Within the travel sector, there are dozens of different factors that can affect whether or not somebody will book a holiday with you.
These factors range from the most obvious reasons, such as the weather and foreign currency exchange rates, to the more obscure, including the customer’s disposable income and the availability on the day they want to travel.
To make matters more complicated, the intensity of each of these factors are constantly changing, hour-to-hour, day-to-day.
In 2019, to succeed in PPC within the travel industry, you need to be rapidly adapting to these changes in real-time using search technology. If not, challengers will be struggling to keep up with leading brands such as TUI and Hilton, who are already investing heavily into this type of technology.
Before we go any further, I think it’s important to define what we mean by ‘demand-based search technology’.
Demand-based search technology, in its simplest sense, refers to the changes that are made to Adwords accounts in real-time, through the use of software, to react to changes in demand.
For example, you may want to use software to automatically increase bids by 10% for searchers whose local weather is below 10 degrees Celsius – this would be a form of what we’ve coined ‘demand-based search technology’.
Adwords Scripts (pieces of code pasted into the bulk operations section of your Adwords account, which allow you to execute small programmes) are the simplest way to create customised programmes which allow you to make changes in real-time based on weather, flight delays, exchange rates, and much more.
In the travel sector, this is likely to give you a significant advantage over your competitors who are not reacting to changes in weather, occupancy, or foreign exchange rates, and are hence seeing performance fluctuate largely.
Demand-based search technology should provide you with considerably more control over your budget and conversion rate than your competitors, providing a higher return-on-investment and more consistency in your paid-search performance.
In this article, we will look at 6 different types of demand-based search technology that allow you to make real-time changes based on the weather, exchange rates, time of the day, day of the week, your availability, and flight delays.
1) Weather bidding for International Tourism
Travel companies advertising flights, hotels, or resorts can adopt the strategy of segment-targeting an audience who are experiencing bad weather (such as cold temperatures, showers, snow, or heavily overcast conditions).
For display or social campaigns, weather targeting works best when coupled with aspirational creative ads showing sunny, tropical visuals to enforce a yearning for warmth and sunshine.
This is an effective strategy, because demand for beach holidays can often increase during periods of bad weather.
For example, a study by Thomas Cook found that local weather impacts both Google search volume and online bookings for Mallorca holidays by as much as 14%.
- On days with continuous rain, Thomas Cook’s online bookings rise by 7%.
- During sunny warm weather, online bookings drop by 8%.
Google Search behavior
- On days with continuous rain, search queries for vacations to Mallorca rise by 9% on average across all devices.
- During sunny warm weather, search volume for vacations to Mallorca decrease by 14%.
WeatherAds.io ran a similar experiment to see if the temperature had a similar effect to search and booking behaviour. They tested the effect of daily temperature fluctuation on Google search volume, using the search term “cheap flights Ibiza”.
The graph below shows search volume for ‘cheapflights Ibiza’ from London, throughout February 2016.
You can see a strong, inverse correlation between temperature and search volume. As the temperature dips, consumers start to plan their trips to Ibiza, and search volume rises.
Since the use of PPC, advertising in the travel sector has become highly competitive, as marketers are able to automate bidding rules based on real-time weather data; instantly giving them a huge advantage over their competition.
By using a tool like Adwords Scripts, advertisers can secure that coveted #1 position for their ads whenever demand and search volume increase due to bad weather.
Simply put, if you’re a weather-sensitive travel brand, weather-targeting your campaigns enables you to steal business from your competitors when it matters most, whilst at the same time gradually reducing your CPC (cost-per-conversion) and saving you valuable ad dollars in the long run.
2) Weather bidding for Domestic Tourism
For ‘domestic’ tourism, the same logic applies – albeit a slightly different tack is necessary.
There’s a strong link between good weather (both current and forecast) and heightened demand for domestic holidays and local day-trips. Warm sunny weather is a boom for countryside retreats, camping sites, nature reserves, and outdoor attractions, such as theme parks, music festivals, and zoos.
The logic is simple – on warm, sunny days, consumers are more likely to be thinking about going outside.
Here’s Google’s take on it:
“Demand for certain products and services varies greatly depending on the weather. For example, users are much more likely to search for information on amusement parks on a hot, sunny day than if it’s cold and raining. An amusement park company may want to increase their bids when the weather is nice.”
WeatherAds.io decided to test this theory by seeing if New York-based searches for “The Hamptons hotels” increased during periods of warm weather.
The graph above shows New York City-based search volume for “Hamptons hotels” over a 2-week period in May 2016, overlaid against the average temperature for each day.
You can see that as the temperature increases, so does the number of searches for “Hamptons hotels”.
Of course, there are other factors aside from weather that will impact search volume, e.g. days of the week. You can see from the graph that Wednesdays and Thursdays have relatively low search volumes, compared to the ‘bookend’ days (hence that dip in the blue line over 25th and 26th). Other factors, like public holidays and various promotional offers, will also have an impact.
However, when you strip these out, the data clearly suggests that local weather is a significant factor in driving consumer behaviour and purchase decisions when it comes to booking a ‘staycation’.
For domestic tourism marketers, a good strategy would be to trigger ads or increase bids based on real-time temperatures and sunshine.
You can also experiment with targeting consumers based on the forecast, and triggering ads or raising bids if good weather is expected. You can even trigger ads if the outlook for the coming weekend is sunny.
This particular approach would work well for businesses that get spikes in bookings in the run-up to the weekend, for example, theme parks and inner-city tourist attractions.
Ad copy can inform consumers that a sunny weekend is forecast, and encourage them to book their tickets in advance.
WeatherAds.io has provided data and content for this section.
3) Foreign exchange rate bidding
Foreign exchange rates have a significant effect on the number of holidays that are booked, as it affects the affordability of the destination.
Following the Brexit vote and the subsequent fall in value of the Pound against the Dollar and Euro, inbound travel to the UK is likely to increase, which advertisers should look to capitalise on.
This will have the opposite effect on outbound travel from the UK into countries, which use the Dollar or the Euro.
A study by the University of Oxford into the correlation between exchange rate and number of domestic hotel rooms booked showed a direct inverse correlation between the number of rooms booked and the affordability of the currency. Put simply, as the relative ‘price’ of the currency went up, the number of hotel rooms booked decreased.
This should be reflected in how you buy traffic within your paid media accounts. The most effective way to do this is to change bids within your account based on real-time exchange rate data.
This can be achieved by using an Adwords script, which pulls data from an exchange API, and then has a set of rules to change bids based on this data.
For example, if you’re selling ‘holidays to Europe’ to British travellers and the Euro is currently strong against the Pound, you may want to reduce bids slightly, as conversion rates are likely to be lowered as the cost of travel is high.
The opposite would be true if you were a luxury hotel in London, for example. The Pound is currently weak to the Euro and Dollar, so if you are advertising to European and American tourists, you would look to increase bids as the cost of travel will be lower and therefore more people are likely to travel.
To help advertisers to bid based on Forex rates, we have open-sourced our Forex bidder Adwords script for you to download and use.
4) 24-hour bidding schedule
In the travel industry, conversion rates will vary considerably from hour-to-hour and day-to-day. Studies have shown that changing bids hourly will increase conversion rates by up to 11%.
However, despite the clear advantage provided by changing bids hourly, Adwords (and most other bid-management platforms like Kenshoo and Marin) will only allow you to change your bids up to 6 times a day.
Therefore, in the travel sector, being more responsive than this is crucial to Adwords success.
Using Adwords Scripts, you are able to change bids hourly, making you 4-times more responsive than your competitors who are most likely using a bid-management tool like Kenshoo or Marin or simply the Adwords interface.
The Adwords script in question is a piece of code which sits within the bulk operations section of your Adwords account.
You can then define the hourly bid modifiers within Google Sheets, as the example below shows, and then the script will run hourly and implement these changes.
5) Inventory-based bidding / Ad pausing
The vast majority of travel providers work to what you would describe as a ‘fixed inventory’.
A plane only has so many seats (here, the seats are the ‘inventory’); hotels only have a fixed number of rooms; cruise ships only have a fixed number of cabins.
In these cases, the fixed cost of the inventory is already paid for, so maximising utilisation and filling up your tour, hotel, or plane on a consistent basis is key to maximising profits.
In simple maths, once the overhead of the hotel or plane is covered, everything left over (excluding advertising costs) is your profit. So in some cases, it will make sense to increase bids to fill up the remaining rooms above your current cost-per-booking, provided that this is lower than the cost of the room.
It may sound slightly surprising to hear a PPC agency telling you that you should be increasing your cost-per-booking as opposed to reducing it, however, in this case, it would generate a larger amount of profit overall for the business, allowing you to solve larger business problems.
Like several other bidding methods that we’ve covered in this article, changing bids based on inventory can be done using an Adwords script, with your current inventory being imported from your database or Google Sheets.
You may also want to consider using “out of stock”-style pausing for your travel company.
When we first started working with Mad Monkey Hostels, we saw their cost-per-conversion would spike considerably when their hostels were full, resulting in a reduced return on ad spend.
We helped advise their in-house developers to create a link between their PMS (Property Management System) and Adwords to allow them to pause their ads when their hostels were full, which meant they would avoid these spikes in cost-per-conversion.
6) Flight Delay-based ad triggering
Flight delay-based ad triggering allows you to pause and enable adverts based on flight delays. This works particularly well for hotels near airports, as it allows them to target stricken travellers who have an immediate need for lodging.
When Hilton enabled this technology to target people in New York that had had their flights delayed, they saw their conversions increase by 21%.
This strategy works by creating campaigns that are targeted to a radius of a few miles of an airport, within which the hotel is located. These campaigns will also target incident-specific keywords that use geo-specific targeting. For example, “Radisson Blu Hotel near Heathrow”, or “hotel near Heathrow”.
Using a customised Adwords script that pulls out flight delay data, you can enable your campaigns in real-time when flights are delayed. You could also consider increasing your bids for a few hours while flights are delayed to maximise exposure of your adverts.