Transforming WiFi from Cost Center to Revenue Driver

By Aaron Vance
Monetizing WiFi through Mobile Advertising and Customer Insights

Unlocking Revenue from a Cost Center

WiFi is in demand among hospitality customers. Hospitality Technology’s Customer Engagement Study 2016 lists it as the number one technology influencer of consumer purchase decision for hotels, and number four for restaurants. This has led to mass implementation of WiFi – often free WiFi – by hotels and restaurants. The alternative is lost customers.

The challenge is that WiFi has become just one more cost required to maintain parity with competitors. It doesn’t have to be this way. WiFi today can deliver new revenue streams for hospitality while delivering customer insights. And, you can apply consumer targeting for advertising, promotions and segmentation the first time someone accesses your WiFi network, by simply mining the data that already exists.

Delivering What Consumers Want – The Competitive Imperative

Hospital Technology Customer Engagement Study 2016

Consumer preference is the key driver of the free WiFi movement in the hospitality industry. Hospitality Technology’s Consumer Engagement study shows that whether a hotel offers free WiFi is the top technology influence on purchase decision. It ranks as more important than online booking options, positive reviews on social media sites, and even membership in a hotel loyalty program. People expect their WiFi for free.

We see a similar situation facing restaurants. While positive customer reviews, online reservations and online menu access make up the top three technology influencers on consumer restaurant selection, 69% rated “Free, Reliable WiFi” as an influencer.

WiFi was barely mentioned in Hospitality Technology’s 2014 and 2015 Customer Engagement Studies. Why the change? These earlier studies focused on technologies used by hotels and restaurants to drive consumer engagement. In 2016, study designers decided to ask consumers what was important to them. Surprise! Consumers want free WiFi, and it impacts their purchase decisions.

Hospital Technology Customer Engagement Study 2016

The bad news is that WiFi has always been a pure cost for restaurants. Hotels were once able to charge for the service and derive added revenue, but now must offer WiFi for free due to competition. WiFi has become a pure cost center for the hospitality industry, as well.

It doesn’t have to be this way. Fast, reliable, free WiFi can be a gateway to direct revenue generation, a conduit for customer relationship management, and provides opportunity to reach current and prospective customers through re-targeting and conquesting. WiFi can be transformed from a cost center to a revenue driver.

The Growth in Mobile and Mobile Advertising

Transforming WiFi into a revenue center is possible because of two key trends: The first critical trend is the rise in mobile usage.

Over 200 million U.S. consumers had smartphones in 2016. Consumers use their smartphones for mobile app access and web browsing throughout the day. Anonymized location information for smartphones can be used to provide insight into consumer intent, interests and habits. This data can then be organized into consumer audiences based on purchase intent, affinities and other characteristics. For example, Gravy cross-references location, venue and event data to categorize mobile devices into several hundred targeted consumer profiles. When a device connects to your WiFi network, it may be new to you, but there is a rich history behind the consumer device that is available to access.

Number of U.S. Smartphone Users

Statista – March 2017

This consumer knowledge can be used to tailor the guest experience and better understand your customers. It can also be used to re-target your customers through advertising to drive repeat visits, or deliver real-time ads that generate immediate revenue.

Mobile Advertising Speed Accelerating

The second key trend is mobile advertising growth. Advertisers follow consumers to the media they use most often. So, the growth in mobile device usage has led to a corresponding increase in mobile advertising. However, mobile advertising has grown even faster because of its robust consumer targeting opportunities. Per Magna Global, mobile ad spending totaled $33 billion in 2016 and is project to grow by 34.5% in 2017.

Hotels and restaurants are in a unique position to capitalize on this growth in mobile advertising spend because hospitality providers have access to mobile users connecting to their WiFi hotspots. The point of connection to WiFi is an opportunity to deliver targeted advertising – enabling marketers to reach consumers more effectively.

The WiFi Ad Revenue Solution 

The Hospitality industry should start to think about WiFi as a strategic asset, rather than a technical or commodity purchase. Today, WiFi is largely an IT decision. This is a mistake.  Marketing, advertising and customer relationship management teams should also be actively involved.

Why? WiFi provides an important customer touch point, and the opportunity to learn more about customer’s habits, intents and interests.  It also enables two types of advertising. Let’s consider direct revenue from advertising first.

Immediate Ad Revenue from Your Guests

Every device that attaches to your WiFi network can become a paid advertising impression. Even more important, they can be served a targeted ad impression. This is important because targeted ads bring in more revenue and tend to be better received by consumers.

How can you target an ad to someone that just joined your WiFi network? Mobile devices have unique identifiers that protect the user’s anonymity, but also reveal real world activity that enables behavioral targeting. For example, consider someone who is a regular 10k runner that is associated in a Gravy Audience profile for that mobile device. When that device connects to your wireless access point, it provides a targeted ad impression that is desired by advertisers like Nike, Mizuno, Michelob Ultra and other athlete-oriented brands. Similarly, the device may indicate that the consumer is an in-market home buyer, a live music event fan, or a wine lover. These characteristics open the opportunity for targeted advertising impressions and revenue for hospitality sites that provide free WiFi access.

Re-Targeting Your Guests

Once you know your guest’s device ID, you can also reach them even after they have left. This can lead to selling ads to brands that want to reach your customers with mobile ads over an extended campaign. Or, local advertisers may want to advertise to your current guests both in your venue and after they have departed. This again provides an opportunity for revenue capture.

In addition, your own internal advertising team may want to build up a file of your customers so you can reach them while they are on your property or after they have left. This re-targeting approach is a great way to stay top of mind with previous patrons and to push special promotions to them. Gravy also has a program that enables hotels and restaurants to run targeted mobile ad campaigns to customers of named competitors, also known as conquesting. Next, let’s consider the customer insights opportunity.

The WiFi Customer Insights Solution

Customer touch points are critical to every hospitality provider. They are an opportunity to influence the customer experience and learn more about what is important to your patrons. In the past, these touch points almost always involved staff contact and only revealed information that the customer proactively shared. WiFi provides an entirely new opportunity on both counts.

Enhancing the Immediate Guest Experience

First, WiFi is a technology touch point that is about the guest experience rather than the purchase process. Hospitality providers have invested heavily in their online and mobile presence to facilitate purchases and to highlight property qualities that entice a purchase decision. Whether it is amenities for a hotel guest or the menu and reservation options for a restaurant, the purchase cycle dominates most hospitality digital investments.

WiFi, by contrast, can enable you to harness a technology touch point to proactively enhance the customer experience. You can deliver generic messages about special promotions in the most basic use case. Or, you can automatically harvest behavioral data associated with the device to offer targeted promotions. At a hotel property, a message might promote golf or gym amenities, offer complementary coffee or turndown service, or deliver a cross-promotion with a local partner.

Restaurants can promote specials or appeal to the consumer based on known behavioral characteristics such as a wine lover or beer aficionado. They can partner with local retailers or entertainment venues based on consumers’ documented interests. This is an entirely new way to engage consumers while adding more value for them and for you. It is an opportunity to delight the customer in the moment.

Understanding Your Customers Better

You can see from the use cases above that the insights provided by behavioral mobile consumer data presents the opportunity to better understand your customers. If you knew that a significant portion of your guests are soccer fans, how would that inform your marketing campaigns over the next year? What if you knew they were new parents or avid golfers?

By understanding your customers’ interests more clearly and considering new information not available through surveys or CRM capabilities, you can transform how you engage with current and prospective guests. You can not only run campaigns targeted at your current customers, but advertise directly to prospective guests will similar interests. Gravy can match your current guests with similar customer profiles and immediately expand your advertising reach. This is about enhancing customer loyalty and generating new customer growth.

What You Need to Succeed in WiFi Monetization and Customer Insights

WiFi was once the sole responsibility of hospitality IT, but you can see that it should start playing a more prominent role and that marketers need to get involved in this strategic decision. Several large WiFi providers are starting to implement access points for free or for low cost and then sharing revenue and behavioral consumer insights back with the venue owner. If you want to get started there are a few elements that are critical for success. These include:

  • The technical capability to capture unique device IDs or social login data that can then be matched to a mobile device advertiser IDs
  • A data provider partner to:
    • match device or social login ID to consumer behavioral profiles that can be targeted for mobile advertising impressions
    • provide a data feed or dashboard to better understand customer behavioral profiles
    • facilitate ad re-targeting for consumer over time
    • identify similar audiences to current customers and high value customer segments that can expand targeted audiences for advertising reach
  • Connectivity to a real-time advertising network for both on and off WiFi targeting (i.e. deliver both real-time and post event ad impressions)
  • An advertising network partner to solicit and serve ads on behalf of advertisers

Gravy monitors the largest number of mobile devices in the U.S. and today segments over 200 million consumers into behavioral categories. Thus, we can provide all the data partner requirements for your WiFi consumer marketing program. Gravy also has trusted partners that install and run WiFi networks and others that include ad networks, Data Management Platforms (DMP) and Demand Side Platforms (DSP). We can work with your existing WiFi and advertising partners or help you bring on an effective team to operate your entire WiFi program.

We hope you have found this report informative. The market is moving quickly and Gravy has some unique early experience that we wanted to share with the industry. To learn more about WiFi programs for marketing and advertising to hospitality customers, click the link below.