Saturday, 7 January 2012

Google Adwords - a Primer for Hoteliers

When your company's name becomes a verb and gets added to the Merriam Webster Collegiate Dictionary you know you have become a household name. Given the ubiquity of the Google brand one would have thought that everyone would understand at a basic level how they generate revenue of almost $30 billion, profits of $8.5 billion and why they possess a staggering $106 billion stock market valuation!

Yet it still amazes me how little the average person knows about how Google makes money. But maybe it shouldn't as until about 3 years ago, I admittedly understood very little about Google's business model beyond the fact that they generate revenue from some form of online advertising. 

I suspect that many hoteliers in the Caribbean are in the same position that I was a few short years ago and understand very little about Google's advertising platform, Google Adwords, and how to use it to their optimal benefit. To better understand Google Adwords' potential benefit to a hotel or any business for that matter one has to put the following in perspective:
  1. The internet has a major impact on travel research and traveler buying decisions. According to a recent survey conducted by WIHP Hotel, a hotel internet marketing company, more than 60% of customers first find out about a hotel through online sources, particularly Online Travel Agents and Tripadvisor. The remaining 40% of the time, travelers usually first discover a hotel through referrals by friends and family. This was based on a survey of actual travelers that was conducted recently. You can read the entire article here
  2. Once a potential customer has become aware of your hotel, they will then use the internet for research and according to a the above mentioned survey they will use an internet Search Engine such as Google, Bing or Yahoo more than 72% of the time.
  3. As a result of its dominance of the search engine market, Google is the world's largest website (albeit with Facebook closing in on them) with about 1 billion monthly visitors. 
Given the above facts and given that using a search engine is such an important part of travel research, clearly a hotel's presence and ranking on Google is critical.

When someone searches for "St. Lucia Beach Resorts" for example you get two kinds of results: "organic" or "natural" search results and "Sponsored" or paid search results. See the screen shot below:

As you can see, the Sponsored Search Results are the most prominently displayed search results. They are displayed to the top against a coloured background as well as on the right hand and a clearly labelled as "Ads". Just under the sponsored search results are the organic search results which are not paid for.

There are thus two ways to improve your presence on Google. The first way is to aim for a higher position in the organic search rankings by investing in Search Engine Optimization (SEO) services. Long term this probably provides the best return on investment and is the best way to improve your Google ranking. But this can take quite a bit of time and don't look for instant results if you go this route. SEO basically uses several techniques including making your content more search engine friendly and getting links to your website from relevant, "authoritative" websites to improve your organic ranking on search terms that you consider important: "St. Lucia hotels", "St. Lucia Weddings", "St. Lucia Diving" etc.

The other option is to invest in Search Engine Marketing (SEM) via Google's Adwords platform. Google Adwords basically allows you to take a "short cut" of sorts and just pay for premium position by bidding on those same key search terms ("keywords" to use the jargon). Google Adwords uses a "Pay Per Click" or "Pay Per Impression" billing model so that you only pay whenever someone clicks on your ad and thus visits your website or when your ad is displayed (in this case you would pay a rate per thousand impressions). Some of the advantages of Google Adwords advertising over traditional print, television or radio advertising or even some other forms of online advertising include:
  1. It is highly targeted - you choose the keywords that matter to you and your ad will only be shown if someone searches for one of those keywords. This way you know that the person who sees or clicks on your ad is more than likely to be interested in your product or service. This is unlike advertising in a mass market travel publication for example where you might find that several of the readers may not even be interested in travel to your destination, let alone your hotel. 
  2. Ability to geo-target and target by demographics - With Google Adwords you can have your ad target persons from a particular country, state, city or zip code as well as target by gender, age groups, specific interests and even bid more for targeting these persons at certain times of the day! This is a feature of Google Adwords that is virtually impossible to replicate via any other offline medium and very few online advertisers (perhaps Facebook and Bing/Yahoo are the only ones who come close) are able to achieve this with the same level of detail. 
  3. You are in control of your advertising budget - you determine how much you want to bid on each keyword as well as your daily and monthly budget. 
  4. Reporting and Analytics - whoever designed the Google Adwords platform is speaking my language! What's the point of paying for an ad if you can't find out how it is performing. This is a clear limitation of traditional advertising but it really surprises me how many online advertising platforms provide very little information beyond impressions and clicks. Not so with Google Adwords. You get real time reporting on impressions, click throughs to your website, which keywords are performing best, which countries and demographic groups are responding best to your ads and even conversions (see below). A treasure trove of information of you love to delve into the detail or high level "dashboard" style reports for busy executives. If you link Google Adwords to your Google Analytics account you can get even more detailed information user behaviour on your website. For example did persons spend more time browsing your website when they came via the keyword "St. Lucia hotels" or "Soufriere hotels". This information can further help you to fine tune your advertising campaign. 
  5. Ability to measure your ROI - this is one of the more advanced features of Google Adwords but one that I would advise even beginners to use. How often do we wonder whether our ads are really helping us to generate revenue? Well Google Adwords' Conversion Tracking feature allows you to determine whether persons who clicked on your ad are signing up for your newsletters, completing wedding or conference inquiry forms or making a booking on your website (and even determine the value of that booking with a little basic programming from a reasonably skilled webmaster). This information has been invaluable to us at Bay Gardens Resorts. With this information I was able to determine that one of our ads was generating a 1000% ROI ($10 in revenue for every $1 of ad dollars spent) and thus allocate more advertising funds to this ad away from ads that were not converting as well. 
With so many advantages, high potential ROIs and given the instant gratification that one can get from seeing their ads in the top spot for certain search terms would I advise hoteliers to dump more traditional offline and online advertising and put everything into the world's largest online advertising medium? Not exactly. Offline (magazine, newspaper, television, public relations) advertising still has its place in the marketing mix and for some niche markets it is absolutely critical. Moreover, it is possible to end up wasting a lot of money on Google Adwords without generating any results by among other things:
  1. Bidding on keywords that are too broad or too competitive and hence too expensive to be worth bidding on. For example, I used "St. Lucia hotels" as an example of a keyword but the fact is you are competing against the major tour operators and OTAs who are bidding $2 per click and more to get premium placement. Better to bid on keywords that are less competitive but more relevant to your hotel's niche e.g. "Boutique Saint Lucia Hotels" or "St. Lucia All Inclusive Hotels"
  2. Using poorly designed landing pages that do not provide relevant information. When someone clicks on an ad that advertises your wedding packages for example they don't want to end up on your home page that has information on all your service offerings. Better to send them to the "Weddings" section of your website where they can get the information they were searching for in fewer clicks. The easier it is for potential customers to find relevant information the more likely you are to get them to convert.
  3. Poorly constructed ads - Google Adwords has a strict word limitation so you would think there would not be much room for error but it amazes me how many ads are constructed without the relevant keywords and key selling points in the ads. This in turn leads to low click through rates (the percentage of ad impressions that lead to a click) which in turn leads to you paying more per click that you should.
Google Adwords tend to "punish" poorly constructed ads that bid on inappropriate keywords and send persons to websites (landing pages) with irrelevant content. This is to protect the integrity of the Adwords platform and to discourage advertisers from trying to steal traffic by bidding on popular but irrelevant keywords (a online shoe retailer bidding on the keyword "Barack Obama" for example would be one extreme example). They assign such ads and the keywords they are bidding on lower "Quality Scores" which in turn leads to them having to bid more per click for the top position. So it is entirely possible that competitors who are better versed in Google Adwords are going to end up paying less than you for a better position as they are able to achieve better Quality Scores. 

Therefore, before shifting a large portion of your marketing budget to Google Adwords I would advise any hotelier to first do the following:
  1. Determine what your goals are - Are you trying to generate traffic to your website? Fill rooms during a soft period? Generate leads? This is important as there may well be more efficient ways to achieve your goals (SEO for example). 
  2. Invest some time in educating yourself and your staff - if you are reading this article this is a start but I am by no means the authority on this! There are lots of articles out there as well as the Google Adwords Learning Centre. I actually decided to go as far as getting the Google Adwords Certification but this is by no means a necessity for anyone!
  3. Experiment - Try different ad formats and different keywords.Target different demographics, countries etc to determine which respond best. There is even an "Experiment" option in Google Adwords that allows you to determine which combinations work without spending your valuable ad dollars!
  4. Measure your results - use Conversion tracking and Google Analytics to determine how the ads are performing. There is no point spending on online marketing if you cannot determine if it is generating returns!
  5. Consider getting outside help - it may make sense to outsource but make sure you are clear on what you want your marketing consultant to achieve and avoid compensation structures that are based on a % of ad spend. My preference is to pay based on results and there are some who are willing to have a portion of their compensation tied to results. 
This article is really just an introduction into Google Adwords and how it can be a valuable part of your online marketing mix. I will be writing a series of articles that delve into more advanced topics and share some the lessons we have learned the hard way at times. Many businesses have used Google Adwords to generate fantastic returns but I have also seen some hotels in the Caribbean use it incorrectly and end up wasting thousands of dollars. 

At Bay Gardens Resorts, Google Adwords makes up between 4-8% of our advertising budget on a monthly basis so it is by no means our largest advertising expenditure. It is a part of our marketing toolkit that we use for particular niche markets and I would encourage hoteliers to look at it in the same light. 


  1. Very well written and great information Sanovnik. My personal opinion is that Adwords as well as SEO are such complex activities that you really have to spend a lot of time on it to do it very well. Otherwise as you say, hotels end up wasting a lot of money. Not to mention that it's not something you only have to learn once, as the latest methods are constantly changing. Most hoteliers, especially in the Caribbean, are much better off outsourcing these activities. But I agree 100% with you that hotels should learn as much as they can with the time they have, so that they can keep the partner that they hire in check. The more you know, the more difficult it will be for them to charge you without delivering results.

  2. Thanks for the positive feedback Ashwin. I agree that things are always changing and despite our in-house expertise we sometimes find ourselves behind the curve by a few weeks on a new trend. We may well end up outsourcing some of our more complex Google Adwords and PPC marketing activities at some point as our online business continues to grow.

  3. I agree great primer. I've spent the better part of the past decade learning Adwords and still feel like I'm lost some of the time. It takes patience, discipline and a solid methodology. Further, wanted to share this article I just published with some side-by-side A/B testing. In my opinion, the ability to conduct these kinds of experiments are Adwords' greatest strength:

    1. Thanks for the feedback Matt. Great article on A/B testing. It is definitely a strength of the Adwords Platform compared to other PPC advertising platforms.