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Why digital marketing metrics can lie – and how you can better evaluate campaign performance
It’s budgeting season, which means your hotel is probably ready to start planning how, when and where you’ll be investing during 2020. As part of the “20/20 Strategy” series, we’ll offer expert tips to help you understand your digital marketing campaign reports and turn insights into impactful actions. This is part 2 of the series.
Part 1: Budget season tips: Mapping your hotel’s 2020 digital marketing budget
We all know that data is crucial for tracking the effectiveness of your digital marketing campaigns. But is the data you’re looking at really telling you the whole story? The truth is: the results you’re looking at can be greatly affected by the metrics that you monitor and how you monitor those metrics.
When Travel Tripper’s digital marketing team first works with a hotel client, we always want to gain access to the hotel’s previous campaigns and understand how the campaign was initially set up in order to accurately analyze relevant historical data.
For instance, understanding specific set-ups such as attribution and conversion windows would enable us to make an apple-to-apple comparison, which helps to increase the year-over-year effectiveness of the campaign. In addition, we can see why certain decisions are made and what kind of budget reallocation may be necessary to achieve the revenue goals at the property.
Tapping into our experience, we will reveal and explain the five most important elements that make up the digital marketing metricss to help you better understand and measure the performance of your campaigns.
1. Attribution Model
Google, Bing, and other channels all have different attribution models. These models can help hide insufficiencies in campaign performance, or increase the value of certain campaigns versus other campaigns.
For example, let’s say that we create two campaigns for a hotel: one of which offers guests 10% off, and another (created for remarketing purposes) offers 15% off.
Now, let’s say that someone types in your hotel’s name and clicks on the ad to get 10% off. However, when they visit your website, they don’t book. Instead, they click away and go to a competitor’s site.
Next, they go back to Google and see your remarketing ad for 15% off. Again, this ad doesn’t convince the customer to book. But later in the day, after searching for “boutique hotels in your city,” they find the organic link for your website, and book.
Which click in this scenario was the most important?
If we use a last-click attribution model, Google Ads would not get any recognition for the conversion, since the last click came from organic traffic and ultimately led to a conversion.
However, if we use a first-click attribution model, all of the revenue would be attributed to Google Ads. This is because the first click was on an Ad, and the model recognizes this click as the most important.
So, unless the campaigns have the same attribution model, it would be wildly inaccurate to compare one number to the next. They tell different stories and need to be interpreted with great care.
2. Lookback window
Lookback windows are defined as the time between a customer clicking or viewing one of your ads and converting. So, if someone clicked on your hotel banner ad today, then booked tomorrow, the lookback window would be 24 hours.
Commonly, the time period applied to a lookback window is around 15-30 days. But some unscrupulous agencies set the lookback window to the maximum 90-day limit, which allows them to skew the data in their favor and potentially mislead the hotel.
How the lookback window can mislead
Say an agency sets the lookback window to 5 days. If a customer clicks an ad and makes a Google query 10 days later, Google Ads wouldn’t get any recognition for the conversion. However, if the lookback window is set to 15 days, that same click would be attributed to Google Ads.
Now, imagine the agency applies a first-click attribution model on a 45-day lookback window. If a customer books 45 days after their first click, Google Ads will get the recognition for that booking. This recognition is regardless of what ultimately led the customer to book, which may have been an inspiring blog post, TripAdvisor review, or Yelp rating.
Furthermore, if this same customer books and stays at the hotel, then receives an offer to re-book at the hotel 45 days later, Google Ads may still attribute the new revenue generated to the initial ad that was clicked. Ultimately, this can cause confusing results that do not match at the property level.
3. View-Through vs Click-Through
Both of these metrics are totally normal to use in their own ways. But it’s important to be clear on how they work.
With a click-through conversion, the ad only gets the credit if the customer booked after clicking through the ad.
A view-through conversion is a conversion that happens after a user sees an ad, but doesn’t click on it. As we’ve discussed before, you don’t want to give too much weight to view-throughs. By their nature, they don’t provide an accurate way to attribute a person “viewing” a display ad as the conversion trigger.
To illustrate how view-throughs can mislead, imagine a customer called Josie searches online for “Hotels in Las Vegas.” She finds a property she likes and clicks on the website. At a later point, Josie sees your property’s ad but doesn’t click on it. However, she remembers your hotel name, types it into Google, then finds and books your property on Expedia.
Who gets the credit? In a view-through model, the ad and the OTA both get the credit. Potentially, relying on this model can lead to a highly inflated ROAS because the same conversion and revenue are counted twice.
What counts as a conversion? While the jargon in the industry can become complicated, there is one number that is very simple: revenue. How much revenue did an action make?
Agencies tend to be very vague when referring to conversions. For example, if a customer calls your hotel to make a reservation, is this a conversion? In many cases, the answer is yes. Obviously, right?
Think again. Is every phone call a customer attempts to make a reservation? If it isn’t, then we simply can’t say that phone calls and other similar actions are counted as conversions.
This is where conversions as a number can become tricky. Often, conversions are desirable actions that we want a user to take on a website, such as a booking, phone call, text message, etc.
In the interest of transparency, revenue-generating activities are sometimes called “acquisitions.” This is where you may see a CPA metric (cost-per-acquisition). Due to the ambiguity of these words, certain channels are now removing the word “conversion” entirely and changing over to CPA and CPL (Cost-per-Lead).
Summed up, understanding exactly what “conversions” entail for your own campaigns is essential if you want to understand their overall effectiveness.
5. ROAS vs. Revenue
It’s a common misconception that a revenue-generating campaign is the most effective campaign. To explain, which campaign would you rather have?
- Hotel A spent $4,000 in July and generated $25,000.
- Hotel B spent $2,500 in July and generated $17,500.
Most people would say Hotel A, because the revenue generated from this campaign is much higher. However, when we understand ROAS (Return on Ad Spend), we realize that Hotel B has a much stronger campaign and can be scaled to get better results.
ROAS = Return / Cost
When we look at the numbers using this model, we see that campaign A has a 6.25x ROAS, while campaign B has a 7x ROAS. Having a better ROAS means that you, quite literally, get the most bang for your buck.
Evaluate campaign performance with the right metrics
As shown above, it’s easy to be misled and base your entire strategy on data that doesn’t reflect the whole story.
Therefore, it’s vital to know the key drivers and settings behind the campaign metrics so you can correctly interpret them as you plan your budget for 2020.
To better understand your reports and turn insights into impactful actions, check out our upcoming webinar. Experts from Travel Tripper & Pegasus will share the key steps to creating a cross-channel, data-driven strategy for 2020. Sign up now to reserve your spot!
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