Paid Search For Travel Becoming Unprofitable

I was reading one of my favourite Australian travel blogs Travel Trends and saw an interesting post which I completely agree with.

By Martin Kelly, Editor, Travel Trends

PAID search advertising volumes have doubled for the accommodation industry in the past year.

Latest Hitwise stats for the Australian market show the most dramatic increase came from suppliers struggling to gain visibility in an increasingly crowed market place.

“There’s been a dramatic shift in the past six months – bidding is a lot more aggressive,” says Sean Smith from HotelClub. “We have a very heavy spend on Pay Per Click and our ability to maintain profit has been massively reduced.”

But it still works and, like other big search advertisers, ratrher than reducing PPC spend, HotelClub is developing better strategies to extract better value from the medium which can chew up thousands of dollars for no return if bidding approach is flawed.

The penalties for getting it wrong are so severe one leading website, Check-in.com.au has pulled all paid search advertising while building better bidding software. MD Simon Isaacs says he is willing to take a short-term hit on traffic for long-term gain.

No doubt this is an issue which will continue to get worse before it gets better. As you might have noticed with my booking.net.au experiment generating a direct response profit directly from PPC is almost impossible these days.I remember 2 years ago, only a few of the major accommodation portals ran PPC campaigns and they were not robust. Now they all have blanket exposure on every region.

Plus you’ve got all the affiliates and local portals using PPC. The crazy thing is, the more people who use this channel, the more unprofitable it becomes for everyone.