Hotel Price Ads, or HPA, are the sponsored price listings that appear on Google+ Local, Google Maps, and Google Hotel Finder. HPA was Google’s way of entering the travel market after they acquired ITA Software, a company that provides various travel data to many different sites.
When Google first introduced HPA in 2010, many hotel marketers questioned how they should react to these changes. Even now, many hotel marketers are still questioning if they should take part in this new bidding system. One of our leading hotel clients, Best Western, decided to get their feet wet in the system early on. Let’s look at some of their key learnings, dive further into how HPA works, and identify considerations for hotel marketers when deciding if they should enter this new bidding system.
What Is HPA?
When a search query produces results for hotels, Google sifts through a list of associated hotel rates that are submitted by advertisers in a real time pricing feed. Then, Google produces hotel results that have the standard site ad copy language, as well as a dropdown menu that has a list of prices for rooms within that hotel. The prices come from both the hotel itself, as well as OTAs (online travel agents, such as Expedia and Orbitz) that have submitted rates for that hotel. The prices are provided from lowest to highest and within a default date range designated by Google.
HPA gives searchers the option to either click through the traditional display URL to the site’s page, or click the dropdown to choose from four price listings and the hotel’s site. The searcher can also change the date range within the dropdown to see an updated price listing within the SERPs. Clicking through to any one of the options within the dropdown will send the searcher to a designated page for booking that room.
Google’s intention with HPA is to streamline the hotel booking process and search experience for travel. Usually, a person will search for hotels in a certain location and identify what hotels are in the area before price shopping. Or, they may simply search for different OTA’s and then search for hotels and prices within those websites based on location and date range.
What Has Changed?
When HPA first began, the OTAs were the first advertisers allowed to enter the program. While the hotel brand itself was included in the drop down, it always appeared at the bottom of the price results and took the user to the brand’s Google Places Page (now Google+ Local Page), not a page to book the room. This created some tension, as it allowed the OTAs to not only infiltrate, but also dominate, the brand local listings.
Google combated this issue by adding a bidding feature to the program. This allows an advertiser to compete for top position within the drop down. To bid against another advertiser, brands much offer the same price for the hotel room. Google could have made more money by designing the bidding platform without this catch, but decided to add it in order to better serve the searcher. Pricing is a main interest of travel searches, and Google wanted to ensure that pricing was easily identified through HPA. Google automatically sorts the prices from lowest to highest, so an advertiser cannot bump higher in position than someone offering a lower price than them. This bidding change allowed more control to the actual hotel brand, taking on the OTAs directly and fighting for a better position for their own listing.
The listings also originally only appeared on the Google.com/maps page. As time went on, Google expanded the listings to show within Google.com (in the local section in the middle of the page), Google.com/maps, Google+ Local pages and Google Hotel Finder.
How It Works
The pricing model of HPA is the same as regular search campaigns and runs on a cost-per-click basis. If the advertiser’s price within the drop down menu is not clicked, they don’t pay for the viewing of that price.
There are two bidding options.
- Pay a flat rate per night (example $1 per night)
- Pay a percentage of total price * # of nights
The formula to calculate how much a click costs using the % bidding is as follows:
CPC= (x) * (Total price) * (# of nights).
X can be any percentage and can be changed to increase your bid for better positioning within the drop down menu.
For example, if an advertiser sets its bid to 0.2%, and the consumer chooses to look at prices for 2 nights with a total price of $180, the advertiser would pay $0.72 for that click. CPC is unfortunately not a metric that can be optimized- each CPC depends on specific information that the consumer chooses or Google defaults to, which is the rate of the room and the number of nights.
While bidding can help brands finagle for spots within the drop down, there are only certain times when bidding will help gain more visibility for hotels.
The most important thing to remember is that the advertiser can only outbid those who are offering the same price. If the advertiser rate is $105 and a competitor’s rate is $103, the advertiser cannot out bid them. The advertiser would have to decrease their rate to $103 to outbid them.
Client Experience: The Pros and Cons
We have been managing the Hotel Price Ads Program for Best Western International since it was first released. We decided to take a step back from the program, after it has been implemented for a significant amount of time, and review its strengths and weaknesses. As with any good campaign, it is important to gain the perception of the client. I had a chance to discuss the program with Jon Stone, the eCommerce Manager at Best Western International. Here are some of the pro’s and con’s that we defined during our discussion.
With every new program comes some roadblocks, and HPA was no exception. There are a few things to keep in mind before deciding to participate in Hotel Price Ads.
1. Limited Support: It was a massive and technically complex process to provide catalog updates that show available rooms and pricing. There is a travel ad team available at Google, but much like the local team you must go through your Google rep first to get any aid from these specialized teams.
2. Low Volume: Overall volume from the program has been much lower than expected. The amount of work that went into setting up HPA was tremendous, and to see low volume is disappointing.
3. OTA Presence: Local listings (Google+ Local) have always been owned by the brand and were one of the few places OTAs could not show their presence. Once HPA started, it introduced OTA pricing into the local listings, causing the brand to lose control of some of the information available on their local link.
4. Reliance on Google+ Local: The extent to which the program relies on your Google+ Local pages ranking appropriately was not made as apparent as it should have been. Even if your HPA program is set up correctly and your bids are higher than competitors, you still need your own local link to appear on queries for your HPA listings to be visible.
While HPA does have its downfalls, there have been some benefits to participating in this program for Best Western.
1. Bang for Your Buck: While volume is low, the return on HPA has been consistently higher than the core Paid Search campaigns. It also provides searchers with the option to book directly through the advertiser instead of the OTA. When a searcher books through an OTA, the hotel ends up paying a certain percentage of the booking. The option to only pay $0.72, for example, per click versus a percentage of the booking is very appealing and cost effective for the hotel provider.
2. Rate Parity: HPA became a good tool to use to discover where rates were not comparable to OTA pricing. Usually advertisers have to spider the web and grab rates in order to see how they fare. HPA brought rate parity to the forefront, and provides the most up to date information.
3. Program Participation: Google almost always opens up new betas to OTAs first, and hotels last. Best Western was able to get into the program as soon as it was open to hotels and figure out the inner workings of it. As Google starts to promote HPA and especially its Hotel Finder product (HPA listings appear here as well), the program will hopefully grow. It is important that Best Western is in it now and has an established program to remain ahead of the curve.
4. OTA Presence Diluted: While OTA presence into the local listings was somewhat of a negative aspect, this is really the first time Google has given the hotels themselves a chance to take on the OTAs directly. It gives smaller hotel providers a chance to show what they have available right next to the OTA listings, and dilute the presence OTAs have in HPA.
Things to Consider
In theory, Hotel Price Ads is a great product. The user experience is enhanced by providing a one stop shop to compare and book hotel rooms. Google has very stringent requirements for advertisers in the program to ensure the user gets the most up to date and correct information.
The program is still in a very young stage, but it seems as though Google is putting a lot of resources toward expanding and improving the program. For instance, they have been including a paid ad on non branded searches that directs users to Hotel Finder.
As this gains traction, more users will hopefully begin using Hotel Finder and the HPA data that is housed here. Overall, users need to become more comfortable with HPA and its listings for the program to continue growing. If this platform ends up gaining popularity and working how it was intended, it would make sense for it to roll out to other verticals such as retail.
Overall the program has shown low traffic, but is growing slowly. When comparing January numbers to May numbers, Best Western has seen a 70% increase in clicks to their site from the HPA dropdown and a 60% increase in revenue generated directly from the HPA program.
HPA has numerous pros and cons as well as things to think about before participating in the program. But overall, it is a good way for hotel brands to have their chance to fight the OTAs directly and increase bookings from their website instead of a third party site.