Impact of PPC on hotel brands

The layout of Google's SERPs have seen rapid change in recent months. PPC Manager Stuart MacLean discusses how this has impacted hotel brand PPC strategies.

Paid Search in its very nature is constantly changing and it is up to us as an agency to ensure that we keep not only ourselves, but also our hotel brand clients, up-to-date with the latest goings on in the fast-paced world of PPC. There have been a number of substantial changes, particularly over the last 12 months, which have changed the paid search industry forever.

Google has consistently tested different versions of the SERPs (Search Engine Results Pages) for as long as we can remember. It is not uncommon to view one search layout and then view another, far different layout, only seconds later. Google has even gone as far as to testing the width of the white space between each paid ad and/or organic listing, trying to find the perfect formula for Search Marketing.

Consistently testing SERP variations and further changes to the paid search landscape have changed the way in which we approach our strategy for the hotel sector. There are now key areas of paid search that require the attention of our hotel brand clients, to fully maximise their paid search strategy. In this post we will look at a number of important changes to the paid search landscape, highlighting the impact that these changes have had on creating and managing a paid search strategy for our hotel brand clients

The removal of right-hand-side text ads

By far, the most impactful change to Google’s SERPs layout came in February of 2016, when Google announced that paid search results on desktop would no longer appear on the right-hand-side of the SERPs. Instead, as many as four paid ads would appear at the top of the page, pushing organic listings further down the results pages. Many advertisers panicked, due to there being fewer paid ad spaces above the fold as well as potential increases to their CPCs. We instructed our clients not to panic, and to ride out any fluctuations to CPCs as a result of these changes.

This proved to be the correct decision following initial increases in CPCs. CPCs did then begin to rise over the following months however this is reflective of search seasonality and entering the peak summer months where competition in the SERPs is greater for hotel brands. Furthermore, we have seen improvements in CTR as high as 10 per cent on hotel brands, indicating that the top positions in the SERPs are now more valuable and that users are finding it harder to distinguish between PPC ads and organic listings.

We always advise our clients to ensure that their overall search strategy (PPC & SEO) is an integrated one, with each channel supporting one another, where they could. For example, ensuring that we have an above the fold presence on paid search when organic rankings are struggling.

Hotel Price Ads

Hotel Price Ads (HPAs) are ads that provide real time room prices to the user. This can be of great benefit to our hotel brand clients as it provides their consumers with the most up-to-date hotel room prices possible. Generally, having prices displayed is likely to entice users to click on that ad. Another benefit to hotel brands is that it’s another way to get hotel guests to book direct, bypassing Online Travel Agencies (OTAs) such as ‘booking.com’. OTAs currently dominate the HPAs, therefore it is crucial for our hotel brand clients to have a presence here, particularly with very few hotel brands actually having a presence in this space.

Furthermore, the real-time rate HPAs provide directly links to our hotel brands booking engine, taking the user exactly where they want to go. Google estimates that hotel price ads perform at a significantly stronger rate than standard paid search listings, generating a conversion rate that is double that of regular mobile traffic. Over the last 12 to 18 months, HPAs presence in the SERPs have increased and they are now more prominent, providing our hotel brand clients with the opportunity to increase their presence in the SERPs.

The growing dominance of OTAs

The ever increasing dominance of OTAs has led advertisers to re-visit their search marketing strategy. The increased presence from OTAs on paid search listings, organic listings and other such Google features as Hotel Price Ads has left advertisers requiring a new approach to online marketing to compete with these sites. It is therefore of paramount importance that advertisers develop an integrated marketing strategy that sees all marketing channels working together.

It is important that should our clients not be ranking high organically for a certain term, we ensure PPC is there to support by showing above the fold in the paid search listings. This allows hotel brands to compete with the OTAs directly. Furthermore, digital display activity will assist all other marketing channels in terms of driving brand awareness, capturing the users early on in their decision making process. We also advise our clients to undertake affiliate marketing to help support the promotion of offers and sales. Our hotel brand clients want an online marketing strategy that is going to provide them value, and an integrated marketing strategy can give them just that.

However, it would be naïve to assume that OTAs are a negative for hotel brands. In fact, for some clients, they can represent nearly 50 per cent of their yearly online advertising revenue. However, in terms of getting users to book directly, their growth in the industry has proved troublesome. It is therefore imperative that we align the strategies of all marketing channels.

Mobile–First World

According to Google, 73 per cent of mobile searches trigger additional action, with around 28 per cent of all mobile searches resulting in a conversion (including both last-click and assisted conversions), highlighting the importance of mobile in an online strategy. Over the last few years mobile has become vitally important to the research stage of a user’s buying cycle. It is vital to ensure that brands have a direct presence at this early stage in the user’s decision making process. Whilst it may not lead to a direct booking, non-brand terms such as “hotels in Glasgow” will assist the other marketing channels, as well as Brand PPC in generating room bookings.

Furthermore, Google’s AdWords ad extensions also provide our hotel brands with the opportunity to add call extensions to their ads. Call extensions encourage users to book direct, when clicking the call button in the ad, which directs the user straight to the hotel. In terms of their performance, Google estimates that these call extensions can increase click through rate by 4-5 per cent. Ad extensions also provide the opportunity to dominate above the fold on mobile with enhanced sitelink extensions. Google estimates that on average click through rates are 30 per cent higher for ads with these sitelinks than those without. This is particularly apparent on mobile when often only one advertiser is shown above the fold. A study by PPC Hero indicates that mobile optimised sitelinks can improve mobile CTRs by roughly 15 per cent.

Have these changes affected performance?

The changes highlighted above have had an effect on paid search performance overall, each in their own way. Changes to the layout of the SERPs caused wide-spread panic with the removal of right hand side ads, increasing how much our hotel brand clients pay per click. However, with seasonality and in turn search volumes fluctuating each month we are unlikely to be able to determine the true effect of this change until Q1 of 2017. Hotel Price Ads have had more of a holistic impact on online advertising, whereby those lucky enough to appear in the HPAs have seen significant improvements to their conversion rates.

The dominance of OTAs has resulted in increases to how much our hotel brand pay per click. The significant increase in competition has made it more expensive for our hotel brand clients to occupy the same positions that they occupied prior to the rise of the OTAs. Finally, with Mobile taking over as the number one device for users, this has helped to ease the increases in CPCs previously mentioned. Mobile activity CPCs are generally cheaper and if optimised correctly will help to increase our hotel brand clients’ online conversion rates.