Social media channels play an important role for every company’s online reputation, but are they providing the best ROI when it comes to digital ad-spend? According to Priceline’s CEO Darren Huston, ads for his company on Facebook and Twitter have failed to deliver results.
“For Facebook and Twitter, we have endless amounts of money,” Huston said April 14 in an interview at Bloomberg’s New York headquarters. “But we haven’t found anything there.”
The Numbers Behind the Words
Priceline’s online marketing costs increased 41% last year to $1.8 billion. This number was significantly higher than the company’s sales growth in 2013 (29%). According to Mark Mahaney, an analyst at RBC Capital Markets in San Francisco, 90% of Priceline’s digital ad spending goes to Google, the best source for delivering online traffic.
Search vs. Social
The advantage Google, and other major search engines, hold over social media is that their search ads are based on keywords and often capture consumers looking for a specific vacation or hotel. This, in turn, leads to online reservations.
Facebook and Twitter social ads can help companies communicate with individual fans, and can be used to target people based on characteristics like location and who they follow. However, these ads have not resulted in significant bookings for Priceline.
Search, Social, and…
According to the Bloomberg interview, Priceline is also dedicating more investments to mobile offerings as more consumers book last-minute travel from smartphones, and as users opt for tablets over personal computers. However, according to our recent “Four Mobile Design Myths for Hoteliers” blog post, the idea that mobile devices are used only for last-minute bookings is outdated.
Thanks to the durability, ease-of-use, and lowering costs of tablets, these devices are now used throughout the trip planning and researching process, as well as in the booking process.
An Example of Why Priceline’s Advertising Dollars Make Sense
Priceline spent $1.8 billion in digital advertising in 2013. Of this, 90% of their digital budget went to Google cost-per-click because that is where the best conversions came from for their shopping site.
Where does the $1.8 billion go?
When I type [Paris Hotels] into a Google, Yahoo, or Bing search engine, I find that Priceline.com has first page placement. When travelers click into the hotel discount-shopping site (Priceline.com), they are offered thousands of hotel room options. The reason Priceline spends $1.8 billion in digital advertising is that this is where the best conversions to bookings take place, affecting Priceline and the individual hotel’s booking revenues.
The only way Priceline generates revenue is if a traveler books a room through their site, and they receive a commission. Because this is the case, it does not make sense to dedicate advertising monies to a channel (Facebook, Twitter, etc.) where conversions are low.
How Does This Apply to my Partnership with ResortsandLodges.com
ResortsandLodges.com is a shopping site for unique lodging properties seeking leisure travelers, just as Priceline is a shopping site for hotels that are seeking price conscious travelers.
When I type [Oregon Resorts] into Google, I find ResortsandLodges.com is on the first page. When travelers click into the shopping site, they travelers is offered thousands of resorts, lodges, boutique hotels, inns, vacation homes, cabins, condos, and other unique lodging options. The traveler can book your unique lodging options online, directly call or e-mail your property, or visit your website with the simple click of a mouse.