Google Hotel Ads new commission program; Pay Per Stay (PPS) is removing the heavy lifting work from you and your PPC agency. Moving to PPS reduces the risks and burden on your marketing teams, freeing up their time to work with their distribution colleagues on strategic activity. You can find out more about how they do this here, however in essence, “Google’s bidding algorithm calculates a maximum cost per click (CPC) bid intended to achieve an average commission equal to the partner’s target.”
Google is constantly managing your campaigns based on the returns they will get, and the return they will get is based on the commission you allot to each campaign. Your conversion is predominantly affected by the conversion of your website and your parity situation. So, for example, on a check-in day where you have severe parity issues or you have a case where one of your hotels is being undercut by Expedia by over 10%, it’s safe to assume that your hotel will get extremely low conversion regardless of your site conversion.
We use FornovaDI to constantly estimate your customer’s sensitivity to rate parity issues, which is different per hotel and per region. There are some hotels for example where a 5% price difference will not change the chances of a booking, as well as there being other hotels where a 5% price difference would mean no booking.
By correlating your customer’s susceptibility to book on OTAs and the severe parity cases, and removing those days from Google GHA, the hotel will experience an increase in conversion. Whatever results you get with us during the first few months, know that our clients get better results as we learn how to better evaluate and estimate your client’s decisions to book direct.
What’s to come
The Google product team has shared with us that the next development to expect in the coming months will be to allow hotels to bid a different commission for different booking windows. We’ll obviously keep you posted when this happens, but you should be aware, that in the future, when google provide this option we will be happy to set rules for increasing commissions for specific bookings windows based on occupancy - for example, when you have occupancy challenges, and we see that your competitor’s pace is higher than yours, we’ll increase your commission on google in order to get better visibility.