Welcome to part 3 of the LIFE HAPPENS™ blog posts trilogy, The Metasearch Marketing Bible for Revenue Managers, that answers the biggest questions hotel revenue managers have about metasearch marketing: Why is it even called “direct” OR how is that different from online distribution? How do you set metasearch campaign goals? How do you build the bidding strategy and optimize campaign’s performance? How do you achieve growth in bookings and revenue coming from metasearch traffic? Finally, how do you leverage metasearch marketing to improve your hotel’s global performance operating metrics such as RevPAR & Occupancy?
In parts 1 & 2, we covered the subject of distinguishing between the marketing and the distribution part of a metasearch campaign, we defined business objectives for metasearch marketing and how to derive campaign goals from them. We also learned to set initial bids and calculate optimized bids for an ongoing metasearch campaign.
Part 3 will focus on growth of metasearch campaigns and will cover more advanced optimization methods to increase bookings volume and improve budget effectiveness, hybrid digital marketing strategies to boost conversion rate, and a revolutionary approach to cancellation policies that will instantly increase RevPAR and strengthen cash flow by reducing cancellations.
What’s a Metasearch Campaign Growth Strategy?
Definition: Additional investment of required means aimed to grow the current outcome of a metasearch campaign.
When is it Time to Utilize a Growth Strategy for a Metasearch Campaign?
A precise growth plan should be prepared before launching a campaign, along with setting the overall business objectives and the campaign goals. Due to the potentially rapid and extensive traffic from large metasearch websites, the relatively small budget allocated by independent hotels and small/medium chains can be exhausted in a short period of time (even a few days for properties in popular destinations). That reality requires being ready with an outlined process of how to grow the campaign.
But the real question is how to know when to actually apply the plan and start taking action towards growth. Seasonality, tourism trends and inventory availability as you know can be unpredictable. In addition, growth isn’t free and may require all kinds of resources – financial, technological and human. Add to that the competition you’ll probably face from OTAs for your own property inventory within the metasearch website, and you end up with pretty risky decision to make.
One thing you should remember is that growth should come only after your campaign proved to reach its initial goals. Don’t try to grow the campaign before it is fine-tuned and in line with your business objectives. Until then you should only focus on optimizing bids towards the CPA or ROAS goals as discussed in part 2 of the trilogy. This is the principal of scaling performance marketing campaigns.
In order to determine the exact timing to launch the growth strategy, it is best to rely on previous experience and data. However, if this is your first campaign, or if you’re not sure how to do it, you can come up with your own rules of thumb. The idea is that you set a budget spend threshold (for instance: 50% of the total budget) that if reached while CPA/ROAS goals are attained, then you can start applying your growth plan.
Metasearch Campaign Growth Strategies and Business Objectives
The growth strategy must be of the same type as the business objective (Amount of Bookings / Revenue) that was set initially for the campaign (see part 2), however, you will define new KPIs and new campaign goals for the growth plan. They can be exactly linear to the initial ones, or slightly deviated, but the overall vision of what the campaign is required to achieve has to stay similar.
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Channels of Growth
There are four main channels that can generate the growth of a metasearch campaign. Some are used for a direct quantitative growth that will directly increase either the amount of bookings or total revenue. Others are aimed at improving performance metrics such as CVR (website conversion rate), ABV (average booking value), as well as reduced CPA and higher ROAS, and as a collateral outcome to drive more bookings while using the same budget in a more effective way. Those channels are:
- Linear expend
- Advanced bidding
- Hybrid digital marketing
- RevPAR centered approach
When your campaign reaches its goals (CPA/ROAS), it is time to add more budget. That is a simple growth channel that will allow you to better exploit the massive traffic potential of metasearch websites. This strategy is especially good for independent hotels and small chains that test metasearch campaigns with a small budget. Remember that you are competing with other OTAs on your own property inventory in a sum zero game, meaning that if you get direct bookings through metasearch, the OTAs are losing market share. OTAs are obsessed with market share and will try to add budgets and increase bids to outbid you, so when your campaign succeeds, don’t miss out on the opportunity to maximize bookings/revenue.
This means taking chances with increasing bids to generate more traffic. When you put a higher bid on your property, not only do you improve your position within the offers box by outbidding competitors, but you may also improve the rank of your hotel and push it upward in the search results list.
The two main factors responsible for the rank of your hotel on the metasearch results list are the CPC bid and the CTR (click through rate). Higher click through rates are indicative of the property’s popularity. As the more popular hotels rank higher in the search results, this benefits the metasearch website as they create more clicks revenue. While CTR is something that you may control mostly by lowering prices, increasing the CPC even by little can give you advantage over other properties in your location.
The basic formula used by metasearch website to rank hotels:
Hotel metasearch rank = CPC X CTR
Advanced Bidding is a more complicated growth channel that requires enhanced analytical capability and a tight tracking of daily campaign performance. You have to increase bids and immediately measure their impact on your campaign goals and KPIs.
A smart bidding strategy will take under consideration daily performance so you can see which days are performing better and on which days you don’t reach the campaign goals (CPA/ROAS). This can help you optimize daily bids. For instance, in days that you usually don’t reach campaign goals, you can reduce bids, whereas in days that you over-achieve CPA/ROAS goals, you can take more risks with increased bids.
Hybrid Digital Marketing Strategy
In part 1 of this series, I noted metasearch marketing is only one part of more complex digital marketing system. If you look at OTAs, you will see they have a very holistic approach towards digital marketing, and that they always use multiple advertising channels in synergy that allows them to achieve a greater business success than the sum of its parts. OTAs never do only metasearch, or only SEM, they do everything. Obviously independent hotels cannot afford such a large marketing budget, however today’s digital advertising has amazing opportunities for small business to use a small budget in a highly effective way.
Facebook remarketing and a branded Google search campaign can help boost your website conversion rate at a relatively small additional expense.
Facebook remarketing allows you to put ads right in front of users that previously visited your website, had begun the booking process and left. There are many factors that may have caused them not to complete the booking, and many of them have nothing to do with the offer itself, such as: the internet crashed, they were using their mobile phone but would only book on the desktop, but couldn’t find the way back once they returned to their computer, they simply forgot about it, or they were disrupted by someone in the physical world.
By placing a small piece of code on your website pages, you can re-target these people and remind them about the deal. You will be stunned about how little it can cost for independent hotels that generate only a small amount of traffic to their websites.
RevPAR Centered Approach
In part 2, we used an ABV (average booking value) variable to calculate the ROAS goal of a metasearch campaign. If you look at the formula that we used, you will see that higher ABV means that your campaign can reach it business objectives even at a higher CPA or CPC. But it also means that you can spend your campaign budget more effectively by setting a more challenging ROAS goal that will drive more revenue for the same amount spent.
The traditional way to increase the ABV is going through more commonly known upsell tactics used by revenue managers to increase RevPAR (revenue per available room), such as offering a variety of different room types, extras, etc.
The problem with these methods is that they are ad-hoc for the specific purpose of increasing RevPAR, which is very important obviously, but it doesn’t support a more global direct booking strategy. It doesn’t give your hotel an advantage in the direct booking battle against OTAs.
Another thing is that on a daily basis you can only optimize your campaign based on reservations and revenue data that isn’t final, because you’re still missing the cancellation data. You can make some good predictions and use a cancellation rate factor for performance metrics, but it will still be far from the best available solution.
So what can be better than having one feature that solves the cancellation problem while at the same time increases RevPAR?
LIFE HAPPENS™ came out with a revolutionary solution for hotels to deal with cancellation and instantly increase RevPAR. Not only that, but due to its unique business model, it is also free for hotels. Actually, it’s more than free. Hotels are getting paid. Yes, you read that right.
LIFE HAPPENS™ provides your guests with simple cancellation protection for non-refundable inventory. In other words, it protects both guests and hoteliers from the risks in booking non-refundable rooms as well as in not offering enough non-refundable reservations.
A small commission added to a non-refundable reservation is shared with the hotel. Your RevPAR increases instantly. When life happens to a guest, and there’s a need to cancel the trip, the guest gets back 80% of the reservation cost – no questions asked and an instant refund. While your guest is having an amazing customer experience with a one click cancellation process, you are enjoying a sustainable cash flow and can safely reduce overbookings.
Offering better rates with more non-refundable inventory may be what your direct booking strategy was missing. It will boost your metasearch campaign performance by increasing RevPAR, improving your position rankings due to more competitive non-refundable rates and will eliminate the cancellation problem.
Means of Metasearch Campaign Growth
Growing the campaign will usually depend upon investment of additional resources. This is something you should be prepared to do, and choose your growth plan via channels requiring means you can back financially and technology-wise. These means are:
- Supplementary Budget
- Enhanced Analytical Capabilities
- Human Resources (Time)
Another factor that you should be considering is risk. As you probably know, every investment of resources carries a risk that the strategy will fail to reach it goals. The more expensive the resources, the larger is your risk.
Metasearch marketing today is the single most effective channel to rapidly grow hotels’ online direct bookings. However, it has to be managed as part of a global marketing and distribution strategy. In order to achieve the best outcome of a metasearch campaign, both marketing and revenue management has to be on board and join forces. Investing the needed resources and planning the way from the initial setup through the bidding strategy and finally the growth plan, will help every hotel win a decisive battle on its way to a direct booking future.
I hope you will find this blog post valuable. Please leave any questions in the comments section below (I reply quickly).
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