Heads In Beds Show - Running Paid Search Ads For Your Vacation Rental Business

Episode Date: September 7, 2021

We explore the basics of paid search: terms, budgets, tracking and results from running ads. Guide to vacation rental paid search adsBuildUp BookingsView this in video format

Hello there, welcome to another episode of the Heads and Beds show. I'm your host, Conrad O'Connell. So in today's episode, I want to dive in and talk more about paid search, Google paid search specifically, and share the insights and numbers that we're seeing today with our clients that are running paid search ads. We're going to dive into the basic terminology of paid search. We're going to dive into the results or ROI that you might expect to see, and finally tracking things that you should be aware of. So let's get right into it. Paid search ads are the best way for you to get direct bookings for your vacation rental business. Google earns $146 billion per year from paid search ads. Google paid traffic is the highest intent and highest converting traffic that you can access instantly. So before

we dive into all the reasons why running paid search is a good idea, let's run through the basics of what paid search actually is specifically from the Google point of view. So if you've done a search before on Google, you've probably seen these four ads show up at the top of the search results page. I did a search a moment ago for vacation rentals, and I found the following ads showing up. The top ad is for Vrbo, the second ad is for Vacasa, the third ad is for Airbnb, and the fourth ad is for Evolve. These four ads that are showing up obviously are predicated upon the search that I did, the location that I'm searching from, and which advertiser here chooses to bid on this specific keyword. These make a lot of sense to me. You should understand the basics of running paid search before you dive in. And I just wanted to share a few of the most important terms and the

most important concepts that you should understand and spend some of your advertising budget running paid search campaigns for your vacation rental business. So the first is CPC, or cost per click. Cost per click is the amount that you pay to get a single visitor to click on one of your Google search ads and visit your website directly. Now, there's a lot of different new bidding strategies out there where your ability to control the CPC, or cost per click, is a lot more restricted than it's been in the past but for the simplicity of this video let's just say that you can set your bids manually meaning you could choose to spend $1 per click and then drive that visitor to your website directly the cost per click is what you pay to get one individual person to come and click on your ad and visit your website

now your daily budget is how you control how much money you're actually spending in getting that traffic to your website from. For example, let's say you set a daily budget of $10 and your bid was $1 per click, you would get roughly 10 clicks per day in that scenario directly to your vacation rental website. Now you can spend a little bit over your daily budget. There may be situations where you have a day where you spend $15, for example, and then a day where you spend $5. But over a 30 day period, you'll always spend the daily budget times 30. So your daily budget is really what allows you to control what you want to invest and what you want to spend in the paid search channel with Google

search ads specifically. The most natural thing to talk about next is the keyword or query that you decide to bid on inside of Google search. The keyword is something like Destin Florida vacation rentals. That's the term that you're choosing to bid on inside of paid search. Keyword and query, these things are interchangeable. They mean the same thing.

Again, on some of the newer Google search ad products, you actually don't necessarily have to select a keyword. You could select a certain page and allow Google to select keywords for you. But again, for the simplicity of this video, we'll talk about the more default campaign types where you select which keywords you decide to bid on and therefore what you're willing to pay for them and your daily budget. And lastly, the thing that the end consumer sees, if you will, is the ad copy or the ad creative. The ad copy or ad creative is the actual text that shows up when someone does the search. So from a moment ago when I did my search for vacation rentals, we can see here that the ad copy that Vrbo was deciding to run, the headline is

Vrbo vacation rentals find the best place to stay. For Vacasa it says find a vacation rental, Vacasa vacation rentals. Those are the headlines. The descriptions, as you can see, were under the headlines. Vrbo's is find vacation rentals with your favorite amenities, Wi-Fi, private pool, kitchen, and more. Compare vacation rentals with Vrbo. Wide variety for all budgets and family sizes. And then they have some additional ad features, including structured snippets and sitelink extensions as well. But the ad copy is what the guest actually sees when they're looking at your ad and most importantly deciding if they're going to click on your ad or an ad from your competition or a national brand like these that I'm showing here on the screen. Once they click on that ad naturally they're

brought to a landing page. Now most importantly this should be a landing page that you control your own vacation rental website or your own landing page that you have access to so that you can track the results of what that traffic does when it comes into your landing page. It's not really a good idea or it's not something that we recommend for you to run a paid search ad and send it to an Airbnb listing page or a Verbo listing page. You can do it. It's technically possible to do that, but we wouldn't recommend it because you can't track the results of your advertising efforts and know what's actually driving results and what's actually converting into leads and bookings. We don't actually know what's converting into leads and bookings on that page. It's always optimal to make sure that any paid search campaign that you're running, you're sending that traffic to a landing page or website that you control so that you can track the results from that campaign.

So now that we have the basics down, let's talk a little bit about what I'm calling the great reset. Because as we're recording this video, it's the end of summer 2021. And in the spring of 2020, we had this great reset, right? The amount of money being spent on Google paid search ads,

specifically in the short-term rental, vacation rental, or even just general hotel hospitality space, obviously went down to zero in many cases. COVID had an immediate impact on the paid ads budget of every single travel brand on the planet. It wasn't just the local vacation rental manager that we typically work with that lost their budget or decided to not run ads. It was the biggest companies in the world, the OTAs, even the hotel specific sites, booking.com, Expedia, and of course, the large vacation rental brand marketplace websites, Airbnb, Vrbo, etc, as well as the individual manager.

So spend went from millions, tens of millions, down to pretty much zero during this time frame. And for the first time ever, I would actually go and do searches in Google. And I would see no search ads appearing. So I would do a search for Orlando vacation homes, which is a very competitive search. Normally, you always see ads showing up there, and no search ads were appearing during this timeframe. Since then, a lot has changed. And what I wanted to spend a little bit of time going over is what specifically has changed, and what's the ROI and the metrics that you might expect to see if you choose to invest in paid search ads for your vacation rental business. Most importantly, I want to answer the question of how you should spend your paid ads budget going

forward. There's a lot of different channels that you could focus on that you could optimize for, or you could run ads on. There's a lot of different channels that want your budget, want your money. And I'd like to talk about why Google ads, in my opinion, is one of the best ones that you can utilize and drive results for your business. So I like to come out of the vacation rental industry just for a second here to talk about the difference between running paid search ads and running social ads or other forms of display advertising. And I'm going to pretend for just a moment that we don't own a vacation rental business and instead we own a storefront, a physical storefront, let's say in a mall or something like that. And just for the purposes of the demonstration, let's say, we own a storefront, physical storefront, let's say in a mall or something like that. And just for the purposes of the demonstration, let's say that we own a

jewelry store. So in this scenario, what I like to draw an analogy between is if you own a jewelry store, interruption advertising or display advertising, social advertising is like people walking past your storefront. Maybe they're there to go to a different store, they're walking past, and you tap them on the shoulder and say, hey, look, I have a special, I have a deal, I have an offer on this particular ring or this particular necklace today. Would you like to buy it?

And of course, that form of advertising and marketing can be very successful. We run lots of different social ads, we run lots of different display ads, but they're always the minority of our budget because we find that they typically don't convert at the same rate as putting money into paid search campaigns. So in this analogy of having the storefront, we're stopping interrupting people in what

they're actually there to do, and we're trying to pitch them on what we have to offer. And again, this is a completely valid strategy, and of course it can drive results. That's like running a Facebook ad, right? They go on Facebook, they're there to look at funny pictures or cat memes or their friends or family, and you're stopping their scroll and you're trying to get them to come over to your business and say, hey, look, I have this great vacation rental or hey, look, I have this awesome ring that I can sell you, whatever the case may be. The difference between a Google search ad and interruption advertising like social advertising

is the difference between someone walking by your store, you tapping them on the shoulder and interrupting them, and someone walking specifically into your store and saying, I would like to buy that necklace. Because ultimately, that's what a search on Google really is. When someone goes into Google and searches Destin, Florida beach homes, we know exactly what they're looking for. And if we have the inventory to match what that guest is looking for, we have a collection of beachfront vacation homes and desks in Florida that we can rent to that guest. Naturally, there's going to be a much, much higher, a significantly higher conversion rate on that traffic, and we're going to be able to get significantly better results from spending money on Google paid search ads as opposed to spending money on social advertising platforms like Facebook, Instagram, or even just running other

forms of display advertising on Google. The difference between sort of interruption advertising and that targeted message that's getting right out to that correct person is significant in my experience. And that's why we typically advocate to put the majority of your budget into paid search ads if you have inventory that matches the demand of what people are looking for on Google. So I wanted to share some numbers to put this into a more realistic frame of what you might expect if you were to choose to spend your advertising dollars, your advertising budget on Google search ads. Over the last 12 months, we took a look at our MCC,

which is Master Client Center account inside of Google. And we've spent just a shade over $1.6 million of collective ad spend on non-branded search. We'll come back to non-branded in a moment. So over the last 12 months, we've tracked $18.5 million in bookings, online bookings, coming from that ad spend. And really what this means is that this is the gross booking amount as well, just to be clear. So we're not accounting here for profits or commissions or fees or anything like that. We work with some clients that get a 15% or 17% commission rate. We work with other clients that get a 50% commission rate.

So we can't necessarily know the profit just looking at this number at a high level. The average return on investment when we look at non-branded search over the past 12 months has been right around 11x, which means you put a dollar in, you got roughly $11 back in gross booking value during this last 12-month time frame. Now, that's actually an increase. We looked at numbers from 2019, we looked at numbers from 2018, and many of our clients were getting somewhere between $7 and $9 return on investment. So they were spending a dollar and getting back between $7 and $9 per ad dollar that

they were spending inside of Google. So the average return has actually increased a good clip since this great reset time period from the spring of 2020 into the late summer of 2021. Naturally, that makes sense. The demand during this last 12-month period has been significantly higher than normal for most vacation rental destinations that we do work with. So the return has been stronger as well. Even in some cases where the CPC went up, meaning there was more advertisers bidding and looking on those same keywords that we were, we still got a better stronger as well. Even in some cases where the CPC went up, meaning there was more advertisers bidding and looking on those same keywords that we were, we still got a better return on our investment because the conversion rate or the overall booking value went up as well. So if

we're paying more per click, that all works out well if we're getting more bookings at the end of the day, and those bookings are returning a higher dollar value into the actual bottom line. So obviously, tracking your return on investment is as important as it's ever been. But it's also harder than ever, because some of these platforms out there that we rely on to give us some of this data back, like return on investment, or conversion tracking, or some of these different elements are making it tougher for the average marketer, the average small business owner to actually understand what's going on. So there's a feud, if you will, between Apple and Facebook. And Apple

is now making it significantly harder for apps like Facebook, for example, to show the data and the numbers, the pixel tracking coming from their app into people actually booking and making results online. So this sort of thing, I suspect will continue. This isn't the last that we're seeing of this particular model or of this particular issues or problems. And you may have seen some warnings like this, if you've logged into a Facebook ads account recently, where they say that the results may not include conversions or numbers or data around people who have opted out of ad tracking on iOS 14.5 or later. I suspect that this is going to get more severe over time. It's

not going to get easier. I suspect it could be harder. What you want to rely on is having an analytics platform on your website, like Google Analytics, to see the results of your ad spend, whether that is Facebook or Google or even coming from other channels. Google Analytics data is good, but it can be a little bit misleading. So I wanted to talk about that for a few minutes just to decide, or just to explain a little bit better, why a click doesn't always lead directly into a booking, at least not right away. I certainly would prefer if that's the case, because there are situations where we're spending money, some of our clients add budget into campaigns, and we're seeing lots of clicks come into the website, we're not always seeing an

immediate result right away. And there's a lot of different factors why that may be the case, right? People don't typically do a search like Destin, Florida vacation rentals, click on an ad and book the first property they see. They're going to browse around, they're going to look at different websites. The normal travel booking behavior is something that makes our ability to track the results from paid search or any sort of digital advertising a lot more difficult, unfortunately. So we have an example here of a client that we're working with who's done $1.2 million in direct bookings this year on their website. So of this $1.2 million, according to the Source Medium report in Analytics, $510,000, which is around 40% of that revenue,

has come from Google Organic as the last touchpoint before they converted. Direct has driven $331,000, which is around 26% of that revenue. Google CPC, which is our paid search ads that we're talking about here, has driven $268,000 in revenue, which is around 21% of the overall revenue. And then we get into very low numbers. The fourth place option source of bookings is actually Yahoo Organic Traffic. They did 35,000, which is only 2%. So naturally in this case, as you can see their top three traffic sources, Google organic direct and Google CPC account for well over 80, 90% of the tracked revenue for this particular website. Just to

share some more numbers. So this client's average booking value is $2,500 and they've done 495 reservations or direct online bookings during this timeframe. When you dig a little bit deeper into analytics, you'll find this particular report that's called the multi-channel funnel report. So what this lets you look at is where people actually visit, the ways that they visit your website before they actually make that purchase or make that conversion, assuming they're using the same device, assuming they don't clear their cookies between those different browsing sessions. And that's just to get off on the right track here. That's a faulty assumption as well, because people do often switch devices. People do sometimes

clear cookies or use different browsers to look around at your website. One scenario, they may be looking inside of an app, like their email app, and then they may later come directly to your website and convert that way. So just know that this report, although it's useful, doesn't necessarily paint the full picture of how people use the website in the real world. But as we look in this website, you'll see that the paid search channel contributes a significant amount of first visits to the website. So four of the top ways that people actually visit this website is by doing a paid search and visiting the website directly first. Then they actually, in some cases, return. In some cases, many times they return five, six,

seven, eight, nine actual browsing sessions before they actually make their reservation or make their online booking. So all the different examples that we look at here are ones where paid search was the first visit or it was along the path, but it was not the last visit. It wasn't the final visit that they made. They didn't click on a Google ad last before they actually made their online reservation. They used the Google search ads, find this particular client, browse around,

look at the properties, or they used it when they did a very specific search. Let's say it could be someone looking for pet friendly vacation homes in a destination, something like that. They clicked on those paid search ads and then later came back multiple times before they actually converted. In these examples, none of these actual conversions where the paid search ad

was not the final click before they made the booking are going to be counted in Google analytics as a paid search booking. So this information again is accurate, but it can mislead because you may assume given the ad spend level, they only got 20% of their bookings from paid search. According to Google analytics, you may say, maybe it's not as important of a channel. Maybe we can invest a little bit less in it, or we don't want to invest a little bit more in it going forward. And then you dig a little bit deeper into this multi-channel funnel report. And without paid search, really the majority of these conversions, these majority of these online bookings may have never occurred.

This person just may not have found this particular website. And that guest may have gone to the competition. They may have gone to Airbnb. They may have gone to VRBO. So paid search, as you can see, plays a critical role in kind of this guest journey that we're all trying to optimize for, where a guest doesn't come in and book right away. A guest may come in and view your website, browse around a little bit, and then later book directly. But there may be a lot of steps that happen in the middle where paid search is helping or getting that person to the right page or getting that person to the right property before they actually complete an online

booking and a direct booking. Again, guests use multiple devices. Guests don't just look at your vacation rental website on just their phone or just their browser. They often swap between devices. And planning a vacation and booking a vacation rental is often a communal process anyways. It may be a wife, a husband, a grandmother, a brother, a sister, an aunt, an uncle that are all involved in booking that vacation rental. So sometimes we find as well when we dig in, the person who actually searches and looks for the rental is in many cases not the person that actually takes out the credit

card on the final step and enters it into your website and books that property. So all these different paths that people shift around can cause a lot of our tracking to be a little bit less accurate because as people jump around between devices, we lose some of that tracking. We don't necessarily know that dollar, that click that we talked about a few minutes ago, tied directly back into that booking that might have happened later on. And guests may take anywhere from one, that would be ideal, but that doesn't happen very often, to 20 sessions, 20 visits to your website to actually convert and make a direct booking. And the truth is that nothing is 100% trackable. We can't take even $100 of ad spend and know for certain every single action

that those 100 people took. Let's say we got 100 visitors for $100. We can't necessarily know every action those people took before they made an online booking. So to support your paid search efforts and to support some better tracking, you could do things like this. You could gather qualitative data. After the checkout is complete, you could ask something like, how did you hear about us? With some drop-down options or the text field. And you could look at the answers and see how many people mentioned things like your Facebook advertising, your Google advertising, how many people mentioned things like your email marketing. Maybe they originally found you on a listing site like Airbnb or Vrbo. And you could start to collect some of this data and see what people say

when you ask them a question like, how did you hear about us? Now I would caution you just a little bit against putting too much weight into this data because what we find is that people actually don't know what they've clicked on. So we've had some examples where people have converted in one browsing session, we've asked this question, and we know they came from Google and they said, we heard about you on Facebook. So it's a tricky situation where they did hear about us on Facebook, it caused them to do a specific search on Google for a property, and then they made a booking. So that booking in analytics will always be credited to Google. But the how did you hear about us, what sort of spurred that action for them to come on Google, search for this particular property and make a booking was seeing a Facebook ad. So this data can be paint a little bit more

of a complete picture, but it shouldn't be used solely, nor should analytics data be used solely. These sort of things can be combined to get a more complete picture. Another thing that we're seeing more and more is being able to track phone calls by source. So if you know that people are calling in, you can sometimes get a little bit more of a complete picture because phone calls typically happen before the actual booking occurs in many cases. They may call and have a question about a particular set of amenities in a property. They may have a question about cancellation policy. They may have a question about rates or fees. And sometimes those phone

calls precede the actual booking, whether that happens on your website or whether that happens over the phone. And at the end of the day, no one single source, in my opinion, should get all of the credit for your digital marketing or digital advertising efforts. Someone could click on a Google paid search ad, like we're talking about today. They could visit your website, leave, get an email from you later on, see a Facebook retargeting ad that you've set up. And all these things is not the one reason why that guest may have booked. It could be a combination of all these things that actually ends up driving the result at

the end of the day. So while we're advocating for spending money on paid search ads, just know that a lot of these things are not necessarily, it's not just one channel that you can focus on to get the best results. So some trackable KPIs that you can focus on, in addition to the analytics data of looking at bookings, you could focus on, for example, comparing your social traffic time on site to your Google paid search time on site. What we typically find when we look at that information is that your paid search time on site and your engagement from a paid search visitor is significantly higher than the engagement that you get from an organic social visitor or even a paid social visitor. Someone who's on social media, particularly if they're on mobile, if they're on their phone,

might look at one property page, might look at two property pages if you're outperforming the average. Whereas someone coming, for example, from a desktop computer, laptop computer, from a paid search campaign may look at six, seven, eight, nine, 10 different properties on your website. So the engagement from paid search campaigns and paid search visitors, again, is significantly higher. Going back to our analogy from a few minutes ago, the jewelry store and someone coming in and specifically wanting to buy a necklace or wanting to buy a ring is always going to convert better than someone that you just convinced to look at it for a second or two before they move on to something else. So you can also focus on all the things that happened before the online booking. So if these

things are coming from your paid search campaigns, you're on the right track. Phone calls, contact form submissions, property page leads. So for example, if you have a contact form embedded on each of your different property pages, those could all be things that people fill out specifically coming from paid search. And that's when you know you're on the right track, and you're starting to see some results from those efforts. And then finally, here, things like live chat engagements, if you have a live chat on your website, you can see the information that people are putting in there. And you can track that it's coming from paid search and start to see some of these sort of leading indicators or these leading metrics that are occurring before someone actually

may make that online booking. And then at the end of the day, of course, what are we what are we after here, if we're spending money on Google paid search ads, we want to be getting online bookings at the end of the day. So you do want to track the ones that are coming specifically from paid search, and then the ones that are assisted by, or where paid search played a role in their ability or in their path when they actually do book with you directly. So clicks do not lead to bookings. It's not that simple. It's not that straightforward of a path, unfortunately.

But clicks do lead to revenue. And if there's one thing that I could share just to wrap up here, it would be that Google paid search ads do the best job in our experience of driving clicks, driving high intent traffic to your vacation rental website, and ultimately driving revenue at the end of the day. Thanks so much for listening. I appreciate it. If you have any questions, feel free to email me Conrad at buildupbookings.com. I appreciate any questions or comments or feedback you may have about this. And I appreciate you taking the time to listen to this or watch this today. I look forward to hearing from you

and looking forward to seeing how we can help grow your vacation rental business. Thanks so much for your time.