NB: This is a guest article by Simon Cooper, account director at Kenshoo.
The importance of relevancy cannot be overstated in today’s search marketing industry. At the back of every advertiser’s mind, there’s always the need to ensure the copy they produce will be relevant to the people they want to reach.
This attitude is epitomised by the value placed by advertisers on Google’s Quality Scores – which go up according to how relevant ad text, as well as the content of the landing page, is to certain key words.
One of the key metrics used to measure this is click-through rate (CTR); one can broadly assume that the more people are clicking on an ad, the higher its Quality Score will be.
The benefit of a high Quality Score is that Google rewards you with a lower actual cost-per-click (CPC) as, according to their metrics, you are offering a more relevant service to the user and therefore a better user experience overall.
With the benefit of being able to pay a lower CPC, Quality Score has become an important metric when measuring the effectiveness of a paid search campaign.
However, I would like to argue that too much value is placed on these Quality Scores.
Whilst it is clear that they are important, the industry is at risk of getting hung up on this metric at the expense of focusing on what should be the real objective: driving conversions.
The travel industry is particularly affected by this conflict.
Travel woes
Advertisers in the travel industry aim above all to fill their capacity; whether that’s seats on planes, rooms in hotels, or anything else. As a consequence, something the sector is often concerned about is distressed inventory.
These are seats or accommodations that, if not sold, will be a cost burden to the owner. Offloading distressed inventory often leads to heavy discounting to ensure that at least costs are covered.
In this situation, there is an immediate need to drive bookings.
I’ll be bold and say that being able to write an ad text that will produce a high CTR is not too difficult. Make sure the keyword appears in the title, include a strong call to action, have a relevant display URL, and off you go.
But – and this is the key point – it shouldn’t be just about getting people to click on the ad; what’s more important is that the people who click on the ad will actually be led to make a booking.
Driving clicks and visitors to the site is one thing, but this traffic has to convert. It’s no good just having a good QS, but lots of empty hotel rooms, or spare seats on the plane.
A high volume of click throughs with a low number of sales will ultimately lead to a higher advertising cost per eventual sale.
What it comes down to is the choice between running a broad advert that will lead many people to click through but with only a small percentage of those going on to make a booking, or running a more specific ad that will see less click throughs but a higher percentage of those individuals actually converting into a sale.
For example, a hotel aggregator that is running quite generic ads for “hotels in New York” is likely to see very high CTR.
After all, it’s a popular destination. But if all of the hotels it offers are quite niche – for example, all at either the very top or very bottom of the market – they may find that very few of the people visiting the site are actually making bookings.
Reality
The CTR, and as a consequence the Quality Score, may be very high, but the ads aren’t having the desired effect.
By using tracking technology that allows full analysis and optimisation, providing the ability to track not just bookings but also other factors such as the number of rooms, nights, departure dates and extras, the same hotel aggregator would be able to change this approach.
By writing ad copy that more accurately reflects the hotels on offer, they will reduce the number of people visiting the site but, ultimately, they are far more likely to actually make bookings.
Once advertisers look beyond CTR and Quality Score, they can get back to matching customers with the actual products. This can lead to far better results that improve overall profitability which, at the end of the day, is surely the most important target.
NB: This is a guest article by Simon Cooper, account director at Kenshoo.
NB2: Cocktail image via Shutterstock.
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About Special Nodes
You make some good points in this article QS isn’t everything. The website is the main factor. The keywords drive traffic to the site, hopefully terms that are relevant, the website needs to do the rest, easy navigation and easy booking system.
There are some good sites that can help PPC advertisers, CTR Boost and PPC Hero are main ones I look at.
I have a solution (albeit self serving) that can solve all Advertising woes. I along with my Brother -In-Law developed a Rating System for the web ( Patent owned) for Advertising & Publishing. Can you imagine for just a moment — You place 2 ads on a web site and you ask your audience (up to two different audiences at the same time) to RATE the Ads, Rate them as “Excellent”, “Good”, “Fair”, or “Poor”, you have just completed a Beta Test that you can utilize the results immediately. You will know in advance which Advertisement your Audience, whether the Travel Agent or the Consumer or both or others will be motivated to make a purchase because of that Beta Test. Another way is to run a contest of sorts asking people to “Vote” or “Rate” the entries, once you have your winner they will be compensated with a prize or cash or whatever and you will have a New Concept born from your audience. Now the reason I am telling you all this is because although valued at $4Million dollars, we are selling the Patent for a lot less. Or perhaps you wish to purchase a License. Owning this Patent can be loads of fun and be extremely profitable.
@jason – reckon you should advertise on tnooz if you’ve got such a service for the industry to play with!
Open to this can you provide me with your tariff? Thanks,
Jason
@jason – there you go: http://www.tnooz.com/tnooz-advertising/rates/
Well, what you have to look at is, of course, not only CTR but also ROI. In fact. I’ve considered this to be the basics of online advertising in general (especially concerning SEO and SEM).
What will be interesting to know is whether there are any methods to make ads more profittable using some kind of “right words”. And another question is, of course, whether ROI and CTR are so far from each other (maybe even niche site can have profit from ‘broad’ ads with good CTR).
There’s also a question of what is the aim of SEM in general. Should it be sales only or we can consider newsletter and special offers subscription to be a good result also?
Kudos to the author. You PAID for that ad. Its now part of your bought media. You want the user to end up on your owned media, be engaged and then acquired as a customer or at least part of your earned media. I recently went through a user experience exercise where (much to the horror of senior management) the bottom dropped out of inquiries. But surprise surprise, a month later the revenue started climbing. More qualified leads = more sales and lower cost of sale.
Hi Simon,
I don’t get it. Wouldn’t you say that most run both generic AND niche related ads? The bottom line for many advertisers seems to be Cost Per Acquisition; henceforth, instead of a trade off, this seems more like advertisers are attempting to business from different segments of their market.
Hi Cleo. Yes, pretty much all advertisers run a blend of generic, and niche ads, my main point though, is that I’ve seen too many mangers of paid search accounts get hung up about ensuring they have high quality scores at the detriment of actual bookings. The brief example provided was just some insight into how focusing on bookings and not just quality score can actually help you maintain meeting business objectives.