from my own experience and from talking to a few others doing similar things I'd say 0.5% - 1.5% look to book ratio is fairly average.
It's an absolutely cut-throat industry so be prepared for weeks/months/years of refining keywords.
One tip, track everything, referrals, keywords, conversions, the lot. Without that info, you really are on a hiding to nothing.
We see generally anywhere from 2-12% conversions, depending on day of week to search term. We host the sites for clients, however, and are not doing affiliate work.
jimberan, sometimes hearing other advertisers numbers can be a little misleading, and I think you'll find them to be all over the map.
A big part of why I say this, is that one's conversions are highly dependent on a number of factors very much within the advertiser's control, such as the targeting between the keyword, the ad, the landing page, and the rest of the site itself.
To put it another way, users who get to your site and find exactly what they want are more likely to convert. And you set the tone for this with your keyword/ad choices, as well as your choice of landing page.
Thanks for all the information because it is confusing.
I worked for an online hotel reservation site in the recent past and some numbers didnt add up.
The average booking value was 350 USD of which 70 USD is mark up. For many destinations they are paying 1 USD a click. So if for every 100 clicks they would get one booking then obviously that would not be possible as the advertising cost to bring in that one booking would be higher then the mark up.
How can this be, am I seeing calculating something wrong?
As you said, Jim it's a numbers game. And numbers should be very accurate.
For example, if there were 1,5 bookings for 100 clicks, they had a small profit (paying 1$ a click).
But there could be many destinations whare you pay much less (0.3$ or even less), so on an average they might be paying 0.65$/click, and so on....
|The average booking value was 350 USD of which 70 USD is mark up. For many destinations they are paying 1 USD a click. So if for every 100 clicks they would get one booking then obviously that would not be possible as the advertising cost to bring in that one booking would be higher then the mark up. |
That's assuming a conversion rate of 1%. If the conversion rate was 2%, they'd be making $40 dollars.
But looking at asia for example and looking at keyword like singapore hotels, hong kong hotel, bangkok hotels, the CPC is so high and especially in these countries there are many cheap hotels so that it seems risky. I mean the most popular hotel in BKK on travel sites is 30 USD a night. Average length of stay is 3 nights. So if customer pays you a total of 90 USD of which 18 USD is mark up, you could be spending 3-5 times the mark up just on the advertising spending. Looks complicated to a newby like me!
Well, jimberan, most of the people in the online travel space aren't newbies. ;) It's stupidly competitive.
There's a lot to be looked at - if you can't make the conversion rate work you have three choices - bow out and pay less, improve the conversion rate and/or find out what your lifetime customer value is - i.e. can you make it work if they buy the $30 hotel and then come back 3 months later and make a $120 booking. You need to be tracking this and working to improve your conversion rate.
There could be a few other reasons when it seems like an impossible conversion ratio is required to make a profit.
-The competitors may have worked out a private deal with the merchant and have more margin to play with.
-The competitors are merchants and have more margin
-There are newbies to CPC that bid stupid amounts, and it always seems like once they run out of money there are more right behind them.
I worked for these sites before and i know for sure that its a 20% margin they use. Its not that