September 5, 2016
Why You Shouldn’t Budget Any Marketing Dollars for Metasearch
Consider this scenario: You are having a great month, as your metasearch traffic and direct-booking volume reach all-time highs. Suddenly, your budget tracking posts an alarm: your monthly marketing budget for metasearch has been consumed already, so you need to pause your red-hot campaign for the remainder of the month!
OTAs then pick up the slack and book your rooms for you, but you will generally pay higher commissions on these bookings than you would have spent in marketing them yourself.
This scenario is all too real, so why does it make sense to not budget any marketing dollars for metasearch, instead of increasing it?
The reason becomes clear when we understand metasearch marketing from a new perspective. Let’s explore the benefits of direct booking and what goes into managing metasearch marketing effectively to keep costs under control.
Benefits of direct booking
You’ve likely seen a number of articles about the value of direct bookings recently. As you may know – place well in metasearch results and you will increase your direct bookings. Direct bookings are the most cost efficient as the investment of marketing on metasearch channels for direct bookings are usually much lower than the commissions to get the same bookings through OTAs.
Direct bookings offer long-term benefits too. They allow you to foster a relationship with your customers and open up pre or post-stay marketing opportunities. This in turn enables you to cultivate brand loyalty for the long haul.
What’s more, direct bookings let you save on opportunity costs. Every direct booking not secured by the supplier is an opportunity for OTA sites to bid for the consumer’s business. OTA sites offer accommodation options from competing suppliers and so bookings may be lost to competitors. Even for those that come through the OTAs, booking costs are higher due to the higher commissions.
Due to the significant benefits metasearch offers through direct booking, it no longer functions as just a marketing channel; rather, it should be considered a direct distribution-marketing channel.
Keeping up with metasearch channels
There are a number of metasearch channels and connecting to as many as possible can be beneficial to your business. But these channels work differently and attract different types of audience, therefore it can be challenging to understand and develop campaign strategies to meet specific goals on each.
Finding the sweet spot for ad spend
Discussions and strategies often focus on Return On Ad Spend (ROAS) as the key measurement of success. While a high ROAS like 50:1 sounds great, it is not of much value if it only results in, say, two bookings. Generally, as the spend increases, ROAS tends to fall. It’s a real challenge to find the sweet spot that delivers the highest volume at the lowest cost.
Balancing tangible and intangible benefits
Making the most money and building brand recognition are often at odds. For example, occupying the first position in search results regardless of the return is great for building branding, but costs more in bidding. However, this can be a good strategy to achieve certain goals, and is usually most effective for short promotions.
Customising strategy to each metasearch engine
Different metasearch channels have different results, influences, and behaviors involved. Using the same strategy across all channels would not be effective. Google alone has three different types of Hotel Ads which carry different types of followers. Google Local Universal, for example, displays a Hotel Price Ad as the result of somebody entering a search for your specific hotel name.
Covering diverse metasearch markets
The metasearch channels foremost in people’s minds include Google and TripAdvisor, followed by Kayak, Trivago, Hipmunk, etc. But the influence of other key sites such as Skyscanner, Wego and Qunar are significant.
The Chinese metasearch market is perhaps most important of all. According to statistics published by PhocusWright in 2013, more than 54% of Chinese travellers used a metasearch site for travel planning, compared with 36% in the U.S., and those numbers continue to grow. The outbound Chinese traveler market is worth $102 billion and you need to be connected to the Chinese metasearch sites to benefit from it. Each of these sites has its own nuances including the need for a proper Chinese-language landing page.
The biggest challenge: managing it all
Devising and executing a winning strategy for metasearch marketing is complex. There are several factors that contribute to this complexity.
- There are a large number of Metasearch sites, and a hotel supplier should connect to many of them to be effective in direct booking. Each of these connections has its own nuances and warrants a custom strategy for optimising the results on that channel.
- There are several variables and calculations involved in optimising ROAS.
- Managing bidding to control placement in metasearch results is complex because the strategy needs to constantly adapt to competitors
- Optimising for tangible and intangible benefit requires different strategies for different promotions.
- Global markets involving multiple languages add a whole new dimension of complexity.
It is possible to assign people to monitor the metasearch sites and constantly optimise bids in real time. This is very resource intensive and expensive, and in practice it often morphs into a “connect and forget” strategy that produces minimal results. It also leads to the creation of budgetary constraints that end up being used as a control mechanism.
A much more effective strategy is to invest in channels and tools that can help in optimising the ROAS. The first step is to have an automated bidding mechanism in place for sites using auction models (i.e. Google and TripAdvisor, among others). It is important that the tools are configured to be aligned with your marketing objectives.
A viable commercial solution for metasearch marketing is to work with one of the handful of companies who have developed the tools to help manage these programs. They should provide the knowledge, expertise, and tools so that you can leverage metasearch as effectively as possible.
Back to our question
Let’s ask the question again: Why does it make sense to not budget any marketing dollars for metasearch, instead of increasing it?
The answer is that our change in perspective on metasearch changes the characterisation of our spend on metasearch marketing.
Subscribing to a commercial solution that keeps the complexity of metasearch marketing under control and provides you with an optimal ROAS means that your marketing should be ongoing. You avoid arbitrary disruptions to your marketing efforts based on fixed marketing budgets. Ongoing, uncapped, marketing spend in this manner makes sense because these costs tend to be lower than OTA commissions, and offer all the benefits of direct booking.
In effect, these costs become low-cost commission as opposed to draws on the marketing budget.
Having the experience and resources of a commercial solution working for you will allow you to eliminate metasearch marketing as a line item in your budget and properly treat it as the cost of distribution that it is.
The DerbySoft metasearch management service
Click is the service that DerbySoft offers for hotel suppliers to manage metasearch marketing. This includes bidding control, caching, and connectivity to multitude of metasearch channels all with a single connection to Click.
At the heart of this service is MetaSearch Manager, a tool built specifically to address aspects of metasearch hotel marketing. Our team of Digital Marketing Managers —experts in metasearch and MetaSearch Manager—are available to every Click client.
Read more information on Click available here. Or contact us.