual

2007 2008 2009

Why model Shoppers?

The shopper metric was selected as it

represents a pure measure of how

marketing is driving consumers with intent to

purchase

What is a Shopper?



Expedia Advertising

5

Cross-media analytics enables the direct and indirect effects of advertising to be measured

Expedia Shopper

By Line of Business by

Source of Traffic

TV Press

Season Base Level

Radio OOH

Online

Adv

PPC

Pay/

Click

Distribu

tion

Direct

Relationships

Indirect

Relationships

Measure how the drivers indirectly affect/drive

intermediate outcomes

Measure how the drivers directly affect/drive the outcome

Indirect

Relationships

Control for and extract the Season and Trend

Model Structure: Direct and Indirect Paths to ’Shoppers’

Offline

Online



Evident correlation between media channels and brand search

6

Visually we can see the impact traditional media has on Google search

Print Adverting Driving Online Search

2009

Brand Search

on Expedia

Print

Advertising

2008

Brand Search

on Expedia

TV

Advertisin

g

GO

OG

LE

QU

ER

Y V

OLU

ME

IN

DE

X

£ A

DV

ER

TIS

ME

NT

INV

ES

TM

EN

T

£ A

DV

ER

TIS

ME

NT

INV

ES

TM

EN

T

GO

OG

LE

QU

ER

Y V

OLU

ME

IN

DE

X

Source: Expedia & Google UK

Television ‘Burst’ Adverting and the impact on Online Search

Source: Expedia & Google UK



After modeling, the results are surprising....

7

The significance of traditional media driving online search is huge, TV has been an undervalued hero

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

TV Press Outdoor Radio

% c

on

trib

utio

n d

rivin

g s

ho

pp

ers

Indirectly Driving Shoppers

Directly Driving Shoppers

The combined Direct and Indirect media effects and contribution to driving shoppers (Credit Where Credit Is Due)

The way Expedia are viewing and

evaluating the performance of their

media has been changed as a result of understanding the

direct and indirect effects

14%

86% 58%

42%



Moving from thinking about the past to thinking about the future

8

Historical contribution vs. Marginal ROI

PAST FUTURE

For future investment decisions, measuring

these indirect paths simply allows the right level of investment to be allocated to each

medium to deliver back optimal return

Despite uncovering indirect

effectiveness of Expedia’s media, this doesn't mean the recommendation is

to invest more in those mediums as a result.



0 2 4 6 8 10

TV

Press

Radio

Outdoor

Partnerships

Paid Search

Indexed Optimal Budget Allocation

Modeling enables optimal budget setting by media channel

9

The optimisation routine supports the need for re-evaluation of media allocation

Historical allocation vs. Optimal Allocation (Same Budget) Historical allocation vs. Optimal Allocation

0 2 4 6 8 10

PPC Package

PPC Hotel

PPC Car

PPC Flight

PPC Brand

Indexed Optimal Budget Allocation

8% increase in shoppers for same budget

29%

8%

-50%

25%

33%

-40%

13%

25%

50%

133%

20%

Negative values

doesn't mean the

medium isn't effective. It simple infers that the

optimal investment

level versus the past

should be lower


Optimal allocation

Historical allocation


Shopper response to PPC Marketing

10

Paid search response curves for Expedia.co.uk

0

20

40

60

80

100

120

% C

hange in S

hoppers

£ Investment 1

1.05

1.1

1.15

1.2

1.25

1.3

1.35

% C

hange in S

hoppers

£ Investment

PPC Package (underspending)

PPC Flight (underspending)

PPC Hotel (overspending)

Expedia Branded Clicks Response Curve

Investment period Jan 2008 – Oct 2009

Generic Clicks by Line of Business

Current (underspending)

Optimal

Important Note:

Maximums on paid search been applied to constrain the optimization - Hitting inventory constraints by LOB

Investment period Jan 2008 – Oct 2009

The response curve illustrates how ‘shoppers’ respond to increases in PPC investment.

The optimal point on the curve is where marginal response across each medium is equal.



Quantify the payback from marketing

11

Link between marketing and sales via the Direct and Indirect paths

TV PRESS RADIO OOH PAID

SEARCH

!"#$%&$'()%*('$%+$,-)(($&,(.&/$

01! 234$,-($5''%67+58$&-7..()&$

91! :386.8;$,-($5''%67+58$&-7..()&$<;$,-(%)$*583($,7$=>.('%5$

?1! @5A($,-($,7,58$5''%67+58$*583($5+'$'%*%'($<;$B7&,$

Indexed R

OI S

cale

8.4

0.7

0.6

3.7

1.8

Indirect ROI Contribution

Direct ROI Contribution



Client Response

12

!"#$%&'(()*#+,-$-.-/01%($*#2"'+($3,4#$5#62&-$%&#+,27$2'$'8,.#$*#+,-$9'&$+&,4,.3$:&-.+$(#-&%"$-.+$2"#$;'<#&$'9$

=''3/#>($?+@'&+($2'$%'.4#&2$:&-.+#+$%'.(A*#&$,.2#&#(2$,.2'$B6;#+,-$("';;#&(C$$$

!"#$*'+#/($%'.D&*#+$2"-2$?+@'&+($,($#4#.$*'&#$;'<#&9A/$2"-.$/-(2$%/,%E$-F&,:A1'.$(%"#*#($20;,%-//0$*#-(A&#C$

!"#$.#2$&#(A/2$,($2"-2$B6;#+,-$"-($-$"'/,(1%$;#&(;#%14#$'.$"'<$'A&$-+4#&1(,.3$-.+$+,(2&,:A1'.$%"-..#/($<'&E$

+,&#%2/0$-.+$,.+,&#%2/0$2'$+&,4#$("';;#&(C$$@#$-&#$A(,.3$2"#$*'+#/($2'$&#-//'%-2#$'A&$*-&E#1.3$,.4#(2*#.2($2'$

#62&-%2$*-6,*A*$4-/A#$9'&$#-%"$;'A.+C7$

Alex Gisbert (Director Online Marketing Partnerships – Expedia EMEA)

Expedia.co.uk

5B6;#+,-$"-($4#&0$(';",(1%-2#+$-F&,:A1'.$*#2"'+($2"-2$;&,*-&,/0$9'%A($'.$2"#$+,&#%2$

,*;-%2$'9$'A&$*-&E#1.3$-.+$+,(2&,:A1'.$%"-..#/(C5$

G-&E#2H"-&#$I-&2.#&($<'&E#+$"-.+$,.$"-.+$<,2"$B6;#+,->($J.(,3"2($2#-*$2'$#/#4-2#$'A&$

-F&,:A1'.$*#2"'+($2'$-$.#<$/#4#/C$$!"#,&$%&'(()*#+,-$-.-/01%($#.-:/#+$A($2'$;&#%,(#/0$

*#-(A&#$2<'$,*;'&2-.2$2",.3(K$

LM$"'<$B6;#+,-$-+4#&1(,.3$+&,4#($:&-.+$(#-&%"$'.$=''3/#$NO$-.+$,.%&#-(#+$PQJ$

RM$"'<$#-%"$-+4#&1(,.3$*#+,A*$,*;-%2($#-%"$/,.#$'9$:A(,.#(($



Summary

1 Modelling direct and indirect paths to purchase helps uncover

additional effectiveness of offline media – especially for TV in this case

2 Reallocating the same budget to the optimal mix could drive an extra

8% shoppers for Expedia

3 Branded PPC search is very effective in driving incremental shoppers

for Expedia over and above organic search

4 The models confirm that AdWords is even more effective than last click

attribution schemes typically measure

5 Expedia is using these models to reallocate their marketing

investments to extract maximum value for money



Expedia UK Marketing Mix Effectiveness Analysis Evaluation of how offline and online media drive shoppers on

Expedia.co.uk

April 2010

Expedia UK Marketing Mix Effectiveness Analysis

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