Attention Hoteliers: Google's Big Move! Say Goodbye to Commission-based Bidding Strategies for Hotel Ads in 2024

Google's recent decision to phase out commission-based bidding (CPA) for Hotel Ads is shaking up the hospitality industry. This change requires hotel owners and managers to rethink their advertising strategies as Google moves towards upfront payment methods.

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Transition Overview:

Google will roll out the transition in two stages:

• From April 2024, new Hotel Ads campaigns won't have CPA bidding options.
• By October 2024, existing campaigns using CPA bidding will switch to other methods.

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Implications:

No more risk-free, no need to pay when no conversions is dead. This shift means hotels must reconsider their advertising tactics, bidding models, and budget allocations.

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Alternative Bidding Models:

Hoteliers can explore alternative options such as:

1. Cost-per-click (CPC) Bidding: Paying for each click with upfront budget allocation.
2. Target ROAS (Return on Ad Spend): Setting performance goals for Google to optimize bids.
3. Performance Max for Travel Goals: Multi-channel campaigns with broader reach.
4. Commission-based Providers: Despite Google's change, options like Hotelzify still offer commission-based models.

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Reasons Behind the Change:

Google's decision stems from the need for standardization, privacy concerns, and product integration.

1. Standardization: Aligning Hotel Ads with other advertising channels that primarily use upfront payment methods.
2. Privacy Concerns: With the phasing out of third-party cookies, Google seeks more sustainable and privacy-friendly bidding strategies.
3. Product Integration: Simplifying bidding models makes it easier to integrate new products like Performance Max, benefiting both Google and advertisers.

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Recommendations for Hotels

Hoteliers are advised to:

• Assess current strategies and returns: Hotels should assess their returns holistically. We suggest that hotels should realize that the total online spend they have is not just direct ad costs. They should recognize that the total return is the ratio of total GMV generated per month by the sum of ad spend, agency fees, and commissions paid to OTAs as well.

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• Explore alternative models based on budget and goals: Top marketing tech companies believe CPC strategy would be way ahead as it guarantees better returns for both Hotels and Google. They have developed and adopted advanced machine learning algorithms to improve this strategy. Google offers Targeted CPC where Google helps you run ads or Performance Max, which could be an option if you are willing to spend more.
• Maintain Guest Information Records: Guest data offers valuable insights into their profile type, purchasing behavior, and unique preferences. Therefore, capturing the most relevant data is essential. For AI algorithm-based ad campaigns, this data from the hotel will serve as a robust foundation to target the right audience for your hotel. By analyzing guests' age group, location, preference for length of stay, and various other factors, you will be able to make email campaigns, develop loyalty programs to attract them or advertise more precisely to similar profiles, thus assisting your campaign manager.
• Research providers offering suitable options: Choose your advertising tech partners wisely. One must consider the total return on ad investment, not just the booking value generated, but also agency fees, setup costs, etc.
• Seek consultation to navigate the transition smoothly: Always seek opinions from experts. Look for people who show expertise in the field and connect with them. Speak to as many experts as possible before making a decision.

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Conclusion:

As Google moves away from CPA bidding for Hotel Ads, hoteliers must adjust their digital advertising strategies accordingly. The critical first party data of past guests along with a good Ad technology partner can go a long way in finding the right guests with the least amount spent.

By staying informed, exploring new bidding models, and considering partnerships with companies like Hotelzify, hotels can successfully navigate this transition and continue attracting guests through Google's platform.

For hoteliers, revenue managers, and hotel software providers interested in innovative Marketing Technology partnerships, Hotelzify offers an AI-driven Ads engine that consistently outperforms Google's standard CPA ads. Discover more at www.hotelzify.com and enhance your digital advertising performance in the hospitality industry.

Recognizing the potential of AI technology in delivering superior results and optimizing ad budget spending, Hotelzify made a strategic shift last year from running commission-based ads for hotels to a cost-per-click strategy. Since then, the performance of its AI algorithm has shown remarkable improvement month-on-month. Despite this new approach, Hotelzify continues to charge its hotel clients solely based on conversions, mirroring Google's CPA model. This strategy has proven highly successful among hotels, providing them with a risk-free model where they only pay when there are bookings from hotel ads. Hotelzify is proud to maintain this strategy for all future clients who opt for direct booking channel through the Hotelzify.

-Team Hotelzify

Contact Anirudh Ganesh for a one free one-on-one consulting on Ad Strategy at anirudh@hotelzify.com

Source:

1. Google Ads Support: https://support.google.com/google-ads/answer/14280291?hl=en&sjid=3212021404527257983-AP
2. What is Google commission per stay (CPS) and how does it work? By Pablo Delgado
3. Trivago adds the CPA model as a bidding method by Paru Tanna
4. Travel Weekly marketing news