Booking incorporates a new marketing tool on its platform, a programme that now allows hotels to bid on a CPC (cost per click) model along the lines of Google Ads.
This new feature will allow hotels to boost their visibility in destination searches: the winner of the bid is placed directly on the second position of the first page of results with the Ad tag; this will differentiate it from Promoted, which is used for hotels participating in booster programmes.
Booking has seen a new business opportunity in taking over the marketing budget that hotels spend mainly on Google but also on Facebook and Instagram (the latter with a remarkable growth). Expedia already tried it with TravelAds and now the giant Booking also wants its share of the pie.
This new programme will also have a direct impact on commission income, it is a win-win for Booking: on the one hand it will have direct income from Native Ads and, on the other, it will increase commission income as the hotels that use this system will have a higher ADR than those that are positioned organically and will therefore earn a higher commission. It only remains for Booking to convince customers that this native ad is as reliable as the original organic second position they have seen until now.
With this new service, Booking continues to improve its marketplace by offering hotels new options to increase revenue and profitability on its platform. They can't just sit back and do nothing, they must continue to innovate to counteract other big players in the sector such as Google or Tripadvisor that have become direct competition for OTAs. In this sense, Booking has been clear: "the best defence is always a good attack".
In which part of the funnel do they intervene?
Booking has opted for the upper part where incrementality is produced as they are aimed at searches by destination. Booking's Native Ads are committed to the "share shift" (movement of share between hotels) and not the "channel shift" (movement between channels), which opens up an opportunity for hotels as incremental revenues are very attractive and compatible with their direct channel strategies.
Costs
The minimum base bid is $0.50 with a daily cap of at least $5. It is based on the days of travel (weekdays or weekends, from 0 to 21 days or from 22 days onwards).
In addition, hotels have the option to apply multipliers or boosters based on length of stay, by mobile, check-in date and booking type. It should be noted that hotels participating in the programme will not be able to adjust their bidding for Genius users.
The algorithm has not yet been made public but is expected to have a strong impact. However, it is expected that the OTA will not only take into account the bidding, there is only a second position, which is highly sought after by hoteliers, so what will happen to hotels that don't convert, have low ratings and low conversion rate, will they only need to bid high? At the moment, we know that when a participating hotel that wins the bid also ranks first or second organically in the results, the ad will not be shown. In this case, Booking cleverly does not punish organic search by not cannibalising it with paid search.
How the result is displayed
The result of a paid search through Native Ads is not customisable, so the customer will see exactly the same information as in an organic result. Perhaps in a second phase further customisation will be incorporated as an enhancement to the programme.
The filters work as usual, that is to say, if the hotel is not in the filter result when filtering the Native Ads position, it simply disappears and takes the place of a hotel that has participated and that does comply with the filters.
At the moment, the Native Ads programme is only available in the USA, in other words, only Americans can book hotels in the USA with this programme. There is no date for the extension to other countries, so we will have to wait and see.
For and Against
If we take stock of what has been said in this post, we can come to the following quick conclusions:
In favour we have the increase in sales, greater ADR, more transparency and traceability as hotels pay for what they get, more control by being able to shift demand to the dates that interest the hotel and, in short, a priori it is a fairer and more efficient model.
On the other hand, we note that this programme is a fee shifter, if you do not participate you can be left out, it increases costs, it is riskier because if there is a cancellation the CPC has been paid and it can end up in a war of all against all where the great beneficiary is once again Booking, increasing competition.
In short, Booking takes another step forward in its leadership and time will tell if this new programme is really a brave and intelligent step by the OTA. Will hoteliers benefit from this new functionality? We will have to wait and see.
This new programme will also have a direct impact on commission income, it is a win-win for Booking: on the one hand it will have direct income from Native Ads and, on the other, it will increase commission income as the hotels that use this system will have a higher ADR than those that are positioned organically and will therefore earn a higher commission. It only remains for Booking to convince customers that this native ad is as reliable as the original organic second position they have seen until now.
With this new service, Booking continues to improve its marketplace by offering hotels new options to increase revenue and profitability on its platform. They can't just sit back and do nothing, they must continue to innovate to counteract other big players in the sector such as Google or Tripadvisor that have become direct competition for OTAs. In this sense, Booking has been clear: "the best defence is always a good attack".
In which part of the funnel do they intervene?
Booking has opted for the upper part where incrementality is produced as they are aimed at searches by destination. Booking's Native Ads are committed to the "share shift" (movement of share between hotels) and not the "channel shift" (movement between channels), which opens up an opportunity for hotels as incremental revenues are very attractive and compatible with their direct channel strategies.
Costs
The minimum base bid is $0.50 with a daily cap of at least $5. It is based on the days of travel (weekdays or weekends, from 0 to 21 days or from 22 days onwards).
In addition, hotels have the option to apply multipliers or boosters based on length of stay, by mobile, check-in date and booking type. It should be noted that hotels participating in the programme will not be able to adjust their bidding for Genius users.
The algorithm has not yet been made public but is expected to have a strong impact. However, it is expected that the OTA will not only take into account the bidding, there is only a second position, which is highly sought after by hoteliers, so what will happen to hotels that don't convert, have low ratings and low conversion rate, will they only need to bid high? At the moment, we know that when a participating hotel that wins the bid also ranks first or second organically in the results, the ad will not be shown. In this case, Booking cleverly does not punish organic search by not cannibalising it with paid search.
How the result is displayed
The result of a paid search through Native Ads is not customisable, so the customer will see exactly the same information as in an organic result. Perhaps in a second phase further customisation will be incorporated as an enhancement to the programme.
The filters work as usual, that is to say, if the hotel is not in the filter result when filtering the Native Ads position, it simply disappears and takes the place of a hotel that has participated and that does comply with the filters.
At the moment, the Native Ads programme is only available in the USA, in other words, only Americans can book hotels in the USA with this programme. There is no date for the extension to other countries, so we will have to wait and see.
For and Against
If we take stock of what has been said in this post, we can come to the following quick conclusions:
In favour we have the increase in sales, greater ADR, more transparency and traceability as hotels pay for what they get, more control by being able to shift demand to the dates that interest the hotel and, in short, a priori it is a fairer and more efficient model.
On the other hand, we note that this programme is a fee shifter, if you do not participate you can be left out, it increases costs, it is riskier because if there is a cancellation the CPC has been paid and it can end up in a war of all against all where the great beneficiary is once again Booking, increasing competition.
In short, Booking takes another step forward in its leadership and time will tell if this new programme is really a brave and intelligent step by the OTA. Will hoteliers benefit from this new functionality? We will have to wait and see.
