Paid search attribution models: Is your hotel doing it wrong, and paying for it?

May 2, 2017

To gauge the success of a paid search campaign, hotel marketers need to have a clear understanding of the metrics they’re using. And that means being aware of two different forms of measurement: click-through conversions (CTC) and view-through conversions (VTC).

Understanding these attribution models is critical to assessing just how successful your paid search campaigns are. So with that in mind, here’s a quick definition of what they involve.

Click-through conversions

In the context of paid search for hotels, a click-through conversion gives credit for a booking when a user clicks the ad. When measuring paid search performance, click-through conversions are given 100% attribution—if a user clicks on a display banner or PPC ad and then makes a booking, that click gets full credit.

In all cases, there is a “click attribution window” (sometimes called “lookback window”). Essentially, when a user clicks on a display banner or PPC ad, there is a window of time where that click is considered to be relevant if the user makes a booking (commonly within 15-30 days). So if a person clicks an ad and then makes a booking within the defined click attribution window, the booking is then attributed to that paid search channel.

View-through conversions

View-through conversions involve a conversion that takes place after a user sees an ad, but doesn’t actually click on it. So, if someone sees your hotel ad but doesn’t click it, and then ends up booking with your hotel at a later date, that would count as a view-through conversion.

The main issue with this form of measurement is determining the level of influence that came from that ad being viewed. Essentially, how much credit can you give to that ad for completed bookings? How can you be sure that the conversion comes from the person seeing your ad, even if that person never engages with it?

Unscrupulous marketer practices

Typically, digital marketers give partial attribution (often around 20%) or even no attribution credit to view-through conversions.

But some unscrupulous hotel marketing companies give 100% attribution to this metric. And we’ve even seen one marketer claim a conversion rate of 178% to a client—a wild exaggeration given that you can’t convert more than 100% of people who see your ad.

Ultimately, a clearly defined approach is needed. If your marketing agency runs a campaign with 100% view-through and click-through attribution, and stretches the attribution (lookback) window to 90 days, it’s clear that your hotel is going to see some highly inflated return-on-ad-spend (ROAS) ratios. This can lead to your hotel thinking it’s getting outstanding returns of 20:1, 25:1, 30:1 or more, when in truth these are relatively unrealistic numbers and not necessarily a true judge of performance.

Don’t be fooled—here are some best practices and tips for making sure you’re getting the best and most realistic results from your paid search campaigns.

Set your attribution model: questions to ask your paid search vendor

So what kind of ROAS should you expect? Given that every hotel is different, you can’t really set a “normal” baseline for ROAS. But what you can do is question your paid search vendor to gain a deeper understanding of how your ROAS is derived. Here are some questions worth considering.

What attribution percentage is given to view-through vs. click-through?

In our experience, you don’t want to give too much weight to view-through for a simple reason. If someone sees your display ad and books with you later by clicking a metasearch link, you can’t rightly claim your display ad was the conversion trigger. In the interests of accuracy, make sure you zone in on click-through conversions, and even more importantly, last-click conversions, the ones that happen right before the booking takes place.

What is the lookback window on views and clicks?

Marketers set an attribution window from the point a paid search ad runs to a point in the future when a conversion may or may not take place. This timeframe generally ranges from 14 days up to one month. However, unscrupulous marketers might lengthen that time period to 90 days or even longer.

This means if someone sees your ad in April, but then books in July, the booking will be attributed to that same ad they saw months before. Given such a long period, can you really give credit to the ad? At best, you can make a guess that it might have influenced the booking, but that’s hardly the basis for tracking the true effectiveness of a campaign.

How do your results compare across the industry?

So how can you assess whether your ads are really working as well as they should be? Just recently, WordStream released data from the Google AdWords industry benchmarks with a helpful sector-by-sector analysis. Here’s a brief review of the results relating to the travel industry, including a definition of the key metrics involved.

Click-through rates
As discussed, click-through rates show when a person clicked your ad and then ended up converting as a result. Knowing your CTR will help you work out whether certain elements of your ad need optimizing, such as the position, keywords and quality of your imagery.

In the travel and hospitality industry, the average click-through rate in AdWords is 2.18% for search ads and 0.47% for display ads.

Cost-per-click comparisons
CPC is the actual amount you pay each time a user clicks your ad. Within a CPC campaign, you’ll be asked to set a maximum cost that you’re happy to pay for an ad click. But often, you’ll end up paying much less than this amount.

In the travel and hospitality industry, the average cost-per-click rate in AdWords is $1.55 for search and $0.24 for display.

Conversion rates
Your conversion rate is determined by the percentage of people who visit your site and then end up booking with you. As hoteliers are aware, increasing conversion rates is one of the most important ways to boost booking revenue by avoiding OTA commission fees.

In the travel and hospitality industry, the average conversion rate related to AdWords traffic is 2.57% for search ads and 0.53% for display ads.

What results are other hotels seeing with their campaigns?

You don’t just have to wait around for the next industry report to keep ahead of the paid search game. To help your hotel set its own baseline, it’s worth asking different agencies and other hotels about their standard ROAS. The more research you can do the better, so aim to find out about the baseline ROAS across a range of channels including paid, organic, referral and social media marketing.

However, now that you are well-informed about attribution models and attribution windows, make sure you are comparing apples to apples and discount any data that seems like campaign measurement is being conducted outside of known best practices. Sometimes, if the performance and return sounds too good to be true, it is just that.

With an industry benchmark in place, you’ll be in a much better position to determine what constitutes a strong ROAS across each part of a multi-channel marketing campaign. Based on this insight, you can then have an informed conversation with your current or future marketing company to set rules and KPIs that are meaningful to your hotel.

A research-driven approach

Given the amount hotels spend on paid search campaigns, understanding the differences in paid search attribution models is essential to ensure ROAS is maximized and accurate.

As discussed, attributing too much weight to view-through rates can be problematic when it comes to determining whether an ad really has generated a conversion. In the interests of transparency, we recommend using click-through rates as the best way to determine your ROAS.

By questioning your own paid search vendor and carrying out your own research on industry baselines, you’ll be able to judge whether a campaign is truly successful and instigate any necessary changes to increase just how effective they are.