The Billboard Effect: Still Alive and Well

Abstract

Changes in the online travel market are causing hotels to rethink their relationships with online travel agencies (OTAs) and to take a closer look at the impact on bookings from listing their properties with OTAs. One outcome of being listed on an OTA is additional bookings on the brand’s own website, a phenomenon that co-author Chris Anderson labeled the billboard effect. In a 2009 study, Anderson presented an experiment in which a group of hotels was listed and then removed from Expedia.com in alternate weeks. This test found that, compared to being hidden, being listed on the site increased reservations 9 percent to 26 percent (above transactions that occurred at Expedia).1 That was followed by a 2011 study examining consumers’ online pre-purchase research that found about 75 percent of consumers who made reservations with a major hotel brand had visited an OTA in advance of booking directly with the brand.2 In this report we show that the ability of a second-party channel to influence an eventual reservation may be lower now, but the billboard effect still occurs, since many consumers visit an OTA prior to booking.