Historical low costs and rising reservations. There is no better time to invest in Google Ads
To bid or not to bid, that is the question. Should we start investing in Google Ads or wait?
Our adaptation of the famous Shakespearean line from Hamlet, describes perfectly the current state of indecision.
Day-to-day demand is growing. The dark sky is clearing. Governments continue to progress through de-escalation and mobility phases.
After the government announcement that Spain will be able to receive foreign tourism from July, there has been an expected upturn in traffic and reservations in Spanish hotels. In other destinations, hotels are adapting and are already achieving some success in their domestic market.
So, do we start playing chess?
The answer is yes. Even if it is starting with a pawn, we should start investing.
We can leave the knight, bishop and rook for later and save the queen for when the time comes, but we must start with some movements now.
Since the beginning of the crisis, OTAs, metasearch engines, chains and independent hotels have withdrawn from Google Ads. Which is logical, taking into account the low demand.
Since March, our clients have reduced their investment in Google Ads by 90%. It is important to note, that campaigns weren’t necessarily paused, but bids were reduced to a minimum.
With the combination of low bidding costs and growing demand, there is no better time for hotels to recover what is theirs and position themselves with the maximum possible visibility in search engines at the lowest cost, even if they’re bidding for their own brand.
What are the indicators that would suggest a reactivation of your investment?
Click increase
If we talk about activity, where the clicks reflect that movement, at Roiback we have dropped in the week of the 13th – 19th April (see graph 1).
Since then, clicks have increased as hotels trigger campaigns and users make more searches.
As the graph shows, we have returned to activity levels in mid-March, which is very positive and encouraging. Logically the recovery phase will be slower and more progressive, unlike the drop, which was drastic and happened in only a few days.
The searches are recovering, but what about reservations?
Bookings are also increasing, and we have seen a very positive trend change since 23rd May (see Chart 2).
The trend since the recovery phase (Graph 1) was already slightly upward, but since the government's statement last weekend, the impact has been very significant, and reservations have grown 202% compared to the previous week. The news is very positive:
CPAs have never been so low
During this period of little demand, uncertainty, and mistrust, acquisition costs (CPAs) have been the best we’ve ever seen. The CPA has stabilized at around 2-3%. This means that hotels that have taken reservations have now done so at extremely low cost.
But it won't last. As demand picks up, costs will rise. Hence the importance of reacting quickly.
We are at a stage where there is an upward trend in terms of the number of visits and clicks, but with enormously profitable CPAs.
How are these low CPAs explained?
One of the determining factors is the CPC (cost per click). After the withdrawal of the main advertisers, including the most powerful OTAs and metasearch engines, there are no buyers in the auction of Google Ads spaces.
This allows bidding for much cheaper CPCs, winning the bid and therefore space.
By clicking with a considerably lower CPC, the final CPA will most likely be much more profitable for the very few bookings that are being generated.
According to our estimates, the CPC is 72% lower than before the crisis, including all kinds of campaigns, not just Brand Search. (See graph 3).
Most of the OTAs and metasearch engines have withdrawn, but we have already started to see Booking.com taking the top positions of many generic searches, such as ‘hotels in Mallorca’. That said, little by little it will increase its presence in searches by brand as we see below in the case of the Catalonia chain.
Let’s seize the opportunity.
Free spaces, all-time low CPCs, and low CPAs. It is time to test, to start investing little by little, and to occupy brand position as soon as possible. Don’t forget, the OTAs can reactivate their digital presence at any time.
If you start after Booking.com, Expedia and metasearch engines, you will have to increase your bids in the future to remove their position. Your costs will increase, and your profitability will go down.
It is preferable to first pay at the lowest possible price. In this way you will recover history while achieving good CTRs (click through rates) and quality ratios.
In addition, with the current cheap rates you are able to test, wait a few weeks, and correct if the profitability is not what you expected.
With payment slots you can manage to take up more space, easily modify messages, add personalized extensions, do remarketing actions and, ultimately, considerably increase the chances that a user will click on your official website.
In the example below we can see the difference in visibility occupying payment space and organic space. Undoubtedly the user is more likely to click, if we take up more space on the results page.
To summarize
- There is no better time than now to reactivate: costs per click (CPC) are down 72% compared to May 2019.
- Bookings through Google Ads has increased by 202% compared to the week of May 18.
- The volume of clicks and bookings is gradually increasing with a clear upward trend especially last weekend.
- It is time to invest (even in a measured way) and to occupy the position by your brand as soon as possible, because at any time the OTAs will reactivate their digital presence.
- The longer we take to invest, the more we will have to increase our bids in the future to take the position of OTAs and metasearch engines.
Are you going to say no to 2-3% bookings?
Don't be afraid, you can go slow or fast, but you have to react. You have to move a chess piece, but with which piece are you going to make your first move?
Felipe Bravo
Head of Digital Marketing
Felipe has been linked to the digital marketing world since 2001 and is currently leading Roiback’s Digital area for over 7 years.
