Lately, a lot of hoteliers have been talking about “ROAS”.
NB: This is an article from gcommerce
And, what great ROAS they are seeing with their hotel’s digital marketing campaigns. Well, yes, hoteliers should be seeing a very high ROAS but what most hoteliers don’t understand is that ROAS is just a metric and a very broad one at that.
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How should you view the ROAS metric for your hotel’s digital marketing campaigns?
As most of you know, ROAS, in its basic form, is the total revenue you brought in divided by your ad spend. The real question is what is included in that “total revenue”. For instance, if a hotel marketing agency is focused on just a hotel’s brand/name terms your ROAS will be very high because you’re placing an ad in front of travelers who are searching for your hotel.
Think of this as your phone ringing and somebody wants to make a reservation at your hotel or book a group with you. Now…throw in a couple of market terms (i.e. hotel in San Diego) and oh no, your ROAS is going to go down. But wait, market terms, in my eyes, are like cold calling. You are placing ads out there in front of travelers who are very high in the sales funnel and maybe just starting to look into traveling somewhere. The question you should be asking yourself is, do my sales people sit around and just wait for the phone to ring or are they out there making cold and warm calls?
Well, now take that thought and ask yourself, is my hotel marketing agency just sitting around and waiting for the phone to ring (brand/name terms) or are they also picking up the phone and making warm and cold calls (market terms). Then, take that thought and look at how many campaigns your agency is running with both brand/name and market terms. I explain this as “how many hooks does your agency have in the sea”. The more hooks in the sea the more fish you’re going to catch. As we like to say here at GCommere, ”ROAS is nice but the main problem with it is that you cannot take it to the bank!”
What does attribution models have to do with my hotel marketing campaigns’ ROAS?
Now, let’s go a little deeper with ROAS as you will see how messy this metric can be once you start peeling back the data. With regard to ROAS on display ads the question you need to ask yourself is if the ad is being measured based on “view through” conversions or not. Okay…what does “view through” mean?
Here is a quick scenario… you visit a hotel’s website, leave without booking and a cookie is placed on your browser. You go to another site, let’s say Cycling News.com and then you realize you did not book a room at the hotel so you go back to the site and book your room. What you did not see at the very bottom of the Cycling News site was an ad for your hotel. But, the agency is going to charge you a 15+% commission on that booking even though the person who booked the room did not see the ad.
Oh and here is the kicker, the person who booked the room might not have even looked at the Cycling News page at all because their kid asked them a question and you will still get charged a commission for that booking. So, if you are using a third-party agency for your display ads or social media ads you really need to peel back the data, which is not easy, on what your ROAS actually is.
Okay, are you ready for your mind to start spinning? Let’s now throw in attribution models. Oh wait, are you talking about last-click attribution or data-driven attribution? If you’re not familiar with either of these I will help you out.
Last-click attribution assigns a credit for a sale to the last ad that a user clicked. By contrast, data-driven attribution will spread credit for a sale across every hotel marketing ad campaign that the user interacted with over the span of the conversion, with fractional credit being assigned to each campaign based on Google’s algorithmic analysis of the campaigns. So, is your hotel marketing agency using attribution in the ROAS they are giving you? It’s important to understand what attribution model your agency is using and if it’s the best way to tell the story of your full funnel campaign strategy.
How to review ROAS for your hotel’s email marketing campaigns
And finally, if anybody tells you that their hotel’s email marketing campaigns are seeing a super high ROAS please tell them…”well, shouldn’t that be the case every time?”. Why? Because you’re sending an email to a consumer who has either stayed at your property before or is VERY interested in staying at your property. Think of email marketing as a brand/name term campaign or the bottom of the sales funnel. Similar to a retargeting campaign, you’re placing an ad in front of someone who already has looked at your site and has an interest in staying with you. They just forgot to book a room.
So the next time someone highlights ROAS take a minute and ask yourself…”okay, that’s great but let’s peel back that number because the devil is behind the numbers”. And with the case of ROAS, there is a lot behind the number.
