Brand Defence Strategy
Grow Direct Bookings Online
In1 Solutions online marketing services and dynamic booking engine combine to deliver growth in direct bookings and to effectively defend your brand online. In an increasingly competitive marketplace with OTA’s spending billions each year on online advertising, a significant portion of which is on your companies own brand name, it is important to effectively manage your brand and your product online.
DO YOU MANAGE YOUR COST OF SALE?
Most hotels have seen an increase in sales from OTAs during 2013. Booking.com in particular has invested heavily in PPC advertising to increase sales. Unfortunately, most of the increased sales are coming from PPC ads that include the trademark name or brand name of the property. As a result, many of the sales that are delivered by OTAs are sales that should have booked directly on the hotel’s own website. This results in a dramatic increase in the cost of sale which eats into tight margins and has a significant impact on profitability. It also allows the OTA to build a direct relationship with your clients and therefore implement future promotions to retain those clients.
BRAND VERITY STUDY
A recent study by Brand Verity evaluates the paid search activities of Online Travel Agencies (OTAs) and hotel brands to determine how their marketing relationships play out in the channel of pay-per-click (PPC) advertising. Specifically, the study is based on PPC advertisements triggered by hotels’ branded keywords. Branded keywords include the brand’s trademark somewhere in their set of search terms (e.g. “Chicago Hilton”) and are often the highest converting keywords for a brand.
Over 100,000 ads were ultimately analysed, and some of the most relevant findings were:
- On average, each Google Search Engine Results Page (SERP) included almost two OTA ads (1.82). Bing and AOL had considerably more, with 4.77 and 5.27 OTA ads per SERP, respectively
- OTA ads outnumbered hotel brands’ ads on Google, Bing and AOL
- 87.5% of OTA ads on Bing included the trademark of the brand that was searched. That compares to 61.1% on Google, 53.3% on Google Mobile, and 67.5% on AOL.
- Brands did not appear in the #1 ad position on 23.6% of SERPs on Google Mobile, 15.9% of SERPs on Google, 17.4% of SERPs on Bing, and 24.9% of SERPs on AOL.
- When brands did not appear in the #1 position, OTAs dominated the #1 ad spot, controlling it well over 50% of the time on each search engine
Overall the study shows that OTAs target brand names and bid extensively on the brand name and keywords to gain the number one PPC ad position.
HOSPITALITY PPC ADVERTISING
Priceline, which owns Booking.com, posted a gross profit of US$2.1 billion for the first quarter of 2015, 26% up over the previous year. In addition to a dramatic increase in profits, Booking.com and its close competitor, Expedia, increased their advertising spend in 2014, by 35.4% and 33.3% to $2.6 billion and $1.6 billion respectively. Although some of the spend went to digital and TV advertising, the vast majority went to the online PPC advertising.
Why are OTA’s such as Booking.com and Expedia spending such large amounts on PPC advertising? Because it has discovered that bidding on your brand name is very profitable indeed as it charges you a minimum of 15% commission. And many of the bookings it delivers to your hotel are from clients who are searching for your brand name online. In other words, Booking.com and the other OTAs are targeting your direct clients.
BRAND DEFENCE STRATEGY
In1 Solutions has built up almost 10 years of experience in PPC advertising. Our campaigns are designed not only to drive more bookings to the hotel’s own website, but also to defend the website’s position against aggressive advertising by the OTAs. Why do we consider it important to defend the brand against Booking.com?
Hotel margins are tight and the cost of distribution can erode margins to the degree that this has a significant impact on profitability. This is why is important to look at PPC advertising as a strategic tool to reduce your cost of sale and to ensure that you develop a profitable brand relationship with your online customers.
In1 has developed a proprietary methodology that feeds into our PPC management strategies. We can demonstrate clearly how your cost of sale is reducing and how investment in PPC advertising as part of a brand defence strategy makes net contribution to your bottom line.
You will not have to commit to long-term expensive campaigns. After three months, we will produce a financial statement showing the return on your investment through increased direct bookings and reduced cost of sales.
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