Wrapup – Hotels Combined PPC Affiliate Experiment

So the Hotels Combined experiment has finished. Here are the final results.

Total Expenses:$613.20
Total Commissions: $176.16

Total Profit: -$437.04

Conversion Rate Lower Then Expected

One of my major concerns early on in week 1 was the conversion rate. Week 1 – 2 was the most controlled and targeted part of the campaign ( before I started dumping dozens of other countries into the campaign ) Even during this time, conversion rates were lower then expected.

So up until this point, the whole process is free, without obligation. This should mean alot more conversions… But that doesnt seem to be the case.

Furthermore, It got me thinking, once people have clicked out to book ( when you get paid for the lead ) they are pretty much gauranteed to pay for that booking.. They have commmitted. Because if they are NOT committed they would just leave or keep searching… There is no reason for them to click and book with a supplier unless they are ready to book!

The Adsense Units Are Bloodsuckers

The adsense ad’s actually get clicked ALOT. even more than the book button. The problem is, the adsense clicks are paid out at a flat rate of $0.14…

Why is this a problem?

Visitor from london

CPC = $1.00
If they click the book button I get = $1.20
If they click the adsense unit I Get = $0.14

Visitor from port fairy ( real place )

CPC = $0.40
If they click the book button I get = $0.70
If they click the adsense unit I get = $0.14

The adsense payout does not scale with the cost of buying clicks from higher paying regions. In fact, every adsense click, no matter which keyword it comes from, will LOSE MONEY. Furthermore it stops any opportunity for that visitor to click the “book button”

** There is an option to turn off the adsense units ** This is probably a sensible choice.
What really needs to happen is adsense clicks need to be variable. The affiliate should get 60% of the actual adsense profit…

Alternatively… Add you own adsense units into the header and footer????

How Could Hotels Combined Be Profitbale?

• Adsense payout 60% of adsense profit rather than flatrate of $0.14
• change the “book button” when you get paid for the lead to here. perhaps call this a “soft booking” and payout 30% of the “book button” payout. maxed at 2 clicks per unique IP.
• Increase the payout. average payout is $0.60 – $1.30. This needs to be $1.00 – $2.00

Week 4 – Hotels Combined PPC Affiliate Experiment

End of week 4.

Week 2 Expenses:$133.28
Week 2 Commissions: $24.89

Week 1 Profit: -$95.93
Week 2 Profit: -$83.71
Week 3 Profit: -$140.83
Week 4 Profit: -$108.39

Total Profit: -$428.86

Coming close to the end of the experiment. I’ve pretty much stopped all other countries except for Australia, just trying to turn a profit margin again, however small.

Week 3 – Hotels Combined PPC Affiliate Experiment

End of week 3.

Week 2 Expenses:$174.14
Week 2 Commissions: $33.31

Week 1 Profit: -$95.93
Week 2 Profit: -$83.71
Week 3 Profit: -$140.83

Total Profit: -$320.47

Week 3 I kept pumping some of the other countries other than Australia. Results just got worse.

To be honest I didnt really keep an eye on things this week. Just let it run away.

Week 2 – Hotels Combined PPC Affiliate Experiment

End of week 2.

Week 2 Expenses:$153.41
Week 2 Commissions: $69.70

Week 1 Profit: -$95.93
Week 2 Profit: -$83.71

Total Profit: -$179.64

During Week 2 I enabled a content only campaign for Australia, which did ok.

I also started added new countries on mass… Japan, Austria, Belgium, Denmark, United Arab Emirates, Switzerland

This was overall a pretty big failure. Japan had alot of cheap clicks but no conversions.

In fact the United Arab Emirates was the only other country with some potential.

Week 1 – Hotels Combined PPC Affiliate Experiment

End of week 1. Overall the campaign is not profitable so far. But on day 1 & 6 I made a small profit, which is hinting at a profitbale arbitrage opportunity.

I went a bit crazy on Day 5, breaking my rule of a max bid $0.30 and going up to $1.00. This was probably a bad move, I became impatient, More on this in a sec.

Expenses:$143.21
Commissions: $47.28

Week 1 Profit: -$95.93

Google Spending Vs Hotel Combined Commissions

Here you can see how much I spent per day on Adwords, how much I earnt on hotels combined.

Hotels Combined Transactions Report

The transactions report is not enabled by default, you need to request it. I strongly recommend you do, because without it you cannot identify which keywords are converting. Adam “The Captain” from hotels combined was nice enough to contact me and offer to enable this report on about day 2. Great support from Hotels combined.

Labels

Labels allow you to track which keyword’s and traffic sources are leading to actions. You need to manually tag your links with labels.

As you can see on day 1, I have no labels, hence no way to identify which keywords from my PPC campaign actually generated sales. So I went back through my campaign and added labels to everything.

I added the label paramter to all of my destination URL’s within the adtext

Example: http://www.tweeve.com.au/City/Healesville.htm?label=Healesville

Important Notes About Deeplink Naming Convention

Deeplinks are highly case sensitive. It took me a while to get this.
The golden rule is: You must write the links as they appear in the hotels combined data feed.

For Example…

• http://www.tweeve.com.au/City/Coffs_Harbour.htm?label=Coffs_Harbour – Label Remains Complete
• http://www.tweeve.com.au/City/Coffs_harbour.htm?label=Coffs_Harbour – Label Breaks

The 2nd link breaks, because the H is the wrong case… hence it redirects, and your label is stripped.

DO NOT MAKE ALL LINKS Capital Case…

At first I thought it would be correct to just make all links Capital_Case, but this is wrong.

For Example…

• http://www.tweeve.com/City/Umm_al_Quwain.htm?label=Umm_al_Quwain – Deeplink Works, Label Works
  
• http://www.tweeve.com/City/Umm_al-Quwain.htm?label=Umm_al-Quwain - Deeplink Breaks , Label Breaks ( lands on default homepage )
  
• http://www.tweeve.com/City/Umm_Al_Quwain.htm?label=Umm_al-Quwain – Deeplink works, Label breaks
  

So what is correct?
The only correct method is to use the exact cityFileName data from the hotels combined spreedsheet. Sometimes it is capital case, other times there are lower case letters mixed in.

If your using speed PPC, i would recommend the following method to clean your city keywords list.

First in excel isolate the cityfilename column in it’s own sheet. remove duplicates, use find and replace to change all _ & -  with a space.

Copy and paste into speed PPC.

I have wrapped this quick guide into it’s own post: Hotels Combined Labels & Deeplinks – Correct Naming Conventions

Day 5 – The Dump

On day 5 I got impatient, The last few days had seen some profitability but on a tiny scale. I wanted test results back quick and I wanted to see the payout and conversion rate from more popular areas like capital cities such as brisbane etc.

As you can see the ROI was a bombshell, lost alot of money here.

Day 6 & 7

Back to the regular pissy little trickle of traffic at $0.30 max bid. Back to profitability.

Concerns

A couple of things concern me.

• Heaps of people click the adsense ad’s, but the payout is a flat rate of $0.14 Even in more popular regions ( where the adsense payout should be higher ) it is still $0.14 – This is a killer.
• The “Book Button” conversion rate ( which gives you the most cash ) is much lower than expected.
• The “Book Button” Payout varies ALOT. You really need to identify the regions which pay $0.80+

Campaign Setup – Hotels Combined PPC Affiliate Experiment

So Hotels Combined offers a white label branding solution. This means we can pretty much just re-label their entire website and use our own domain. Really great for lazy PPC strategies because we don’t need to build any pages.

It also allows us to use our own domain in the Google ad text which gets rid of annoying destination URL issues. It is also important to avoid copyright / ppc rage from the affiliate program.

Using PPC to promote affiliate products these days can be heavily restricted and can often result in your commission being withheld. Make sure you read the TOC carefully and remain compliant. Bidding on their brand keywords, using their brand in your ad text, or using their domain in your URL are all pretty bad ideas…

Introducing… Tweeve

I’ve quickly purchased 2 domains. tweeve.com and tweeve.com.au. I wanted a short domain so I can use /sub folders/ in the Google ad text. Some region names like “sunshine coast” can be quite long, so they shorter your domain the better.

Since this whole thing is setup on their private labeling system there is no chance it will be indexed by Google. SEO just isnt a factor. So using a keyword stuffed domain has no value…

A domain which has branding potential would actually be more valuable here. Maybe some people will return directly… maybe not… but like I say, SEO is not possible so go the brand for an extra trickle of return traffic.

Hotels Combined Data Feeds

Looking around in the affiliate area I can see Hotels Combined offers some very nice data feeds. All hotel, region, pagename information is available for download in .csv files. This is perfect for rapidly setting up a PPC campaign.

I grabbed the .csv file which includes everything ( all countries, all fields )

I’m going to scrub these quickly for the data I need.  I’ll do this manually through excel.

Basically I’m just going to wrap a table around the entire sheet. I’ll then filter by country > australia. Copy and paste this data to a new sheet to isolate it.

Then i’ve removed any columns I deemed useless, keeping the city name and state.

Rather then dumping every city in australia into the PPC campaign I only wanted to start with what I like to consider tier 1 & 2 regions. I have a bit of a method for rating regions.

Regional Tiers

• Tier 1: Brisbane, Sydney, Byron Bay
• Tier 2: Mooloolaba, Coffs Harbour, Port Macquarie
• tier 3: Bobmolvi ( insert small town you have never heard of here )

Understanding these tiers is important to travel affiliate marketing. Tier 1 regions are to competitive and the CPC is to expensive. They have the most inventory and the most search impressions.

Tier 2 are regions which are popular enough to have decent inventory but still arent tourism behemoths. They are often growing in popularity and are sub regions of popular spots. Many tier 2 regions are quickly turning into tier 1. Tier 3 destinations take longer to become tier 2, or may never become tier 2.

Tier 3 normally have little inventory, making conversions harder.

The thing to understand is, the CPC can often be similar for tier 2 and 3. But when the user arrives on a tier 3 affiliate page and only 1 -2 hotels are available, they bail.

Spreedsheet Now Ready

I added another column to my spreedsheet so i can just place an “x” next to cities which I believe fall into tier 1 and 2. I’m going to run tier 1 regions but anticipate this wont even make it onto the SERPS.

I’ve also got another column called “to strange”. It’s basically just a way to filter out any regions which have unsually long or difficult names to use in the PPC campaign. Since I plan to auto generate my entire campaign, small anomolies are better to be removed at the start. Don’t get caught up in making every variation fit, you will probably comprimise the other 90% of your campaign to make everything work.

Ok so my data is ready to go, all up that’s taken about half an hour.

Using Speed PPC to create the Campaign

I’ve tried both speed PPC and efficient PPC and Speed PPC is clearly better. I’m not a huge fan of these programs but they do work well for campaigns where geo region is the main element. Which makes them perfect for travel affiliate marketing.

Just copy and paste your cities into the seed box, set your expansion and settings and away you go.

Create your text ad and use the {Seed} etc variables.

View your output, make sure it’s legit.

Copy and paste into adwords editor.

It will probably take a few trys to get the formula working for every ad group.

Once you have pasted into adwords editor, you will probably need to manually clean some of the ad text up. Normally ad text which exceeds the character limit.

Upload Campaign & Grab A Beer.

That’s it. The campaign is now live, and I’ll report in a few days to show you the results, earnings etc.

Rules – Hotels Combined PPC Affiliate Experiment

Rules

• Affiliate: Hotels Combined Affiliate Program
• Timeframe: 1 Month: November 1st 2009 – November 30th 2009
• Google Adwords Budget: $1000

Goals

• Goal 1: Proof of concept that the arbitrage opportunity is profitable
• Goal 2: PPC campaign is sustainable.
• Goal 3: Scale PPC Campaign so the daily profit is worth getting out of bed for.

Let the games begin!