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A Case Study on
Utilizing a Sophisticated SEM Technology to Increase Conversions,
Boost
Revenues and Optimize Search Engine Marketing ROIs
Paid search marketing
continues to function as a critical direct online channel tool to
combat the
OTAs, making it essential that hoteliers understand how sophisticated
search
marketing technology can optimize campaign performance, increase ROIs,
boost conversions
and revenues, and ultimately save precious marketing dollars. HeBS Digital is a
Google AdWords Qualified Company and one of the early adopters of
travel and
hotel SEM. By utilizing state-of-the art SEM management technology, we
are able
to achieve consistent ROIs of 1,000% and above for many of our clients.
In an
effort to really prove the value of using this sophisticated
technology, HeBS
Digital conducted a pre- and post-study over a 12-month period, using
Adobe®
SearchCenter+, powered by Omniture® and introducing bid rules at
the midpoint.
The search campaign was based on hotel name searches only and yielded
not only
an increase in revenues of up to 1600% in one case but also lowered the
cost
per click for all three cases in the study. The bid rules were shown to
positively impact cost per click, average positioning, and other
important
metrics for search engine marketing. Introduction Online advertising, a $25.8 billion business
in the U.S. and
$61 billion worldwide, surpassed print advertising for the first time
in
December 2010, a business worth $22.8 billion in the U.S. last year
(eMarketer). Online banner advertising and paid search
marketing command
a lion’s share of digital marketing budgets—the search ad market in the
U.S. is
expected to reach $14.38 billion in 2011 (ePathChina). The four largest
search
engines account for nearly 94% of the overall search ad market. Of
these four,
Google is expected to win 75.9% of all search ad dollars in the U.S.
this year,
in contrast to the joint Bing/Yahoo partnership with only 15.9% market
share.
As more media moves their business models online to new tablet formats,
this
trend of spending large portions of marketing budgets on paid search
will only
continue. Hotel digital marketing is no exception to
the trends, as
Search Engine Marketing (SEM) remains a major revenue driver for hotels
and a
tool to combat the online travel agencies. Approximately $5.4 billion
annually
in lost “leakage” revenues were paid to Expedia and its ilk from hotels
using
the OTAs to sell inventory. To help combat this leakage, most HeBS
Digital
clients dedicate one-third or more of their entire online marketing
budget to
paid search marketing. With all the money
being pumped through the Google AdWords machine, hotel marketers must
use
advanced technology solutions to manage paid search campaigns in a way
that
generates the highest conversions, revenues and ROIs. One such tool is
Adobe®
SearchCenter+, powered by Omniture®, which HeBS Digital has been
using since
the introduction of this industry leading SEM management technology
back in
2006. HeBS Digital has since introduced this tool to many luxury and
boutique
hotel brands, full service hotels, resorts and casinos. All clients are
given
24/7 access to their Adobe® SearchCenter+, powered by Omniture®
account where
they can monitor—in real time—how their SEM campaigns are performing.
It also
enables HeBS Digital to utilize sophisticated bid rules to maximize
returns
from paid search campaigns, and to provide reporting down to an
incredibly
granular level. The following case study explores the impact
of bid rules on
SEM campaigns. Here we examine the influence of bid rules, a mechanism
in
Adobe® SearchCenter+, powered by Omniture®, to determine how
much SearchCenter
helps HeBS Digital drive more hotel bookings, achieve higher ROIs and
cut
unqualified clicks/ad spend for its clients. Welcome to
the World of Bid Rules HeBS Digital analyzed the marketplace and
chose Adobe®
SearchCenter+, powered by Omniture® because Adobe had the most
sophisticated
bid rule functionality. As the phrase suggests, “bid rules” is a
generic term
to describe the practice of establishing a set of rules to achieve
campaign and
business goals in search engine marketing. HeBS Digital utilizes bid
rules to achieve
business and revenue goals for its clients and to successfully compete
for
better placement on the SERPs. SearchCenter can help in budget
planning,
forecasting the paid search marketing spend, and even project revenues
based on
the spend level. Google provides some quasi-bid rules in the
form of
day-parting, geographic delivery, and upper and lower maximum spends
per
keyword. In contrast, SearchCenter allows the use of complex bid rules
that can
determine how the keyword placement, the budget, and search performance
influences the delivery of the keyword. For example, if a certain
keyword ranks
higher in the SERPs and is shown to lead to more reservations over the
performance of other keywords, then the budget should increase for that
term.
Conversely, for a term that generates lots of clicks but few
conversions, the
budget can be lowered. At HeBS Digital, we employ bid rules to help
optimize paid
search campaigns. Our SEM experts monitor these campaigns up to the
minute on a
daily basis. For this case study, we randomly selected three hotels and
focused
on the hotels’ official name campaign results over a 12-month period. A
follow
up study will look at geo-targeted and key customer segment campaigns,
but for
this study we focused only on the hotel name campaigns as hoteliers
often
question why they should even bid on their own hotel name in paid
search.
Obviously, for hotels whose names include their locations, this serves
them
especially well. Study
Methodology This pre/post study
covered a 12-month period. We randomly selected three independent
hotels and
evaluated the keyword performance of the hotel name campaigns for six
months.
After introducing bid rules, we then compared results at the end of the
next
six months. As these tests are very progressive, preliminary research
returned
no insight into best practices, conditions or parameters for these
campaigns;
therefore, we used intuition and years of Internet marketing experience
to set
three different sets of conditions. We first created
different sets of bid rules to see if there would be any meaningful
results.
For the first hotel case, we set the bid rule as follows: only if the
keyword
appears in the third position or lower (4th, 5th, etc.) on average in
AdWords
and has recorded ten or more bookings initiated over a 90-day period,
the
budget should increase by 25 cents. Conditions for the second hotel
were
simpler. If the average position is lower than second on AdWords in any
seven-day period, the budget should increase by 10 cents. For the third
hotel,
if the average position was 2.5 or lower over a seven-day period, then
increase
the budget per keyword by 15 cents. An example of the actual bid rule
implementation in Adobe® SearchCenter+, powered by Omniture®
can be seen below.
The Case Study Everything was kept as consistent as
possible as to not
influence the results. Over the course of these 12 months, the overall
budget
did increase because there was no overall fixed budget in our study,
and the
campaigns were monitored but not modified in any way to influence study
outcomes. For hotel name campaigns we used ad copy that simply
announced the
official hotel website. By specifically testing hotel name campaigns we
limited
any biases that seasonality may have played. Lastly, these hotels have
small
marketing and PR budgets and had no significant promotions or other
activities
that would have influenced the traffic to the hotel in one part of the
year
over the other. Study Questions How do paid search campaigns results compare
before and
after bid rules were introduced? Is rules-based performance on paid
search the
way to go? Can bid rules improve the outcomes in the management of SEM
campaigns? Study Results The pre- and post-bid
rule performance for each hotel is illustrated in Table I below. The
results
appear unanimous for all three hotels. Using bid rules in SearchCenter
for the
hotel name campaigns positively influences outcomes. Indeed the
difference is
dramatic when compared to the prior six months. Table I describes the percent change from
before to after
bid rules were introduced at the end of the sixth month in this
12-month study.
All three hotels generated positive results from the use of bid rules
after the
introduction. In all cases, clicks, ROAS, CPC, CTR, and average
position improved
dramatically An increase in the
campaign budget was expected since the bid rule conditions set the
price per
keyword to increase if the search term in the campaign performed well.
In each
case, terms performed well and more of the budget was added to bid for
higher
positioning and more exposure as conversions rolled in. After applying
bid
rules, each hotel experienced an increase in revenue from177%-1600%. Also, the cost per
click per keyword declined and for one hotel by as much as 67 percent.
Even
though more money was spent for the overall campaign, the average CPC
dropped.
The drop in average cost per click suggests two things: first, the ad
copy ad
was strong and generated more clicks, and second the quality score by
Google
rewards better performance with lower CPC.
As shown in Table I, this test reduced cost
per click,
increased revenues and increased ROAS from 55% to over 500%–clearly
proving the
worthwhile use of bid rules.
As previously mentioned, with this bid rules experiment, the overall budget across all campaigns in each Google account did increase, as the budgets for the specific tested campaign increased and there was no overall fixed budget. So the question then becomes, is the increase in overall budget worth it for the hotel? The answer lies in whether or not the percent change in ROAS outweighs the percent increase in overall spend. In Table III, we can see the results:
It is clear from this table that for all
hotels in this
study, the increase in budget was completely outweighed by the increase
in
ROAS. For the third hotel, we can see that even though there was an
increase in
spend by 153%, which may seem high, there was an increase in ROAS of
2296%.
Clearly these bid rules are paying off. We now see that by running bid
rules on
a single campaign, there are remarkable improvements to the specific
campaign
as well as the overall Google AdWords account. This practice can now be
applied
and tested for other campaigns within the accounts for these three
hotels, and
for other hotels’ accounts as well. Conclusion With Adobe® SearchCenter+, powered by
Omniture®, we have the
luxury to truly drill down into the results and spend more of our
client’s
precious marketing dollars on those campaigns, ad groups, and keywords
that
perform best. We can optimize the paid search marketing budget to
extract as
much value out of every cent in the budget. This case study
demonstrates that
using bid rules to optimize campaigns is the best use of your marketing
budget
and a great way to outsmart your competition. About the Authors and HeBS Digital: This article was co-authored by Jason Price, Executive Vice President and Toby Tornay, Manager, SEM Dept., at HeBS Digital, the industry’s leading full-service hotel digital marketing and direct online channel strategy firm based in New York City (www.HeBSdigital.com) HeBS Digital is a Google Adwords Qualified Company and has over 20 Google Qualified experts on staff. One of the early adopters of travel and hotel SEM, HeBS Digital’s SEM experts have been actively using and managing travel and hotel SEM and PPC client campaigns since 1997. HeBS Digital has pioneered many of the “best practices” in hotel Internet marketing, social and mobile marketing, and direct online channel distribution. The firm has won over 135 prestigious industry awards for its digital marketing and website design services, including numerous Adrian Awards, Davey Awards, W3 Awards, WebAwards, Magellan Awards, Summit International Awards, Interactive Media Awards, IAC Awards, etc. A diverse client portfolio of over 500 top tier major hotel brands, luxury and boutique hotel brands, resorts and casinos, hotel management companies, franchisees and independents, and CVBs has sought and successfully taken advantage of the firm hospitality Internet marketing expertise offered at HeBS. Contact HeBS consultants at (212) 752-8186 or [email protected] |
Editorial
Contact: Mariana Mechoso Safer |