Why Hotels Must Bid on their Brand Name in PPC

One recurring discussion I’ve had with hotels when discussing their PPC campaign strategy is this: why do we need to bid on our brand name? Because this was a question I was met with so often, and one which I can understand why hotels (or any company for that matter) would ask. Surely if its your brand name, and they’re already searching for you, you don’t really need to spend any money bringing them to your website?

There are a few reasons why hotels must be bidding on their brand name. First of all, you can be sure that other brands are already actively bidding on your brand name. Even if you have copyright protection, that may not cover you in every market, and it’s also difficult to stay on top of. Just by performing a search for your brand name in Google should be enough for you to find out which sites are bidding on your name (at least in your own local market anyway). It’s likely that as a hotel you will find Booking.com and TripAdvisor as 2 of the bidders, but in truth there’s a whole bunch of recurring bidders which I’ve listed below;

Hotel Connect
Trivago
Hotels.com
etc!

Brand name PPC for hotels

 

Screenshot above highlights the amount of page-space taken up by advertisers bidding on a German hotels brand name

 

So why do you think these companies are bidding on your brand name? The fact is that your brand name will be a cheap click for them, and it will likely convert quite well on their website. Booking.com for example have one of the best-performing websites in terms of conversion rates. They invest huge amounts of money into ensuring their website converts at the highest possible rate. You can guarantee they’ll have a better conversion rate than your own site. And the big problem here is that even if they’re searching for your hotel name, once they arrive on Booking.com, Booking.com don’t care which hotel they book – they have millions of hotels to choose from now, and once they arrive on that site they’re going to be impelled to book somewhere.

To put things into context, an average brand name click could be around £0.50. This is for someone who knows the name of the hotel they want to stay at, so they’re likely in that final stage of booking (so they’re a highly valued searcher). Compare this to bidding on non-brand, such as “hotels in Paris”. That’s a really broad search query, and the user is likely in the beginning phases of their booking. They may visit another 30 sites or so before deciding on where to book. But bidding on a keyword like this is likely to cost around £4 per click for a decent position.

So in the above scenario you can see the business model behind OTA’s like Booking.com & TripAdvisor in bidding on your brand name; they can get a much lower CPA by using this technique. Unfortunately for you, as the hotel owner or brand ambassador, you’re losing out on all of the hard work that has been done to get that person to search for your hotel name in the first place. Without bidding on your own brand name, you risk losing these kinds of bookings every day. It’s really low-hanging, ripe fruit, and many companies will happily snap it up if you’re not happy to do so.

Even if you do already bid on your brand name in PPC search, you likely already feel the heat provided by these OTA’s. They bid heavily on your name because they know it converts well, and this in turn forces up the CPC that you have to pay, even as the brand owner (not overly fair but those are the rules of PPC).

So what if I don’t bid on my brand name in PPC; I don’t care which channel my booking comes in!

Although I heard this argument a few times I don’t really see much value in it. First of all, as a hotel your priority should be on driving more direct business. You can get bookings at a lower comission rate, so make more profit overall. Even if an OTA is driving millions of pounds in sales every year, they’ll still be taking a large 40% chunk or so; why not drive that business through your own website, and avoid that huge 40%? Depending on the booking engine you use, you could likely get it direct and only pay around 5% commission.

Secondly, as mentioned already in this piece, OTA’s don’t care which hotel drives their booking. So once they’ve bid on your name in PPC, and got that user onto their site, they’ll work hard to convert them at any 1 of their hotels. You also have no brand loyalty here. If someone books your hotel through Booking.com, chances are that they’ll book again through the same site, and won’t think twice about it. There’s no brand loyalty here, which is the value that you can get when you get direct business. Booking.com has a huge marketing push; through its newsletters and so forth. They even carry out retargeting on PPC, trying to encourage booking through them when a user has visited the site without booking and whilst they’re browsing elsewhere. You should value direct business, and you should value brand loyalty highly.

I rank first organically for my brand name so I don’t need to pay for this traffic!

This was another quite popular argument – if I’m ranking first in Google already organically, why should I start to pay for PPC ads on my brand name; surely this is just free money for Google?
It’s true that you may dislodge some clicks from organic onto PPC when starting to bid on your brand, but this is only really applicable if absolutely no-one is already bidding on your name (highly unlikely). One relevant situation I’ve seen is for a newly launched hotel. Searching for their name gave no PPC ads, because nobody was bidding on it at present (nobody really knew the hotel). Not until a few months later, when OTA’s had information on this hotel, did they start to bid on their brand name. Before this time, it made no sense to bid on it either – this would just displace the organic traffic. Unfortunately this is a very rare case, so we still always recommend brand name ads even if you do appear top organically.

Hopefully you can now appreciate the benefits of bididng on your own brand name. For me, the point to take away here is that you, as a hotel, work tirelessly to promote your brand. You carry out all kinds of promotional work and marketing, your staff do a good job, and your marketing team invests thousands of pounds promoting yourself online and offline. So why on earth would you not be willing to bid on yourself in PPC search ads? You go through all of that effort and are then just happy to let another company poach your customers from right underneath your noses! To me it has to be one of the biggest sins in online advertising, and unless you have the most broad-brand name in the world (which is another matter) then you should always bid on your brand name.

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