Vintory’s Director of Digital Marketing Teaches a crash course: How to Get the Most Out of Your Digital Advertising Efforts
“We’re seeing a lot of traffic, it’s not just converting.”
How many times have you heard this? How many times have you said it yourself?
Google Ads is a very effective way to get qualified leads when it comes to B2B and B2C marketing, but it’s important to see the effectiveness of these leads through the right lens.
I have news for you: your cost per click (CPC) is not the most important metric to follow when evaluating success.
The 5 best conclusions:
Understand the industry averages for paid search performance. Check out our benchmarks below.
Learn which metrics to focus on to make smart ad investments that drive higher conversions and signed deals.
Expert Tip: Test titles and descriptions through responsive search ads and let Google’s algorithm show the most engaging ad variations.
Optimize your conversion rate by implementing conversion tracking in Google Ads.
Find a trusted digital marketing partner who can help you analyze your data and make smart ad spend decisions to grow your business.
The impact of the sticker on owner metrics vs. Traveler metrics
When looking at your traveler marketing strategies, it’s important to get volume for your website. Top marketers realize that travelers have multiple points of contact, including third-party OTAs and review sites, before making the final booking.
Plus, you’re not just competing with other vacation rental companies. You are competing with hotels, resorts, inns, B & Bs, hostels, motels and the list goes on.
Ultimately, we seek to lead as many of these travelers as possible to make direct bookings and, for this, there needs to be a comprehensive strategy with as many people accessing your website. You don’t want to pay a lot of money for these clicks as your Average Daily Rate (ADR) will dictate what kind of ROI you are seeing on these clicks.
On average, the hospitality industry sees a CPC of about $ 1.65 on the traveler side of the marketing spectrum, with brand terms generating a much lower CPC (typically less than $ 1, depending on your business name). Those numbers are very attractive, given that the ADR varies between $ 100 and $ 500 depending on the location and type of property.
Ultimately, the cost of these clicks is very low because there are so many more impressions available, and in essence, Google’s auction is based on supply and demand (with many nuances along the way). People ALWAYS (especially now) look for inspiration to travel and go on vacation. The number of people who will be traveling in a given period of time versus the number of people looking to list their home with a professional rental manager is very different.
This creates a bit of a surprise when limited supply and high competition in many popular rental markets tend to drive CPC.
The average CPC range we see in Vintory on owner acquisition is $ 3 to $ 20. Vacation rental managers who are used to spending between $ 300 and $ 500 to generate more than 300 guest website visits are surprised when the same amount generates between 40 and 45 clicks from the owner side, and it really puts a premium on spending that money wisely.
So how can vacation rental managers get the most bang for their buck when it comes to digital advertising?
Make sure you focus on the correct metrics!
These are some of the key performance indicators (KPIs) that the management team Vintory used to generate more value for partners.
What does click-through rate (CTR) mean and how to use it
Do you have compelling messages that direct people to your website in your digital advertising? Your click-through rate (CTR) or engagement rate will give you a wealth of information on whether or not this is the case. The industry average for CTR ranges from 3% to 5%, depending on the level of the sales funnel at which you attract search engines.
Similar to how open rates in email marketing are actually more of a measure of the strength of your subject line, CTR is primarily about ad copy in Google Ads. That is why it is important to take advantage of all Google tools to improve this number as much as possible.
One of my favorite ways to test titles and descriptions is through responsive search ads, which allow Google’s algorithm to help you deliver the most engaging ad variations.
How to optimize your conversion rate
A low cost per click is good when volume is what you’re trying to drive, but vacation rental managers often play the volume game because their direct booking conversion rate is low. Less than a percentage is pretty standard for the industry, much of this is due to the fact that travelers can book through so many different channels.
Because importing conversions into Google Ads or adding conversion scripts to your website is manual in nature, some advertisers will not actually have conversion tracking in Google Ads and will simply try to monitor in Google Analytics.
Why is this such a missed opportunity?
Google uses a lot of behind-the-scenes automation to optimize conversions (even going so far as to create multiple automated bid strategies that are specifically optimized for conversions). By not giving Google the tools to measure conversions, you won’t be able to optimize them that easily either.
Use cost per conversion to make smart budget decisions
If your heart is set on having a cost metric to measure performance, I recommend that you review your cost per conversion.
Yes, clicks are a desired action, but unless your click-to-lead conversion is 100%, you’ll only get a fraction of the story with CPC as the primary KPI.
Viewing campaigns through a cost-per-conversion lens enables you to invest better in your highest-converting channels. It’s possible for a business to get ridiculously low CPC for specific keywords, but if none of those search engines are converting, what is the value of cheap clicks?
On the traveler side, you’re measuring this based on your ADR and revenue per available room (RevPAR). On the landlord acquisition side, your cost per conversion is measured against your gross reserve income (GBR) for the new rental that goes into your inventory. Depending on your market, this could be $ 20,000 or $ 200,000.
Now let’s take that gross booking revenue one step further. On average, the net margins on that GBR are roughly 10%, so you have between $ 2,000 and $ 20,000 on your bottom line. That is only one year; Hopefully, you won’t just keep a rental on your show for a year.
At Vintory, we calculate customer life by dividing a partner’s churn rate by one, so that a partner with an average 10% loss of owners would have an average 10-year life:
Let’s get back to $ 2,000 – $ 20,000 reaching net margins every year. With a lifetime value of 10 years, you are looking for between $ 20,000 and $ 200,000 in lifetime value and a gross booking income of $ 2M +.
At those GBR numbers, a $ 10 cost per click and $ 300 cost per conversion don’t seem all that outlandish.
Don’t set it and forget it
All of these KPIs are important, but if you’re not really paying attention to the numbers and adjusting your strategies based on what the data tells you, you will never get the most out of your digital advertising efforts.
Make sure to constantly monitor your campaigns to make sure these and other KPIs are in line with your marketing and revenue goals.
Here are 3 recommendations to help automate some of these records:
1. Create custom reports in Google Ads and Google Analytics that highlight your own KPIs, whether you use the ones listed above or build your own set.
2. Create custom alerts in Google Analytics to get notified when your KPIs are reporting performance outside of industry benchmarks / your desired results.
3. Make sure Google Analytics and Google Ads are linked and share information.. Google Ads will show you the interaction with your ads; Google Analytics will show you the subsequent interaction with your website. It is important to be able to connect the dots.
And make sure you find a trusted digital marketing partner that can help you read and analyze this data, to help you make the right decisions to grow your business!