The saying goes something like ?A fool and his money are soon parted?? and
buying pay-per-click advertising without doing your math homework can quickly
have hoteliers sharing the same fate.Pay-per-click advertising (those ?Sponsor
Results?, ?Sponsored Links? or ?Sponsored Sites? above and to the right of the
organic or natural search results on the major Search Engines) has to be one of
the smartest money-making ventures of all time. Advertisers bid against each
other in a frenzied auction environment, competing to appear higher up the list
of ads that accompany the natural search results.As of today, to appear at the
very top of the page in the Sponsored Links in the UK for ?London Hotel? will
cost you over GBP1.30 per click; in the US over $3.00 for ?New York hotel?; in
Australia more than $2.60 for ?Sydney hotel? and in France more than EURO1.40
for the search term ?Paris hotel??that?s per-click?it costs you nothing to show
your ad but the moment someone clicks on the ad and is routed to your web site,
the meter clicks over one more time and takes another little nibble from your
credit card balance.Developed by the really smart guys at the Search Engines,
the pay-per-click auction environment encourages the great majority of
inexperienced users to bid up the cost per click somewhere north of
Vladivostok?which it was probably designed to do. In the hotel arena, these
inexperienced bidders are probably the same people who measure their performance
in terms of ARR rather than RevPAR.Still, it?s only a couple of bucks isn?t it?
Well, based on data that indicates that the majority of hotel web sites convert
less than 2.0% of clicks that go through to the site, at $2.00 per click, it
just cost you more than $100.00 to convert that sale!Given the prices being bid
per click at the moment, it appears that few hotel managers and marketers are
doing that math, so we have prepared the ?Hotel Marketing Workshop Pay-Per-Click
Calculator?. You will be able to quickly and simply work out in advance, exactly
what the maximum cost per click you ought to be paying based on your Average
Online Room Rate, Average Online Length of Stay, Percentage Marketing Investment
Per Sale and Estimated Conversion Rate.Using this simple tool (it?s just a
spreadsheet and some basic formulas), you will be able to choose what level of
investment per click will give you a reasonable Return On Investment (ROI). And
may prevent you from pouring your scarce marketing dollars down the porcelain
through over-expensive clicks through to your web site. You can download it here
or visit www.hotelmarketingworkshop.com and follow the links to this article and
download it from there.Now for that math lesson?let?s say you run a mid-scale
inner-city hotel and your Average Online Room Rate is $200 and Average Online
Length of Stay is 2 nights. You Revenue Per Online Sale is therefore $400. Now,
before your eyes glaze over, it?s not much more complex, just keep following the
bouncing ball a bit longer.Most hotels allocate somewhere between 3.0-7.0% of
revenues to marketing expenses, so let?s keep it simple and say that you would
normally spend 5.0% of your $400 revenue on marketing costs ie $20.00. Your web
site converts 2.0% of visitors to sales (1 in 50 ? sad isn?t it but that is the
average conversion rate and yours may well be lower) which means that you should
only spend a maximum of $0.40 per click on pay-per-click ($20.00 x 2.0% =
$0.40)?not much is it? $0.40 will get you on about page seven in most markets
for high volume keywords. Maybe your bookings for next month are looking a
little soft so you are prepared to up your Percentage Marketing Spend to 10.0%
of Revenue Per Online Sale or $40.00; that still means a maximum cost per click
of $0.80 to give you a modest ROI.So, why in the name of Conrad Hilton is the
price bid today for the key phrase ?your destination hotel? up to $3.00 per
click on Yahoo Search Marketing and even higher on Google?If you ?reverse
engineer? the math, at $3.00 per click with a 2.0% conversion rate and a 5.0%
marketing investment and a 2 night stay, your hotel would need to be achieving
an Online ARR of?wait for it?$1500.00 per night; perhaps in parts of Saudi
Arabia that may be achievable but seldom in downtown anywhere else.And the
Search Engines are smiling all the way to the bank?even at a 5.0% conversion
rate and 10.0% marketing investment that?s $300.00 per night; a not unheard of
ARR, but 5.0% web site nett conversion rates and a 10.0% marketing investment
are rarified numbers indeed for many hoteliers and their web sites.So, what can
you do to make PPC work for you? It?s all there in the formula:research keywords
that aren?t so actively competed for that are still relevant for your target
audience and bid on those ? less volume yes, but a much more reasonable cost per
clickextend your key phrases that you bid on to three or four words ?downtown
boutique your destination hotel? as these phrases are again not so actively
competed forselect and implement the very best Web Booking Engine you can find
to make that final step to conversion as user-friendly as possibleincrease your
Revenue Per Online Sale by either increasing online rates or encouraging longer
staysfind and be prepared to pay a professional to manage your pay-per-click
investment with the skills to maximise click through rates and the lowest cost
per clickcall Hotel Marketing Workshop to help you increase your conversion rate
through a better web site experience (oops?that darn commercial keeps sneaking
in)OR you could just keep bidding up the cost per click like everyone else and
slowly go broke while the Search Engines keep charging your credit cardAt Hotel
Marketing Workshop we don?t actually manage pay-per-click advertising for
clients; there?s nothing wrong with PPC when well-managed but we just prefer to
do what we do best?developing and designing great web sites that maximise the
conversion of visitors (from whatever source ? PPC, Search Engine Optimisation,
referrals from inbound links, online and offline ad campaigns) to online
revenues.And we are happy to help you find and select a PPC advisor as part of
your overall hotel internet marketing strategy and work with them to maximise
your online revenues? and we?re OK at the math too!Keith Paulin is the General
Manager of Hotel Marketing Workshop (http://www.hotelmarketingworkshop.com).
Keith has worked in senior marketing roles within the hotel industry (Hilton,
Regent, Hyatt, Accor) and in other industries (HP, Lion Nathan, Shell) and holds
degrees in Marketing and Business Management. Hotel Marketing Workshop works
with chain and independent hotels, large and small, delivering tactical,
practical hotel e-marketing strategies that work and then assist with expert
implementation. Keith has a deep interest in the world of e-commerce, Search
Engine Optimisation and Search Engine Marketing and a clear track record in
producing growth in RevPOV (Revenue Per Online Visit) for hotel clients.
You may view the latest post at
http://www.richproject.co.cc/?p=3458
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admin
k_malee@hotmail.com
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