On October 4, 2017, Google released an update that allows AdWords campaigns to spend up to twice their average daily budget. Previously, campaigns would only serve up to 20% over the daily budget.
Google describes the update as being designed “to help you hit your advertising goals,” and there’s a clear logic to the thinking.
Over the course of a month, internet traffic is extremely changeable. So on days when there’s a spike in quality traffic, a campaign that spends up to twice its average daily budget can capitalize on the extra attention. Equally, on days with less traffic, it makes sense to reduce ad frequency to account for lower levels of interest.
Ultimately, this update represents a more intelligent way of distributing ad spend based on the rise and fall of relevant search interest. But what are the potential implications for hotel marketers?
In the following post, we’ll look at how these changes will impact your AdWords spend, how to manage your budget more effectively, and the steps you’ll need to take in order to capitalize on a potential boost in bookings.
Impact on monthly ad spend
It’s important to note that as before, Google won’t charge advertisers more than their monthly charging limit. This figure is determined by multiplying the average number of days in a month (30.4) with the average daily budget.
Overall, your ad spend will stay the same each month. Any extra money you spend on high traffic days will be offset by spending less than your daily average budget on quieter days. Google has also pointed out that if they over-deliver on your monthly budget, they’ll credit the overdelivery cost back.
However, it’s worth noting that if you alter your daily budget during the month, a monthly charging limit won’t apply. Here’s how Google describes this kind of scenario:
“Let’s say your campaign runs for three days. You set a daily budget of $30 for the first day, $40 for the second day, and $50 for the third day. You could be charged $60 on the first day, $80 on the second day, and $100 on the third day due to the 2 times daily charging limit. This means that you’d be charged $240 in calendar month and a monthly charging limit won’t be used.”
This has important implications for short-term campaigns. For instance, if you advertised a room deal over five days, and kept increasing your daily budget in a similar way as outlined above, you could end up paying twice your intended budget. While this is unlikely to happen in reality, it’s worth keeping a close eye on your campaign in these instances.
The implications for hotel marketers
Depending on the kind of PPC you’re running, you’ll need to consider how Google’s update impacts your campaign and how to market your hotel strategically throughout the search funnel.
Funding a branded campaign
Investing in a branded campaign is crucial to capturing attention at the bottom of the search funnel. At this stage of the search process, users are specifically searching on your brand terms and getting ready to book.
Prior to the point of the purchase, an engaging and prominently placed PPC click can help drive those all-important direct bookings. However, virtually every hotel brand has to compete with OTAs and other properties bidding on their own brand terms.
This is where Google’s budget update offers a golden opportunity to get ahead. On days when there’s more interest in your brand, your campaign can now spend twice as much as your average daily budget, helping you to capitalize on the heightened level of attention.
For any marketer struggling to fully fund their brand campaigns, it’s time to consider the merits of finding the extra budget to invest in this potentially lucrative new opportunity to drive bookings.
Funding a non-brand campaign
As discussed, the amount of search traffic Google observes on a given day will directly impact whether your campaigns over-serve or not. Based on this fact, it’s especially important to remain vigilant on the amount you spend on upper funnel initiatives.
The reason comes down to brand awareness and buying intent.
At the top end of the funnel, your prospects are at an earlier phase in their research and further away from booking. They’re likely searching on non-brand terms, such as “pet-friendly hotels in New York” or “Los Angeles hotels with a pool.” In essence, they’re doing research for a trip that may or may not happen further down the line.
Marketing at this phase of the funnel allows you to reach the widest possible addressable market, which can potentially bring in a lot of extra traffic. But a large number of these leads may not end up converting on your site.
So in theory, you could spend twice your average daily ad spend when relevant traffic volume is high without seeing a significant boost in direct bookings.
As an overarching approach, it’s best to think of top-of-funnel campaigns as a way of supporting and driving traffic via additional strategies (e.g. branded PPC campaigns) and other channels such as direct and organic website traffic.
Whether your property has a limited budget or not, it’s crucial to be conservative and continuously measure if the extra money you’re spending on upper-funnel initiatives is paying off long-term.
Remember, if you set your campaign budget too high, there’s now a higher probability that you’ll end up overspending and negatively impact your bottom line.
Monitoring occupancy levels
With the ability to suddenly attract a surge of interest in a narrow booking window, it’s also essential to keep a close eye on occupancy levels. When booking interest is high, you could quickly oversell rooms and have to turn guests away because you can’t accommodate them.
Overspending on your daily marketing budget is clearly a waste if you haven’t got the capacity for extra guests. And it could also leave you with a lot of frustrated potential customers who might be put off from wanting to book with you again.
If you don’t think you can accommodate a surge in bookings, you may want to lower your daily budget. However, there is another way to avoid spending your budget on attracting guests when your property is booked.
With Google’s Remarketing Lists for Search Ads (RLSAs), you can be far more targeted in your marketing efforts. RLSAs let you target people who have already visited your hotel website. But unlike traditional remarketing, these ads are only displayed when a user conducts a specific search for your hotel, or any keywords you’ve chosen.
So by creating a list of users who have previously shopped sold-out dates in your property’s booking engine, you can exclude this list from your PPC campaign.
Capitalizing on the budget update
By tapping into real-time search activity, Google’s AdWords update will provide hotel marketers with the ability to maximize ad spend and boost the performance of their campaigns.
If hotels have the budget, investing in both upper and lower funnel PPC campaigns could see an increase in both brand awareness and direct bookings. The key to success will involve careful management of budget and constant tracking to measure how overspending at different stages of the search funnel affects the bottom line.