Why Hotels Should Leverage Search Engine Marketing with Radii Bidding Modifiers

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Why Hotels Should Leverage Search Engine Marketing with Radii Bidding Modifiers

By Michal Christine Escobar - 09/10/2020

During the pandemic, many deep-pocketed online travel agencies were driven to the advertising sidelines. Similarly, many hotel brands also stopped advertising. However, one brand saw this time period as an opportunity to better leverage Search Engine Marketing (SEM) to engage with potential guests who were looking to take a trip, even if it was only within driving distance of where they lived.

This hotel brand partnered with PMG and used its marketing intelligence platform, Alli, to establish radii bidding modifiers in order to increase reach with consumers who lived within a certain distance of the brand’s properties. As a result, the hotel brand saw a 94% increase in conversion rate and a 65% decrease in average CPCs for non-brand keywords. Coupled with the higher conversion rates, PMG helped the brand achieve a 500% increase in return on ad spend (ROAS).

To learn more about SEM, radii bidding, and marketing to guests during a pandemic, HT spoke with Price Glomski, Executive Vice President, PMG.

Prior to COVID-19, how were hotels traditionally marketing to consumers? What role did SEM play then?

Before the pandemic, hotels competed heavily on price as well as amenities, and search marketing has long been a catalyst for introducing new customers to hotel brands and offerings. While hotels had sophisticated engagement programs through other digital channels, SEM was foundational for all hotel brands, and that includes their investments in TripAdvisor and Google’s metasearch products. Hotels also had a fairly consistent approach to the consumer lifecycle. For personal travel, consumers went through five different stages that brands used as engagement points — aspirational, planning, booking, experiential and sharing. SEM played a critical role in each stage during a typical traveler's digital journey.

During COVID-19, how can hotels change the way they use SEM to engage with potential guests?

Hotel brands now must be more sensitive to regional considerations, often on a very granular level. Consumer behaviors have shifted several times throughout the pandemic (e.g., aspirational travel, last minute, etc.) and they must be agile in how they adapt to future changes. SEM can be leveraged to educate consumers on safety precautions led by the brand or property, including average occupancy rates or room spacing for risk-averse customers.

Brands should also evaluate core targeting strategies using Google Customer Match as a way to directly engage a previous guest with cohorts being broken out by audience type and affinity (group, golf, day-tripper, general business, day-of, etc). We recommend pairing this targeting method with custom emails to the same segments, Facebook/Instagram CRM activation to said segments, and low budget programmatic coverage using a third-party data connector, like LiveRamp. 

How has one hotel brand successfully done this?

We were involved in a unique scenario with a new hotel client right around when the pandemic really set in. We went from working at an accelerated pace, which is typical for us, to immediately hitting the brakes and going into maintenance mode. Although the client’s business was severely shaken by the pandemic, like the entire travel industry, they began to dig into their customer base and local presences to leverage their brand’s differentiators.

SEM was a key way of messaging with their target customers, and the brand’s messaging performed well. We also used SEM in collaboration with other channels, including programmatic display, paid social, and strategically placed OOH placements. We achieved particular resonance with current and potential customers about local destinations while acknowledging the state of the world as it was.

Is it difficult to change the way hotels use SEM and other marketing tactics?

Due to the hyper local nature of hotel marketing right now, the SEM marketplace is constantly changing and brands must rely on a mixture of data driven tactics, first party data, and consumer insights. Localized targets can inflate your CPC due to the economics, but this could also create total cost efficiency for the program given the granularity. The difficulty in our current state relates mostly to audience uncertainty. Although session volume continues to increase for many hotel brands, we aren’t seeing bookings follow the same trend (as we would in the past).

SEM is known for its performance efficiency, however, inflated cancellation rates creates optimization uncertainty. In short, the math problem or algorithm that we as an agency apply to our bidding strategy along with Google’s enterprise algorithms, add many new variables to the equation. What was learned over an extended and consistent period of time before the pandemic has been overturned, and now the story behind the data needs to be re-established and informed.

Other tangible expenses may relate to the need for analytic resources to help inform a constant flux in forecasting and for this role to help de-risk in 2021 a search marketplace that will be all but predictable. SEM can be planned for but this travel market has removed many of the previous data points that allow for proper goal setting. 

Why is it beneficial for hotels to be flexible when it comes to how they market their properties and to whom they market themselves?

Testing is mandatory. This means that our previous expectation for all brands was a budget focus of 10% for testing at all times. Moving into late H2 and 2021, we believe that 20% - 30% of your budget as a travel brand should be used for testing and innovation. We are in the time of reeducation and re-aligning expectations. Hoteliers and other travel brands should use this time to reinvent how they engage with customers and drive bookings.