This week the Competition and Markets Authority has announced enforcement action against six of the market leading hotel and travel aggregator websites including: Agoda, Booking.com, eBookers, Expedia, Hotels.com and Trivago after it is believed some of their conversion rate optimisation tactics are breaking UK consumer protection law.
The story seems to have largely gone unnoticed in the wider media circuits but should have made every CRO consultant and in-house advocate stand to attention this week.
Often, conversion rate optimisation is considered the black hat brother to user or customer experience and this ethical and legal announcement has sadly bolstered that opinion, with what the government body refers to as unethical tactics used to coerce conversions on their platforms.
After the 14-month investigation triggered on the 27th of October 2017, the CMA’s Chief Executive, Andrea Coscelli said in a statement:
Booking sites can make it so much easier to choose your holiday, but only if people are able to trust them. Holidaymakers must feel sure they’re getting the deal they expected, whether that’s securing the discount promised or receiving reliable information about availability of rooms. It’s also important that no one feels pressured by misleading statements into making a booking.
That’s why we’re now demanding that sites think again about how they’re presenting information to their customers and make sure they’re complying with the law. Our next step is to take any necessary action – including through the courts if needed – to ensure people get a fair deal.
Key areas of contention
The following are the key areas of contention as outlined on the CMA’s official press release about the verdict:
- Search results: How hotels are ranked. For example, to what extent search results are influenced by factors that may not be relevant to the customer’s requirements, such as the amount of commission a hotel pays the site.
- Pressure selling: whether claims about how many people are looking at the same room, how many rooms may be left, or how long a price is available, create a false impression of room availability or rush customers into making a booking decision.
- Discount claims: whether the discount claims made on sites offer a fair comparison for customers. For example, the claim could be based on a higher price that was only available for a brief period or not relevant to the customer’s search criteria, such as comparing a higher weekend room rate with the weekday rate for which the customer has searched.
- Hidden charges: the extent to which sites include all costs in the price they first show customers or whether people are later faced with unexpected fees, such as taxes or booking fees.
As digital practitioners, we are all familiar with these concepts:
- Scarcity tactics
It’s clear from the CMA that the biggest infraction is around the disclosure of pricing. These tactics have been long known as ‘black hat’ and not acceptable by the CMA or ASA. Leading supermarkets have employed the similar tactics offline to give perceived discounts on items marked up higher than RRP the previous week.
While price positioning will be the driving factor of the CMAs input, I am more interested in is what the CMA has deemed to be ‘pressure selling’.
It’s no secret that we’ve all seen the warning boxes stating that “Ten other people are viewing this room right now’', and personally I have always seen this disclaimer with some scepticism. However it’s proliferation is an indication of the tactics success.
Couple this with tracking cookies which will inflate a price of a room on return, you start to notice the unethicality of the system. (You can try this yourself find a hotel room leave the site, return and it will likely inflate the price – Trick: open the page in incognito and it should show the original price. This works especially well with flights).
While these tactics are unethical, it is clear how they are obvious pressure selling. I imagine in their early infancy on certain sites their development was as more dumb than intuitive. To report back on an index, the number of people looking at a potential search or description page would be a great development task and coding in a simpler algorithm to show a randomised number is not unheard of and a lot more cost effective to a business.
However, the CMA has stated that it is now mandatory to explain to users whether others looking at these sites are in fact looking at the same dates as yourself, and to be much more transparent on the subject.
Let’s take another popular example of this kind of tactic on e-commerce sites.
We would all have seen the only X left in stock button on Amazon, right? This is in fact the same pressuring tactic, just in a different context. The green text is not there to help you make the decision, but to give you urgency into buying it on impulse rather than assessing and exploring other options and it will be interesting how the CMA review these practices in the future.
What should we do as marketeers?
It goes without saying that marketeers should where possible follow ethical best practice. However in highly competitive industries and cheaper development solutions to problems (that might lead to misleading practices), you have to be empathetic to the Head of Marketing who has their c-suite breathing down their neck.
Although, in the modern era this is not an excuse to live by. There is still a plethora of ways to induce scarcity and increase conversion while adhering to fair practices. As a rule of thumb, if you are going to make a claim on your site it has to be accurate and factual, this is common sense, but is easy to succumb to pressure and move away from.
This enforcement also shows that pricing has to be calculated fairly and upfront to the consumer. While this has always been the case you can no longer depict one price for a consumer in a search result index and disclose further ‘charges’ on subsequent description pages for results.
Further changes to come?
The CMA has referred the matter to the Advertising Standards Authority to consider whether statements like ‘best price guarantee’ or ‘lowest price’ mislead consumers in what could become sweeping changes to the regulation of copy over price aggregation websites across the board. The impact of this is far beyond the travel industry and could affect any aggregator if the ASA rules against the big six travel companies and sets a legal precedence against copy in this way.
Alongside this, these practices as implemented unilaterally and are not specific to the travel industry, prompting Andrew Tyrie, CMA Chairman to say:
The CMA will now do whatever it can to ensure that the rest of the sector meets the same standards.
‘The Big Six’ have now agreed to voluntarily end the outlined practices by September 2019. Square Owl will be following these developments closely, so keep up to date with our blog for the latest on digital legislation and news.