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Why hotels need to bid on their own brand name in AdWords campaigns

There is a school of thought out there that hotels should NOT bid on their brand names in Google AdWords. In this school of thought, it’s dumb for a hotel to be paying a portion of their AdWords budget on something as basic as their brand name. “Why pay for a brand name keyword? Isn’t this essentially paying money to preach to the choir since people who are Googling my hotel already know of and want to stay at my hotel?” So the thinking goes.

Let us tell you, that is a bad position to take.

Think about why people Google things in the first place. First, they likely don’t know the website URL. And secondly, “Googling” something is now a regular Internet habit. In fact, most browsers don’t require that you type in a URL in the browser bar—you can type in what you’re looking for, and it will send the query straight to a search engine.

So, let’s say that a guest searches for your hotel name to find your website URL. The first thing they see is a PPC ad that you didn’t pay for (because you still adhere to the old school of thought). The guest isn’t thinking, “Hey, this looks like an ad. Let me look for a result that isn’t an ad.”  They just see a link to book rooms at your hotel and they click on it. It really is that simple.

Now since there’s an ad for rooms at your hotel and you didn’t pay for it, someone else did. Who? An online travel agency, most likely, and some of them are very clever in how they go about it. Take the below ads for example:

Example of brand hijacking by OTAExample of OTA brand hijacking

It is very difficult to identify at first glance that these ads are for hotels.com and booking.com. Both use the name of the hotel in the immediate title and both use the same name in their own URL.

By making the choice not to bid on your brand name, you are thereby waiving your right to get dibs on the revenue for that room—and letting someone else earn money in the process.

The new school of thought is this: You MUST bid on your brand name if only for insurance purposes. If you do not do it, then someone else will. The small amount of money that you spend bidding on your brand name is worth it for the extra revenue you will realize each time you receive more bookings directly on your website instead of via OTAs.

Why brand hijacking in PPC ads matters

The concept of brand hijacking—essentially when OTAs bid on and use hotel brand names in online advertising—is not new, but recent Google algorithmic changes have increased the effects this has on hotel bookings and revenue. While OTAs have the legal right to do this because of their contractual clauses, it still harms your business financially.

You might assume that your website would be the first returned result in search engine results pages (also known as SERPs). After all, if your hotel is following solid SEO principles, shouldn’t your hotel appear at the top of the page?

The answer is no.

That’s right, Google places its pay-per-click (PPC) ads first, and shows organic search results below the ad. After all, AdWords users are paying good money to receive premium placement, so Google returns this favor with prime placement in search results. Even if your hotel website comes in as the first organic link in Google search results, there may be three to four PPC results above the organic results.

If you have not bid on your hotel name, then all of the results that appear above your website URL are paid for by third parties. Worse still, your hotel website is now so far down the page that users will not see it unless they scroll down. And with so many results for booking rooms at your hotel, why would they scroll down the page?

The average consumer is likely to click on the first link that they see, without thinking about whether the link is an authoritative link to your website, or whether the link is from a competitor site like Hotels.com or Booking. But don’t just take our word for it—the image below shows a heat map by Mediative showing where people viewed on a search result page before clicking back in 2014.

Heat map of search engine results page

You can clearly see that the top red areas are paid listings and other sponsored results controlled by Google, whereas the very bottom yellow area is where the first organic results show up.  Although Google has changed its results page layout slightly since then, the principles still remain the same.

Every time a consumer sees this and clicks on the first link, you lose money. If you bid on your hotel brand name, you are likely to be one of the PPC ads at the top of the page, and more likely to receive the click and the correlated room reservation.

Although it’s good to get the reservation either way, it is much better for your bottom line to have guests booking through your hotel website rather than an OTA. Guests searching for the hotel name directly clearly want to stay at your hotel—it’s not the same as getting an reservation from someone who was searching for keywords like, “hotels in X City.”  In order to get that direct booking, you’ll need the premier Google placement that comes with the ad.

The benefits of being first in SERPs

It’s good to be first: The number one returned result in Google gets 33 percent of clicks. So if you can land the first PPC ad for any given keyword, including your brand name, you will see significant traffic from every ad.

The second position in SERPs receives 18 percent of clicks. With 51 percent of clicks taken up by the first two slots (which are both ads), the likelihood decreases that a user will scroll down past the ads to click on your link. Assuming that there are four ads, and an organic link to your hotel is in the fifth slot, your link is projected to receive just 6.1 percent of clickthroughs.

From our own research undertaken in similar test conditions, we have found that there is not only a direct link to higher clickthrough rates in relation to ad position, but also booking revenue is directly affected. The higher the average ad position, the greater the total revenue generated directly through the website.  This data should convince any holdouts who have been adhering to the old line of thinking.

Why does it matter that you receive premium placement over an ad purchased by an OTA? This is simple: Fees.

Sure, a booking is a booking and you receive money either way. But OTAs have high commission fees (check your agreement if you need a reminder). To maximize your profit for a given room, you need to either have a direct organic booking (via telephone or your hotel website directly) or have the booking come via your PPC ad link and not a competitor’s link.

Any time an OTA delivers a booking for you, in any way, you receive less money for that room than you otherwise would. While you obviously want the OTAs do to well, so they can continue to deliver guests to your site, you don’t need them to succeed at your expense.

Takeaway: A diversified approach is key

To succeed with advertising, you must strive to maintain a balanced strategy for PPC and AdWords. After all, bidding on your brand name only affects returned search results for searches that include your hotel’s name.

Many travelers simply search for hotels in a city or neighborhood. They may be unaware of your hotel’s presence, yet likely to stay there if they find it via while searching or come across positive reviews on a travel website.

When planning out your AdWords spend, leave money to cover branded and unbranded searches. By casting the widest net with AdWords keywords, you can leverage your budget against third-party websites to get the biggest return on investment. To maximize your ad spend, it’s beneficial to work with an experienced PPC marketing strategist who can explain not only what works best, but why.

Nancy Huang

Nancy Huang

Nancy is the Senior Marketing Director at Pegasus and expert in strategic communication, brand development, and content marketing. She is an admitted travel junkie and loves finding amazing hotel deals when booking direct. Contact her at nancy.huang@pegs.com.

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