|Adwords in Travel - sucks big time|
I am in travel and adwords just is not profitable anymore. In fact 3 competitors who had very large budgets are in trouble so I heard this morning. I have spoken to other peers and that say at best they are breaking even. These are properly run companies that have been around for years.
I heard from someone who has a contact in booking.com and he says that they need 3 conversions per customer to pay for their adwords budget, so that run at a loss for branding and long term customer acquisition. Whether this is true or not I do not know but I cannot see this guy telling me BS.
Someone else I know says 1:3 clicks is fraudulent. He has given up on adwords too.
So summing up, if you want to go into travel with adwords as your primary source of marketing, forget it. The brands are burning cash for banding and you cannot compete on with someone who is already making a loss.
That's an interesting observation, and, I have a similar situation in another sector. Three sectors, eventually, were not cost-effective to run AdWords. Once the ad was paid for there wasn't the profit in the item. It wasn't travel, btw, but is a competitive sector.
Interestingly, SEO became more cost-effective as AdWords costs rose.
Are we coming full circle?
|Once the ad was paid for there wasn't the profit in the item. |
The biggest reason that happens is that someone is letting their bids be driven by what the competition seems to be doing instead of doing their own math and sticking to bids that are sustainable for their own conversion rates.
If Adwords isn't cost-effective (or even if it is!) then be more selective about who sees your ads. Tighten your targeting, lower your bids, test some new ads, tweak your landing pages, and look for ways to organize your campaigns more effectively. Above all, stay out of bidding wars.
|The biggest reason that happens is that someone is letting their bids be driven by what the competition seems to be doing instead of doing their own math and sticking to bids that are sustainable for their own conversion rates. |
Agreed, and there was no bidding war from the client's point of view. The campaign was optimised, and drilled down, and focussed, and timed well, etc. It turned out that those in the bidding war were happy to bid higher because they had greater margin available because of the way the business is structured. In simple terms, the big got bigger.
The ads were tested and did work, initially, but the others got into the bidding war and this client decided it didn't want to play that game.
The SEO, on the other hand, was working far more cost-effectively.
I just get the feeling that the success of Google being the main traffic driver, and the demand for AdWords, might be its own downfall as far as the smaller business is concerned.
To such a client I would say, don't pull out of AdWords completely, but lower their bids and find the point where the clicks pay for themselves.
If that means their ads are seldom on the front page, so be it. One has to take what one can get, within the constraints of profitability and sustainability.
Add timing to my list of things to test ... bidding up or down at different times of day.
The big do get bigger, although not always. Small players must be nimble to avoid being stomped on.
Interestingly, the lower down the ad ladder, the more enquiries were received from business trying to sell AdWords. The actual clicks produced almost no enquiries, and none for the actual service. The higher up the page the ads appeared meant that the real enquiries came in. BTW, QS was great, landing page converted well when the clicks came in.
What they did was pull out of AdWords for those particular services, and now just use SEO.
I don't doubt there's more that could be done, with time and more testing, but it all comes down to budgets, and when SEO was working out cheaper, that's got to be indicating something.
|the more enquiries were received from business trying to sell AdWords |
|I am in travel and adwords just is not profitable anymore. |
I've heard this too, but for many years in fact. At best, it was break even. In the travel vertical I also hear from large multi national corporates that consistently loose a great deal on Google Adwords. In other verticals, which are highly competitive, the same. And likely Google knows full well they do.
|WordStream pegs Travel & Tourism as the third largest spender in Google AdWords in 2011 at $2.4 billion (behind Finance & Insurance, $4 billion; and Retailers & General Merchandise, $2.8 billion). And, the top five travel brands in Google AdWords spending, according to WordStream, were: |
Booking.com, $40.4 million
Expedia, $28.9 million
Kayak, $28.7 million
Marriott, $20.9 million, and
Priceline (which owns Booking.com), $19.6 million.
[ btw - these 3 year old figures seem way too low / but I could be wrong ]
So why do they continue to do it ? What's the motive ?
Why does Google , which requires sustained income streams persist? What makes players like TripAdvisor thrive on an overall mix that includes PPC , publishing and itself advertising?
Having lost a lot of money on large managed campaigns in the past revisiting it is not a 100% attraction, but with the benefit of current knowledge, those preceding campaigns were badly managed and, I suspect, more tightly controlled they would have been break even. Times have moved on though and the competition is a lot smarter.
I think most of the big players take a blended approach to the marketing mix, which is why they sustain it.
On a footnote, in [ non travel ] areas where there is no competition, I'm seeing enormous ROI.
Better use a rifle, with a scope - shotgunning it here, will hurt.
And if your LTV / email isn't stellar, your rifle will also misfire badly.
@RhinoFish - Too cryptic for me :) - can you explain for my benefit what you mean?
|brotherhood of LAN|
>Add timing to my list of things to test
Ran such an experiment for a colleague a few years back. It was interesting to see when competitors turned ads off for the weekend.
if travel adwords are really expensive, it makes me want to be a travel *publisher* (using adsense).
how do adwords travel clicks compare to travel website/forum/blog banner ad clicks?
rifle = specific targets, use fewer bullets. ex, bid on 'central florida disney cruise', geo target people within 800 miles of florida.
shotgun = broad aim (and I use the word aim loosely), spray and pray. ex, bid on 'cheap cruises', geo target entire USA.
trivial examples here, point being - you'd better be specific (rifle), or you're gonna get hammered into oblivion.
and the space is so competitive, the Life Time Value of a lead / buyer, is something you'd better be very tuned into, via email and loyalty aspects, the initial SEM acquisition costs are too steep to not leverage the LTV.
|the space is so competitive, the Life Time Value of a lead / buyer, is something you'd better be very tuned into |
Great point. One problem with travel is that many searches are for products or services that a traveler may buy only once in a lifetime. A prospect who's searching on "Widget River car ferry" may not be crossing the Widget River more than once or twice in a lifetime. If you're the Widget River Car Ferry Co., as opposed to an online travel agency, the "lifetime value" of that traveler may be the price of one roundtrip ferry ticket.
|lower their bids and find the point where the clicks pay for themselves |
Whenever I tried this, conversions went away in a fashion that made PPC effort useless (even if some traffic was still there). While I have no exact data on hand to support this, it looks to me that Google has made it long ago to force advertisers bid above certain amount if they want to see some "real" traffic.
It's like they have the conversion switch in hands and they send converting traffic to those that pay more while leaving out those that play with limited bids. Almost like they categorize traffic depending on the ad position.
One thing I have done for clients is help them find keywords their competitors are not using. People get too bogged down on what they think their keywords should be.
You have to think outside the box. Sometimes you have to find out what else your customers might be searching for. One thing that works well is weather. People want to know what the weather will be like where they are going to travel. I have already said too much