In a move that is set to reshape the metasearch landscape, Google has announced the removal of commission-based bidding models. This shift will come into effect in April 2024 for new campaigns and October 2024 for existing campaigns. It removes a staple of the hotel industry’s digital marketing tools. This blog covers how recent changes affect hotels.
NB: This is an article from Triptease, one of our Expert Partners
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We’ll outline the options to ensure your metasearch strategy remains high value and impactful.
What is commission bidding?
In commission bidding, you pay Google only when they secure a booking for your hotel. You have the flexibility to choose the commission rate, for example, 10% or 14%, and decide whether to pay for each booking or only for stays i.e. accounting for cancellations.
It has allowed hotels to pay a percentage commission post-consumption rather than upfront. This model has offered a low-risk performance-based advertising approach for many hotels.
Note: Many hotels work via with a metasearch vendor to whom they pay a CPA commission. The vendor then uses Google’s commission model in the background – either transparently or covertly. You might be using this model unknowingly.
Understanding the impact for hotels
The end of commission bidding impacts hotels that rely on Google’s algorithm for bid management, charging them post-checkout/stay. Now, these hotels need to shift to alternative models which could mean:
- Upfront ad spend commitments
- Greater exposure to risks, including booking cancellations
- The need to explore other packages or providers who continue operating on a commission basis.
Why are Google making this change?
“With upcoming changes, like third-party cookies getting phased out, we need to transition to more durable strategies to help grow your business.”
Google’s move can be seen as a standardisation effort, aligning its metasearch offering with other advertising channels like paid search and display which never operated on commission models. The change also removes a barrier to adopting new products like Performance Max for Travel Goals.
How hotels should start preparing for this change
If you’re not sure whether your metasearch provider is using Google’s commission bidding model, the first step is to find out! If you are using this model you’ll need to understand what your provider’s plans to mitigate the risk are. You may even need to consider engaging with other metasearch providers who offer robust alternative to Google’s commission model.
