When mobile booking and payment become part of metasearch, it is even more important to have a single party with a seamless closed loop marketing solution.
Metasearch continues to be one of the hottest topics for the hospitality industry.
The rapid growth and changing landscape of metasearch means that the “old” rules of metasearch marketing no longer apply. Marketers are facing many new problems and dilemmas.
Is metasearch a marketing channel or distribution channel?
Metasearch used to be a simple concept to grasp when it was defined simply as a marketing channel. Now it is getting more complicated. Increasingly, many major metasearch sites like TripAdvisor are promoting booking and payment functions, similar to an OTA, despite many differences.
Many hotel marketers may balk at the idea that a booking would be completed on a metasearch site. To solve this dilemma, we have to step back to understand what the business objective is?
If the ultimate objective is to get more bookings at a reasonable cost, then we should embrace this change. Metasearch is no longer just a marketing channel, nor is it simply an OTA type of distribution channel. Perhaps it should be called a direct distribution-marketing channel, through which you can get bookings from direct customers on your branded site or app?
How much budget should be allocated for metasearch?
Consider this example, one of DerbySoft’s clients was having a great month, its metasearch traffic and booking volume reached an all time high with a targeted ROI. Then they got a call from the client telling them it had consumed its entire monthly marketing budget for metasearch and asked them to pause its metasearch campaign for the remainder of the month.
In the meantime, OTAs continued to generate and deliver bookings from metasearch and as a result the hotels paid higher commissions, on the same bookings that could have already been generated from our metasearch campaign.
The short and simple lesson here is that if the cost of booking is lower or even the same as the commission you are paying OTAs, you should keep your budget for metasearch open. Sometimes, the cost of “acquisition” on bookings for new customers can be higher than OTA commission because the lifetime value of your direct customer usually is much higher.
As you can see, metasearch is not an isolated marketing channel anymore, it’s a clear path to customer acquisition and if the booking path and consumer experience are excellent then ultimately so will the customer retention be. In the age of metasearch, your brand.com rate can be easily compared with other OTAs, therefore it is vital to control the ROAS and cost of booking for each metasearch channel.
What should be the target for ROAS? Is higher ROAS always better?
So how do we control ROAS (Return on Ad Spend) or ROI? We have often heard and seen some agencies and product vendors boast high ROAS or ROI data. The fact is that higher ROAS or ROI is not always better. The law of diminishing returns dictates that higher ROAS will ultimately mean lower revenue, as shown in the chart below.
Some marketers have unrealistic targets for ROAS. For example, you could set your ROAS target at 50:1 (meaning that every marketing dollar spent generates a return of $50 in booking value), but you will not get many bookings, your ad will not even show up in most cases.
If your objective is to maximize your profit, then you should find the optimum ROAS target and maximize your revenue and profit. So there is no such thing as maximizing the ROI, it is more important to maximize your revenue/profit for a given spend and ROAS target.
Bidding Automation (Bulk Bidding) vs. Bidding Optimization?
Now with bidding becoming more popular for metasearch marketing, it is possible to set a different CPC for different properties, channels, sites, devices and countries…
Some bidding solutions support automated bidding such AS bulk bidding, which could set the bids in bulk, sometimes using some kind of rules created by campaign managers. However, optimizing just one property on one channel is not enough, you need to find the best combination of bids for the whole portfolio to maximize the total revenue or profit.
This is not easy for any human being to find optimized bidding solutions, given so many combinations and factors. The manually designed rule and bulk bidding will not achieve the optimized result. You need the best portfolio optimization algorithms and mathematical models based on years of data to find the best solution.
Should I use different vendors for price feed and bidding management?
Finding the right bidding tool is not the only challenge. Three main challenges for metasearch marketing exist: connectivity between CRS’ and the metasearch channels, caching solutions to buffer CRS’ from large shopping traffic volume and controlling campaigns through effective bid management.
Most vendors can do only one or two of these. While it may be technically possible to separate price feed connectivity and campaign bidding management in some cases, it is inefficient, expensive and sub-optimal to separate one project into two or more parties.
Take Google Hotel Price Ad (HPA) metasearch campaigns for example. The success of Google HPA relies on both the price feed and bidding, along with other settings, which are intertwined closely in Google’s API. It is very difficult to integrate different solutions.
When a hotel is not shown on Google hotel finder, there are many reasons: the hotel may not be indexed correctly on Google, the price feed setting may not be correct, the price may not be accurate, or the bidding is not high enough. As you can see, having two separate vendors to manage price feed and bidding introduces even more complexity into an equation we are all trying to simplify and when something goes wrong, who fixes it?
Metasearch marketing requires a holistic strategy that considers an integrated approach toward price feed and bid management. For example:
You will be able to adjust bidding depending on data such as room price and room quantity, which are key components of revenue management and useful bidding signals to improve ROI.
In the new age of metasearch marketing, product inventory, pricing and campaign management are closely intertwined. When mobile booking and payment become part of metasearch, it is even more important to have a single party with a seamless closed loop marketing solution: connect and cache (price feed/cache), control (bidding and optimization), and finally conversion (booking integration).