If you attended our Webinar on July 31st, 2019, you learned about all the various ways currently available to implement Google Hotel Ads, whether it be via JackRabbit’s Meta Search product or through your Booking Engine, for those Booking Engines that have already formed a partnership with Google Hotel Ads.
During this webinar we shared that we were waiting on Google’s August 9th release that would provide a connection between Google Ads (previously Google Adwords) and Google Hotel Ads. This connection would allow an individual property to manage their own Google Hotel Ads campaign payments directly, and not be required to use a third party to do so.
Keep in mind that there are 2 parts when using Google Hotel Ads.
- Part 1: Feeding the property Inventory to Google to display
- Part 2: Paying for the Clicks
The August 9th release relates to Part 2 only. Innkeepers will still need a way to feed their inventory to Google, whether they do that via their booking engine or contract with Jackrabbit for this connection.
I have received an update from Alec Tossani of JackRabbit systems, recently purchased by Simpleview, that indeed Google did migrate the release on August 9th and JackRabbit is currently working with this new release, and will let us know when we can Beta Test with a few of our clients using this new payment option for Hotel Ads.
As with any paid option to grow your direct business all property managers should be concerned with ROI (Return on Investment) and should be tracking this data to verify they are spending their marketing dollars effectively.
As so few Inns and Bed and Breakfasts have been using this option due to cost, Acorn has very little data on Google Hotel Ads ROI. So I reached out to Allison Crumpton of White Stone Marketing to see if they would be able to provide an average conversion rate for Google Hotel Ads, as they have a few clients who have been using this product for a few years now.
Allison shared that the average Last Click conversions from Google Hotel Ads is returning about a 1.5% conversion rate. Which is slightly below the average lodging website overall conversion rate of 2.2%.
So what does this all mean?
To better explain the value of Google Hotel Ads, we must first set the stage for our example, and then do some simple math. Keep in mind that if you are able to spend less for a click or you are able to track more bookings than in this example, it will improve your ROI. We are simply using the data we have available at the moment. Each property manager needs to evaluate their Google Hotel Ads ROI on a monthly basis for their own business.
- Let’s say you spend $100.00 in Google Hotel Ad PPC costs for the month.
- And that you average $1.00 a Click.
That means you would have had 100 clicks from your Google Hotel Ads directly to your booking engine.
Now let’s say you converted 1.5% (from White Stone's average) of these 100 clicks into bookings.
- That would be 1.5 bookings for the month.
- And let’s say it was a 2 night booking at $250 a night.
The math would look something like this:
1.5 (Bookings) X $500 (2 night stay) = $750
So basically you paid $100 to make the $750. Let’s do a bit more math:
$100 (what you spent) / $750 (what you made) = 13.33%
That means you spent 13.33 cents on the dollar, for each dollar you made from the Google Hotel Ads booking.
So – Why do we do this math?
Because it’s common knowledge that a lodging property that provides inventory on an OTA (Online Travel Agent) to sell its rooms is going to typically spend 18% on a booking with that OTA. Anytime you can get a direct booking for < 18% you are doing better than what you’d have spent with the OTA.
It’s like a line in the sand. You want to always do better, IE: spend less marketing dollars on a direct booking than with an OTA or otherwise wouldn’t it just be easier and more cost effective to give your money to the OTA?
But WAIT!
If you are paying a 3rd party to help you use the JackRabbit Meta Search product, or you are using JackRabbit's payment system that connects your Google Hotel Ads campaign setup and costs to Google, then you must also include that additional maintenance cost in your equation.
If you are using JackRabbit's campaign manager directly
If you are using Jackrabbits campaign manager, you will be paying 10% of your PPC spend each month for use of this service.
So let’s do that math using the same example data:
- What you spent: $100 in clicks + 10% of $100 in fees to use the system = $110
- What you made: 1.5 (Bookings) X $500 (2 night stay) = $750
$110 (what you spent) / $750 (what you made) = 14.66%
That means you spent 14.66 cents on the dollar, for each dollar you made from the Google Hotel Ads booking. Which is still less than an OTA booking at 18%.
If you are paying a 3rd party to access JackRabbit for you
If you are paying a 3rd party to manage your Google Hotel Ads campaign, you may be spending an additional $100 in maintenance fees each month.
So let’s do that math using the same example data:
- What you spent: $100 in clicks + $100 in maintenance fees to your 3rd party provider = $200
- What you made: 1.5 (Bookings) X $500 (2 night stay) = $750
$200 (what you spent) / $750 (what you made) = 26.66%
That means you spent 26.66 cents on the dollar, for each dollar you made from the Google Hotel Ads booking. Which is considerably more than what you would spend to secure an OTA booking at 18%.
Be careful to pay attention to your added maintenance fees.
They can actually cost you more than just selling your rooms on an OTA.
On a Side Note: We are hopeful that the August 9th release will also resolve the “Live” feed vs. “Cached” feed issue that was requiring your guest to key in a new date into the calendar before JackRabbit’s Google Hotel ad showed up in the Knowledge graph. This adjustment may help us see an increase in the conversion rate from 1.5% to something higher. Time will tell!
Finally!
If you are not working with the JackRabbit model directly or through a 3rd party reseller, but instead are using Google Hotel Ad’s via your Booking Engine, you’ll need to check with your Booking Engine to see how much and by what method they are charging you for this service.
Booking Engines will either charge you:
- A flat rate of x% after the booking is made. This is the Pay Per Booking model, and you don’t pay for clicks. You only pay when you get a booking.
- A % of your Pay Per Click Spend. This is the PPC (Pay Per Click) model, and you pay for the clicks and typically an additional percentage of each click cost to the provider, whether a booking is made or not.
