Creating a social media strategy for a tourism business Block 3: E-Commerce in Tourism International Master in Hospitality and Tourism Management ESCP Europe - Cornell University School of Hotel Administration

1. Creating a social media strategy
for a tourism business
Block 3: E-Commerce in Tourism
International Master in Hospitality and
Tourism Management
February 4th, 2013
Francisco Hernández
fran.me
This document has been produced by 11 Goals & Associates. It is not complete unless supported by
the underlying detailed analyses and oral presentation.

2. About me SHAMELESS
SELF-PROMOTION
Education: Universidad Politécnica de Madrid, UNED,
London Business School, University of Chicago – Fundaciò
“laCaixa” & Fundación Rafael del Pino scholarships.
Firms worked for full-time: Abengoa, McKinsey&Co, ABN
AMRO, Real Madrid C.F.
Entrepreneurship: Crisalia
Social Media & Internet consulting: 11goals.com
Lectures & Speaker in 3 continents: The Wall Street Journal, Universidad Politécnica
de Madrid, London Business School, Cornell University, Politecnico di Milano, CEIBS
(Shanghai), Kungliga Tekniska högskolan, The Business Factory, Asociación J.W.
Fulbright Spain, ESCP Europe, UIMP, and several private companies.
Full profile: linkedin.com/in/franciscohm

3. Seminar’s agenda
Block 1: Basics of online marketing (day 1)
Block 2: Social tourism (days 2 & 3)
Block 3: E-Commerce in tourism (day 3)
Block 4: Case presentations (day 4) How do I make
money in Internet?
(Block 3)
How can I market
my business in
Internet?
(Blocks 1 and 2)

4. Summary of block 1 REMINDER
 Online advertising
 Affiliate programs
 Referral marketing
 Email marketing
 SEO
 Content marketing
 Online public relations
Social marketing
 Fake marketing
Block 1 presentation

5. Summary of block 2
Page 1 of 3
¶ Tourism is a social activity by nature. Social media just changed the way that is
expressed.
¶ Online Social Tourism sometimes happens through highly complex processes that involve
several tech services.
¶ Internet de-socialized some human activities. But now Social Technologies are re-
socializing them. It is a general trend observed in many human activities.
¶ When a new technology is introduced, it always takes years to discover models and
formats to extract value from it. Innovation is frequently slow, and so it is the adoption
of Social Technologies by companies.
¶ Web 2.0 is all about people participating in projects, contents, etc.
¶ Web 2.0 is a sound reality. No doubt about that. Hope you are not still thinking whether
it makes sense or not!
¶ The huge importance of social media is due to the fact that SNS were able to translate
online (and make it more efficient and powerful) one of the World’s most important
human activities: socializing; managing and using our circle of trust.
¶ Facebook is Worldwide leader in usage and technology. The World is still leaning towards
Facebook in many countries where it is not yet the leading SNS. Only China and Russia
seem to stay away from Facebook’s rule, the second one due to its blocking.

6. Summary of block 2
Page 2 of 3
¶ Web 2.0 is not only Social Networking websites. There are other categories like social
blogging, microblogging, video, gaming, etc.
¶ In our opinion, the existence of an Social Graph that resembles a person’s real social life is
what distinguishes an actual SNS from a Social Medium.
¶ There are also a ton of complementary services to SNS and other Web 2.0 tools. We call it
the “Social Media Ecosystem”.
¶ It is interesting to observe and understand the 5 attitudes companies generally adopt
regarding the Social Media Ecosystem. The best attitude is “to Complement it”, but few
companies are mature enough to understand that. However bad experiences are helping
a lot to let them understand.
¶ In Social Media, the medium is the people. Interesting little fact to have top of our
minds…
¶ Social media advertising is intrinsically different from other type of ads like contextual
advertising. They complement each other rather than compete. They should be used for
different goals.
¶ People trust in people more than in brands. In the last years even more due to the never-
ending roll of corporate scandals and the crisis.

7. Summary of block 2
Page 3 of 3
¶ Some Marketers (even “traditional” ones) believe that “Marketing is dead”, at least in
its current form. They believe brands should turn their eyes into tha “Community
Marketing”
¶ “Community Marketing” is actually the oldest form of marketing. However brands had
to leave it because of scale.
¶ Social technologies have proven useful for brands with the mission of applying
“Community Marketing” while keeping their size. E.g.: Football clubs.
¶ Building an effective online brand community is an important business tool for many
companies. However it is a very difficult one to achieve because it is a long term goal
and the final impact in the P&L account is not easily measured.
¶ It is a frequent mistake to believe that having a good brand makes it easier to have a
good online community.
¶ In order to build your own successful online community it is important to understand
in depth your underlying community: how your members affiliate, what are their key
roles within the community, how do they benefit from being a member, etc.
¶ Online communities take time: first hire fans, then engage them (almost immediately
after hiring them), and finally try to monetize them in the least possible frictional way.
Block 2 presentation

8. Quote of the block
“What’s worth doing is worth doing for money”
Gordon Gekko

9. Very recommended presentation
E-commerce Landscape 2012

10. Agenda
 E-Commerce
 E-Commerce in tourism
 Social E-Commerce in tourism
 Social Mobile E-Commerce in tourism

11. Definition of E-Commerce
“Electronic commerce, commonly known as e-commerce,
ecommerce or e-comm, refers to the buying and selling of
products or services over electronic systems such as the
Internet and other computer networks. However, the
term may refer to more than just buying and selling
products online. It also includes the entire online process
of developing, marketing, selling, delivering, servicing
and paying for products and services.”
We will focus on
the Internet
Source: Wikipedia

12. E-Commerce timeline
Netscape browser & 1st Internet
purchase (netmarket.com)
“Dot Com” Amazon buys
Online shopping burst Zappos.com
concept
1st Browser Amazon ->Diapers.com
Alibaba.com eBay -> GSI Commerce
CERN
1984 1995 2010
1979 1990 1994 1998 2000 2009 2011
1st Electronic Mall Amazon.com Groupon rejects
CompuServe eBay.com Google offer
Highly-funded startups Small-funded startups
Tech&Concept development
(KSF: Tech) (KSF: Biz Model)
Jeff Bezos: “I am more worried about 2 guys
in a garage than about Barnes&Noble ”

13. Types of E-Commerce/E-Business
 Not easy to classify
 Many real models fall into multiple categories
B2B B2C B2G
Business to Business Business to Consumer Business to Government
•PayPal (and B2C, “B2B2C”) •Amazon “E-Procurement”
•Optize (and B2C) •FreshDirect
•Alibaba Group •Zynga (and C2C)
C2B C2C C2G
Consumer to Business Consumer to Consumer Citizen to Government
•Zonzoo •Prosper (“P2P”) •Agencia Tributaria (Tax agency
•Fotolia •eBay online)
•Google Adsense •Facebook
G2B G2C G2G
Government to Business Government to Citizen Government to Government
“E-Government” “E-Government”
•Government Gateway
•AEPM •eDNI •Schengen Information System
•Certificado Digital •USA.gov (also G2B)

14. Business models on the web (Professor Michael Rappa)
Page 1 of 2
1. Brokerage: 3. Infomediary:
• Marketplace Exchange [Orbitz, ChemConnect] • Advertising Networks [DoubleClick]
• Buy/Sell Fulfillment [CarsDirect, Respond.com] • Audience Measurement Services [Nielsen//Netratings]
• Demand Collection System [Priceline.com] • Incentive Marketing [Coolsavings]
• Auction Broker [eBay] • Metamediary [Edmunds]
• Transaction Broker [PayPal, Escrow.com]
• Distributor 4. Merchant:
• Search Agent • Virtual Merchant [Amazon.com]
• Virtual Marketplace [Amazon.com] • Catalog Merchant [Lands' End]
• Click and Mortar [Barnes & Noble]
2. Advertising: • Bit Vendor [Apple iTunes Music Store]
• Portal [Yahoo!]
• Classifieds [Monster.com, Craigslist] 5. Manufacturer (Direct):
• User Registration [NYTimes] • Purchase [Dell Computer]
• Query-based Paid Placement [Google, Overture] • Lease
• Contextual Advertising / Behavioral Marketing • License
• Content-Targeted Advertising [Google] • Brand Integrated Content
• Intromercials [CBS MarketWatch]
• Ultramercials [Salon]
Source: Michael Rappa, http://digitalenterprise.org/models/models.html

15. Business models on the web (Professor Michael Rappa)
Page 2 of 2
6. Affiliate:
• Banner Exchange
• Pay-per-click Check out detailed
• Revenue Sharing
descriptions here
7. Community:
• Open Source [Red Hat]
• Open Content [Wikipedia] • Classifying is difficult, on Internet is
• Public Broadcasting [The Classical Station (WCPE.org)] even more difficult.
• Social Networking Services [Flickr, Friendster, Orkut]
• Some companies fall into multiple
categories. Real business companies
8. Subscription: can have traits of several models.
• Content Services [Listen.com, Netflix]
• Person-to-Person Networking Services [Classmates]
• Trust Services [Truste]
• Internet Services Providers [America Online]
9. Utility:
• Metered Usage
• Metered Subscriptions [Slashdot]
Source: Michael Rappa, http://digitalenterprise.org/models/models.html

16. Long-Tail business concept ILUSTRATIVE
“Selling many marginal products in small quantities ”
The sum can be much higher than the sum of few top-selling products, and no
brick-and-mortar shop can offer such a broad catalogue on their shelves.
Q Top sellers
HEAD → Brick-and-mortar sellers’ focus
Weird
products
TAIL
Products
A market in itself + a way to attract a customer at some point of time

17. Long tail. Weirdest items sold on Amazon
Uranium Ore
Wolf Urine
Dagobert Wooden
Toilet Throne
Fat replica demonstration models

18. Freemium model ILUSTRATIVE
Venture Capital favourite’s model
FREEMIUM = FREE + PREMIUM
“Attract audience with free versions of the product, introduce them to paying with
affordable versions of the product, and monetize them with premium versions of the
product”
Examples:
FREE •Spotify:
•Free: Listen with ads
•Cheap: 1 day pass/Unlimited
•Premium: monthly subscription
•Social games:
•Free: Play
•Cheap/Premium: Virtual goods
CHEAP •Most Open-Source Software
(Affordable) •Free: base software
•Cheap: modules, extensions
PREMIUM •Premium: professional services
•Adult content

19. Is this Freemium?
• Free: 2 Paragraphs
• Premium: rest of the article
• “Coitus-interruptus user
experience” is not good for
the user nor for the brand.
• Smartest Freemium models
do not compromise
between user experience
and monetizing. Otherwise
you may stop attracting
users, and therefore
monetizing them.
• Every time you think there
is such a tradeoff, test,
retest, and retest again the
model with a sample of
users before implementing
it.
www.wsj.com

20. E-Commerce sales are very large and grow strongly
19%
Source: Internet Retailer, Goldman Sachs

21. Where are the largest E-Commerce markets?
E-Commerce sales by region % of online consumers who
in 2010 made a web purchase in 2009
Source: Internet Retailer, Goldman Sachs, Forrester Research

22. What markets are expected to grow more?
E-retail sales
CAGR
U.S.A. EU 17 Brazil
10% 10% 18%
In 2015 it would account 11% of
retail sales in the USA
Source: Internet Retailer, Forrester Research
GAGR= Compounded Annual Growth Rate

23. Agenda
 E-Commerce
 E-Commerce in tourism
 Social E-Commerce in tourism
 Social Mobile E-Commerce in tourism

24. Tourism is widely considered as de #1 E-Commerce
category
Spain
Source: Observatorio Nacional de las Telecomunicaciones y de la Sociedad de la Información

25. Expedia
Travel agent
• Founded in 1996 as a
Microsoft division.
• Expedia Inc. operates
Expedia.com, Hotels.com
& Hotwire.com
• More than 60 countries,
1000s affiliates
• Revenue model: margin on
sales
• Revenue: ~ USD 3.3 bill./yr
• Largest online travel agent
www.expedia.com

26. Trip Advisor
Travel reviews
• Founded in 2000
• Bought by Expedia in 2004,
spun off by IPO in 2011
• More than 100 mill.
travelers have used it
• Revenue model: social
infomediary
• Revenue: ~ USD 486 mill/yr
• Largest travel review site
www.tripadvisor.com

27. Kayak
Meta search engine
• Founded in 2004 by Expedia,
Travelocity and Orbitz
veterans.
• Revenue model: referral fee
• Revenue: ~ USD 225 mill/yr
www.kayak.com

28. Agenda
 E-Commerce
 E-Commerce in tourism
 Social E-Commerce in tourism
 Social Mobile E-Commerce in tourism

29. E-Commerce is more than the act of buying online,
it’s the whole system of information and
reputation, which makes it a highly social activity
Social Shopping
Source: Internet Retailer, Forrester Research

30. What form of advertising do consumers trust?
Recommendations from people I know 92%
Consumer opinions posted online 70%
Editorial content such as newspaper articles 58%
Branded Websites 58%
Emails I signed up for 50% 28.000 Internet users in
Ads on TV 47% 56 countries
Brand sponsorships 47%
Ads in magazines 47%
Billboards and other outdoor advertising 47%
Ads in newspapers 46%
“Recommendations from
Ads on radio 42%
people I know” is, by far,
Ads before movies 41% the most trusted form of
TV program product placements 40% marketing
Ads served in search engine results 40%
Online video ads 36%
However, “Ads on social
Ads on social networks 36%
networks” not really
Online banner ads 33% trusted
Display ads on mobile devices 33%
Text ads on mobile phones 29%
Source: Nielsen, Global Trust in advertising and Brand Messages, Abril 2012

31. Definition of Social Commerce
“a subset of electronic commerce that involves
using social media, online media that supports
social interaction and user contributions, to assist
in the online buying and selling of products and
services.”
Two types :
• Social Media on E-Commerce Platforms:
“Helping people connect where they buy”.
• E-Commerce on social media platforms:
“Helping connected people to buy where
they connect”.
Source: Wikipedia, Syzygy

32. What are CMOs (Chief Marketing Officers) worried
for the next few years?
Source: Customer Data, Social Media Top Marketing Priorities for CMOs Worldwide, eMarketer.com

33. What Booz & Co thinks social commerce is going to
be worth in 5 years
Source: Booz & Co.

34. The 6 dimensions to social commerce success (Syzygy)
Social Commerce : Sharing your purchase experience before, during, and after buying.
•Twitter.com/Dell
•Groupon
•My Starbucks Idea SCARCITY
•Blendetc Less is more
(perceived value) •Vente-privee.com
•Twitter.com/Dell
AFFINITY
CONSISTENCY Shop with like-
One step at a time
minded people
•Adidas Social Coupons
AUTHORITY •Starbucks @ 4S
Follow the leader
RECIPROCITY
Payback favours
(experts)
POPULARITY
Follow the crowd
•Vente-privee.com
•Apple Expert Forums
•Facebook.com/1800flowers
Source: The 6 Dimensions of Social Commerce - Mark Ellis, Syzygy

35. TripAdvisor pivoting from reviews to social
Your friends’ trip wall
Recommendations from people I know 92%
Consumer opinions posted online 70%
Editorial content such as newspaper articles 58%
Branded Websites 58%
Emails I signed up for 50%
Ads on TV 47%
Brand sponsorships 47%
Ads in magazines 47%
Billboards and other outdoor advertising 47%
Ads in newspapers 46%
Ads on radio 42%
Ads before movies 41%
TV program product placements 40%
Ads served in search engine results 40%
Online video ads 36%
Ads on social networks 36%
Online banner ads 33%
Display ads on mobile devices 33%
Text ads on mobile phones 29%

36. TripAdvisor pivoting from reviews to social
Friends’ map and ads
Source: Internet Retailer, Forrester Research

37. TripAdvisor pivoting from reviews to social
Identifying and outstanding friends reviews
Source: Internet Retailer, Forrester Research

38. Key points about Social-Commerce on social media
platforms
• Still in its infancy. Almost inexistent as of today. Mostly focused on the pre-selling stage: people
talk about and discover products through social media, ads on social media, etc.
• Most cases take advantage of the huge traffic that some social media platforms have, but do not
leverage on social integration to offer better, customized products and services. Leveraging on
social integration is better than merely sucking traffic because it adds value to the customer. The
customer can find it very interesting to shop in a place where he/she has products he/she and
his/her friends really like. Remember shopping can/should be a pleasant experience!
• Referral marketing through social networks seems to be an obvious way to take advantage of
someone’s social graph when doing E-Commerce. Concept of “Horizontal Marketing”.
• Spotify integrated on Facebook is a good example of social commerce: you see what your
friends are listening to, which is probably what you would like. Also, a friend listening to a song
and you seeing it is a form of referral marketing.
• Brands need to lose their fear to let people talk about them, and to invest in personalized,
smart social apps to tackle the full potential of Social-Commerce.
How would it be a social-commerce
strategy in your company?

39. F-Commerce
“Facebook commerce, f-commerce, and f-comm refer to the buying and selling of goods
or services through Facebook, either through Facebook directly or through the
Facebook Open Graph.”
“Experts forecast that F-
commerce transactions on
Facebook will overcome
Amazon’s annual sales
($34 Billion) over the next 5
years.”
First purchase within Facebook: July 8th, 2009 on facebook.com/1800flowers
Source: Wikipedia, Janice Diner, F-Commerce Ecosphere Visual

40. Agenda
 E-Commerce
 E-Commerce in tourism
 Social E-Commerce in tourism
 Social Mobile E-Commerce in tourism

41. Hotel tonight
Last minute hotel reservations. Remember?
• Founded in
2010
• Revenue
model:
referral fee
www.hoteltonight.com

42. Hotel tonight
Really Social?
www.hoteltonight.com

43. Blink
www.hoteltonight.com

44. Today’s main takeaways
¶ E-Commerce, E-Business… difficult to define and classify. Do not waste much time in
figure-out where your model fits.
¶ E-Commerce success stories have evolved in the last years:
¶ Before: Highly capitalized, tech-based companies (invest, invest, invest…)
¶ Now: Small capital business model incubators (test, test, test…)
Technology not a problem anymore; success is many times driven by innovative business
models, sometimes easily copycatted if one does not protect oneself.
¶ Long tail concept / Freemium concept / “Piggyback” concept.
¶ 17-year history but still growing strong, now specially in emerging markets (broadband
penetration, purchasing power), but maybe on mobile channels soon.
¶ Tourism was and is the #1 Ecommerce segment. It is also a good example of trends.
¶ E-Commerce is an intrinsically social activity. It evolved to the social space even before the
social media phenomenon started.
¶ 6 dimensions to social E-Commerce success.
¶ Social Tourism Ecommerce ready to take off. Few startups working already on it.
¶ Takes time to refine an innovative business model. Test and error based on analytics is the
best way to refine a model. Be patient, imaginative, and analytical.

45. Thanks
Francisco Hernández
francisco_hernandez@11goals.com
www.11goals.com