The State of Hotel Advertising: The Rise of Display in the World of Meta

One of the key findings of our research, is the positive trend of Display advertising. At D-EDGE, we have implemented what we call Pre-targeting (a technique called also Prospecting) together with a network of partners and the use of classic Re-targeting. The growth of these channels has become a standard for our customers. Both for the very high ROI over the years (never below 9x), and for the volume of bookings generated.

In 2019 alone these channels generated as many bookings as Google Hotel Ads and TripAdvisor combined. Because display ads are not shown directly on search engine results, the use of this kind of campaign can increase visibility without the risk of traffic cannibalisation.

Today, metasearch ads in the hospitality space are almost synonymous with Google Hotel Ads. The growth of the company in the travel space seems to be unstoppable. The first incarnation of GHA launched nearly a decade ago under the name Hotel Finder. Back in 2012 Hotel Finder was generating less than 0.2% of market share, but in the span of 8 years that number jumped to 52%, more than TripAdvisor, Trivago, HotelsCombined, and Kayak combined. ROI-wise, Google is the undisputed winner as well, with an average return in 2019 of 10.5x, increasing steadily since 2013. The launch of google.com/travel in 2019, the implementation of Book on Google, and the recent Pay Per Stay (PPS) and Property Promotion Ads (PPA) features confirm the renewed interest Google has in the hospitality industry and cast a dim shadow over the future of other meta.

Over the years, the Return on Ad-Spend (ROAS) for Tripadvisor metasearch ads remained stable: 10X in 2012 versus 9.5X in 2019. What changed, is the volume. In 2019, Tripadvisor generated 52% fewer clicks than in 2012. Since new players came on board over the last decade (namely: Google), competition has obviously played a role. Yet, one of the main reasons for this drop could be found in the business model of Tripadvisor itself, and at a closer look, the decline seems to come from a change in business model and advertising products. Since the early 2010s, the company introduced a more extensive suite of products and features: the hotel price comparison in the results’ core page (2013); the “Instant Booking” facilitated booking tool (2014); the feed-based revamp and the introduction of the “Business Advantage” suite (both 2017); the new “Sponsored Placements” advertising solution and the self-service ad platform “Tripadvisor Media Manager” (both: 2019). Most recently they launched a co-branding ad platform, that allows advertisers to pair Tripadvisor audiences with the ad inventories and targeting capabilities of third-party sites, which for now include: Facebook and Instagram. As of today, Tripadvisor has ten new advertising products in beta test, so a certain degree of dilution in traffic coming from metasearch ads can be explained and puts the drop in volume in a more nuanced context. That being said, investments in Tripadvisor metasearch ads remain very qualitative with a very engaged and relevant audience.

With meta results taking more and more space on the Google search engine results page, it is not surprising that classic search engine advertising has seen negative growth. Brand-protection on general search engines (Google and Bing), once the safest investments of all, paid the highest price, with ROI shrinking from 16x to 12.4x, and the average CPC increased by 10 cents (0.31€ in 2012 vs. 0.41€ in 2019). With Bing and Google both working on hotel advertising channels within search results, the situation for Microsoft’s search engine closely matches Google. According to Statista, in January 2020, Bing had a market share in the search engine space of close to 6%, while this figure was at 3% in 2010. The Microsoft search engine currently processes over 10 billion queries/month and it may be used by hoteliers as a secure sandbox to beta-test different advertising approaches, before implementing them on Google.

While it is customary for digital marketing services to promote results in terms of Return on Ad Spend, we are tending towards using CPA as a model. This makes for a clearer comparison with OTA costs, and while direct marketing campaigns are complementary to OTA marketing, we believe it is important to compare like with like.

Many factors go into the cost of advertising: Rate parity, agency costs and of course brand building which is an important, though hard to measure result.

We have compared the various advertising channels with their minimum, maximum, and average cost of acquisition as a guide for our customers to have a clear view of their direct advertising costs compared to OTA distribution costs.