At Fuel Interactive, we’re always trying to find more profitable advertising and marketing channels for our clients. That means we test beyond those channels already known to have the best ROI (which are email marketing and PPC). Some of our clients have virtually unlimited budgets, so we’ve been able to try a variety of different channels.
I want to show you comparative results on some of the advertising opportunities we’ve tested.
NOTE: this case study is in the hotel industry. Some of these channels are only applicable to travel and hospitality, or to our client’s locale. For other clients, look at advertising opportunities specific to their verticals and geography.
Here’s what we saw in February 2009, which was a strong hotel booking month, for one of our clients. The numbers here are similar proportionally to what we’ve seen in other months.
*ROAS is an ROI metric = revenue / ad spend
Where Was The Best ROI?
To protect client identity and competitive advantages, I can’t share the spends or sales volumes, but I can tell you that the lion’s share of revenue came from Pay Per Click.
The best ROI results came from:
- Pay Per Click advertising
- Text ad placements on locally-focused websites
The advantage of some of these local placements is that the cost per click can be much lower than what you pay in AdWords- at times, 50% less or more. For example, we can get clicks from MyrtleBeach.com for less than $0.50, which the average AdWords CPC for many of our hotels is $1.30. Naturally, your cost per sale is lower, and this increases your ROI.
TripAdvisor achieved a great ROI, but we couldn’t spend a lot there. The overall revenue was a drop in the bucket compared to PPC.
Details on PPC Efforts
Pay Per Click included Google AdWords, Yahoo, and MSN. As usual, Google provided the bulk of clicks and sales. Yahoo produced the best overall ROI in PPC, but a significantly lower volume of sales than AdWords. MSN produced its typically low click volume.
AdWords campaigns were focused on customers both new to Myrtle Beach and customers familiar with specific hotel brands. We used a mix of Search and Content networks. Google’s newer approach to Content Network keywords yielded ROAS above 300%.
Six Budget Allocation Recommendations for Online Advertisers
For those who are allocating ad spends online, this case study and our other client experiences lead me to recommend the following:
- Test new ad channels ONLY if you can track ROI via your analytics. Also, use call tracking to find out how many sales come via each channel.
- Spend where you get the best ROI. Do not pay for clicks blindly. Don’t pay for impressions only unless you want to be accused being stuck in the 20th century.
- Spend the bulk of your ad spend on pay per click, mainly AdWords, but also as much as you can in Yahoo.
- For new customers, PPC is your strongest option. But don’t neglect appropriately stimulating return sales with emails to your house list.
- Find media placement opportunities on locally-focused sites, especially those that use text ads and charge lower than the going AdWords CPC for your niche.
- Consider directly approaching sites with good ROAS from the AdWords content network. If they have their own advertising opportunities, you may be able to lower your CPC and improve your ROI from these sites.