“On TV & Video” is a column exploring opportunities and challenges in advanced TV and video.
Today’s column is by Humphrey Ho, managing director, Americas, Hylink Digital.
The Dow may be down, but Marriott’s stock is up 6.7% from a year ago. And it shows no sign of losing momentum. To what does it owe this success?
Much of the continued growth will stem from the hotel group’s debut of its very own ad network.
Once launched, the new media network would allow advertisers to target Marriott guests with relevant ads on their app and through guest room TVs using customers’ profiles, search history, and reservations as a first-party data source – something that has become an increasingly scarce resource in the post-cookie era.
And the impact will be massive.
Untapped ad potential
Considering an average occupancy rate of 75% in 2021 (or 367,701,000 rooms sold), a conservative estimate of five ads shown per day and a $30-$50 CPM, the hotel group would be adding a minimum of $662 million to its bottom line. With reported revenue of $13.86 billion in 2021, this would represent a 7% increase. Plus, the brand can take advantage of a 29% or more net margin for advertising, nearly double the net margin of the hotel industry on average, driving tremendous shareholder value. Not to mention the partnership with Yahoo means a low cost of ad sales.
Regardless of the hotel group you look at – Marriott, Hilton, SH Hotels & Resorts – the highest number of their rooms are concentrated in China, with 15.33 million hotel rooms available. The Chinese market has the highest population. It’s the largest consumer economy. Its citizens are the most brand loyal to hotels. And it has the most elite, wealthy travelers. Due to the pandemic, they are exploring destinations in their own backyard.
Simply put, it’s an opportunity that’s impossible for Marriott to miss. Every marketer will need to adapt to cookieless.
Even varying regional privacy regulations can’t hold Marriott back, because the loyalty membership number issued to guests (and any other information they provide during their stay) belongs to Marriott. That means it falls under the hotel group’s jurisdiction, not the country’s.
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CTV is better on a big screen
Large format advertising is here to stay. With 55-75 inches of TV glory available in every Marriott room, ads now have the perfect platform. But there’s an even deeper opportunity that awaits.
What if you could link the TV screens in hotel properties with connected TV (CTV) through programmatic?
CTV is commonly used for awareness campaigns and achieves high performance results for brands – 94% viewer completion rate compared to just 74% and 69% on PC and mobile devices, respectively. Paramount Plus, Netflix, Sling, Disney+, Apple TV and Hulu are all in or exploring monetizing viewers with CTV inventory. Marriott opens up a whole new viewing context – during travel – with their new CTV inventory.
Top-notch targeting
Although leisure travel volume has returned to pre-pandemic levels, business travels and events still remain a fraction of 2019 levels. For those that are looking to target specific segments of travelers, capturing their undivided attention in a single screen environment – the hotel room – is an opportunity that must be captured.
Marriott’s move reveals a broader trend within the travel industry that other leaders like United Airlines should adopt.
Why wouldn’t brands want to offset the rising cost of operation and establish a new stream of revenue?
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