REPORT FROM THE U.S.—If you’ve ever typed in a Google search, you’ve likely seen it: that little box at the top of the results, featuring “sponsored” links, which one must scroll past in order to reach the actual listings further down the screen.
For hotels, in these instances, even branded websites often take a backseat to third-party marketers, who then put commissions from those bookings right back into maintaining their marketing dominance.
In the case of travel-related searches, online travel agencies such as Expedia and Priceline dominate this prime real estate—determined by bidding on pay-per-click advertising through services such as AdWords, Google’s specialized pay-per-click mechanism—and that model seems unlikely to change. So according to marketers, the first step toward mitigation is knowing the match is already lost.
PPC “is a tough (playing) field because there are a lot of metrics out there to really say, ‘OK, this keyword is going to generate traffic,’ and you get into a bidding war for it. Frankly, the OTAs are going to win,” said Paul Wood, VP of revenue management for Greenwood Hospitality Group. “The reason is because their model strictly supports that, and we as an industry have allowed them to do it for many a year.
“Now Google’s also getting into it, and of course they’re going to be a huge player, and they’re in a great place specifically to compete,” Wood continued. “As an independent hotelier or even a management company, it’s hard to overcome that.”
Priceline, Orbitz, Travelocity and Expedia all either declined comment or didn’t return messages seeking comment for this story.
Alternative PPC strategies
Trying to circumvent rather than confront, Wood says Greenwood’s latest approach to PPC is from a hyper-local perspective. For example, staff will scour the local area convention and visitors bureau guides, identifying all the upcoming events in a specific market, then targeting related search terms to bid on. He’s also had success by isolating the dining aspects of his properties for PPC marketing, even specific key terms related to cuisine.
Courting customers online in such a personalized manner isn’t something Wood says the OTAs are doing.
“Where you can make the real niche difference is with specific key terms, if you know what’s happening in the marketplace. The OTAs don’t do it that way,” Wood said. “They don’t say, ‘Gosh, the top medical seminar for the Southwest division is coming in at the beginning of July.’ They’ve got all these massive hotel sites, and it’s not only the PPCs where they have better organics—they have a lot of organic search ratios, too—and that’s hard to overcome as well; you can’t take that on head-on. You need to find that trench in the Death Star.”
From a PPC perspective, the status quo is likely to remain in place, provided OTAs have the coin to keep outbidding their competitors. What’s more likely to change—and also central to the entire online marketplace—is where Google itself is headed, between search listings and all its other ventures.
Wood speculated recent changes at Google are just the beginning, especially the implementation of its new Penguin algorithm in April 2012. The software update aims to decrease search engine rankings of websites that use black-hat search engine optimization techniques, such as keyword stuffing, cloaking, participating in link schemes and deliberate creation of duplicate content.
“The Penguin update is changing the dynamic for how a search is determined, based on cross-referenced searches. It’s going to change Google’s organic listings a little bit, and there’s going to have to be modifications on the OTA side to keep up with that,” Wood said. “And with Google—because they’re really hardcore getting into the travel side—they’ve got the ballgame all on their own. They can play the game however they want and redirect traffic.”
Google weighs in
The search-engine does indeed have big plans for the travel industry as it looks ahead, according to Google spokeswoman Sandra Heikkinen.
“Searches for travel-related information are among the highest-volume queries we receive at Google. We are innovating in a number of ways to make it easier for users to search for travel information and to deliver more useful results to them,” Heikkinen said. “The online travel industry is competitive, with a range of companies that provide different solutions for users. We’ll work to continue to have productive partnerships with as many online travel companies and industry players as possible.”
Where Wood believes that game will go is toward a more exclusive model, where instead of myriad websites all bidding on the price of a single mouse click, Google will instead partner with specific companies (like a hotel) directly, to sell that prime positioning on the page. When asked for comment, Google’s Heikkinen offered carefully measured words.
“Our goal is to help people turn their intents into actions quickly, and we can help make this happen by delivering the most relevant results at the moment of interest,” said Heikkinen. “Delivering these results via AdWords takes bids into account, but it is only one of many factors.”
Wood is convinced the AdWords system will eventually disappear, once more of these exclusive placement arrangements start to flourish. This also means hotels would not only have greater control over their positioning on Google in the future, but would also rely less on the OTA contribution to the marketing mix because the OTAs would no longer command the PPC landscape.
“If it’s a Google situation where we can have top dominance, then that tips the alliance directly in favor of Google (as a partner) for the independent hotelier or small management company. We can say, ‘OK, OTAs, I get it. We’re still going to be friends, but I’m not going to use you as much. I’ve got to focus on this bigger partner here.’ That’s what’s going to happen,” Wood said.
“I think old-school PPC is going to go away, frankly, in the next two or three years. That’s the way the market area has evolved.”
