SEO marketer Wordstream recently analysed the economics of AdWords, Google’s pay-per-click advertising platform.
While Google’s recent financial results disappointed Wall Street, AdWords overall impressions and clicks increased in the third quarter, leading to a 16% year-over-year bump in revenue for the Internet giant.
The news for travel brands
Travel companies spent more on pay-per-click advertising than any other industry except for finance, according to Wordstream’s analysis of 2,600 accounts. The top ten travel advertisers using Google AdWords are Expedia, Hotels.com, Booking.com, Priceline, and Kayak.
Despite its big spend, the travel sector has the lowest conversion rate (1.45%) of the ten largest online industry verticals.
It also has the second lowest cost per click (CPC), averaging 29 cents.
Dramatic increase in impressions and clicks
In the third quarter, the world’s most popular search engine enjoyed impressive growth of ad impressions and clicks. Clicks were up 21% for Google Search and 29% for Google Display Network.
The average costs per click (CPCs) for Google Search declined significantly—down 16.5% for Google Search—while click-through rates (CTR) were down 12%. In Google’s own financial statement, it reported that its CPCs fell in both Q2 and Q3 of this year. Many analysts attributed this to Google placing more ads on search pages.
Says Wordstream’s report:
The dramatic increase in impressions and clicks is in some way contributing to the decline in average CPC’s and CTR’s.
Generally speaking, higher supply means lower prices, and showing a greater number of ads on a page inevitably means that any one individual ad is less likely to be clicked on.
Alternatively, the massive increase in impressions could be a deliberate strategy on Google’s part to monetize more of their search inventory to increase clicks and revenues.
Wordstream’s infographic has also published AdWords performance in other industry verticals for comparison.
Decline in searches for “flights” and “hotels”
Icelandic metasearch site Dohop recently pointed out that general searches on the words “flights” and “hotels” have steadily declined over the years. A straightforward historical search on the keywords reveals that search volume has dropped in half in the past eight years.
The declines will impact Google’s effort to promote its new search tools Google Flights and Google Hotel Finder.
The cost of other travel-related keywords has continued to climb over the years. For small businesses that spend less than $10,000 a month on AdWords (or about 96% of businesses that use AdWords), these are challenging times. Google recently released a statement that The New York Times paraphrased as:
Small businesses can compete by making their ads more relevant to consumers and they should use multiple strategies to pursue customers: “search, social media, earned media and more.”
The world of AdWords is clearly in flux.
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About Sean O'Neill
If the Wordstream infographic (nice linkbait guys) would also include average value per order, leadtime, avg amount of searches before a conversion….then the low conversionrate would be self explanatory.
In Google potential travelers perform more than 24 queries before booking.
Hi Wouter, i don’t have access to average order value. it varies so much by company and product. But yes, if you say that travelers perform 24 searches before booking – that there’s a lot of comparison shopping happening prior to purchasing, then that would certainly explain the results.
24 queries, on a *30 day cookie duration*, including tickets and hotels. Packages can take months of orientation, so this obviously gives us another scale of KPI’s to look at.
Great point. I typically look for flights months in advance, over many months sometimes. The AdWords tracking cookie dies after 30 days, so, that could also explain the lower conversion rates!
Thanks for commenting, Larry. It’s an eye-opening report.
It means that the average CPA is around 20USD for both adwords and display…that’s a lot!
That would be relevant to decline travel stats into flights and lodging. I doubt any flight ticket provider can afford a CPA of 20 USD.
I’d sign for that CPA on hotel only sales and Dynamic packaging. Totally agree that on ticket only you’d bleed. Hence all walk the ancillary route with carrental, hotel, tours, insurance after the ticket sale.
I wonder how much branded keywords factor into the $0.29 CPC? I would love to see that split out!
The decline in search volume shown above is likely mis-leading. When using Google Trends (http://www.google.com/trends/) as shown above, almost all keywords will show a decline over multiple years — e.g. try “travel” or “stock picks” or “health care”. It’s just the way Google Trends displays the results; I doubt it reflects that there is truly a down trend in so many of these keywords.
Regarding CPC’s, I would love to see a breakdown on the major categories of keywords, e.g. flights vs. hotels vs. tours vs. cruises. As an example, “tours” would typically be above $2.00 average CPC, MUCH higher than $0.29!
And finally, the decline in average CPC’s as well as CTR’s can likely be attributable to the increase in mobile impressions. Any thoughts on that?
Brian Tan
CEO
Zicasso
The reported conversion rate seems low because, as others have pointed out, it is unusual for a traveler in the planning stages to click then convert. The long and winding path may be messed up in Adwords reporting by the 30-day expiry of the AdWords cookie, but the Google Analytics cookie does not expire. If you use the relatively new multi-channel reporting in Google Analytics, it shows you which marketing stimuli played what role at what stage in the conversion process. You can see, for example, whether Twitter tweets initiated the visits that (20 visits later) led to the purchases you’ve been ascribing to SEO, or whether a series of AdWords and SERP clicks did the job. (All of this, of course, subject to the fuzziness introduced by people like me who kill cookies daily).