Google has been rattling the cages of travel for years now, constantly threatening as a perceived enemy with product releases like Hotel Finder and Flight Search.
The entrenched interests push back against the intrusions into their sacred territory - especially given that Google is the beneficiary of billions of dollars of ad spend each year.
For the first time, there's ample empirical evidence that Google may actually be cannibalizing its PPC revenues in the travel vertical.
The analysis comes from AdGooroo, who did an in-depth look into the 2013 trends of AdWords spending in travel. Overall ad spending on Pay-Per-Click (PPC) in 1Q 2013 dropped 19% from the same period in 2012 - a drop of $57 million.
The longer-term trend since 2010 points drastically downward, with a $75 million reduction compared with the same period in 2010.
Two potential explanations are that travel advertisers have pulled back from search (which is not supported by the data - there are more travel advertisers this quarter than last, 228 now vs 217 a year ago), or that travel websites are more well-designed and thus more sticky. With an improved user experience, users are more likely to be loyal and simply directly enter the preferred website into a browser.
Another, more intriguing, explanation is that Google's entry into the travel space has decreased the amount of available PPC traffic by encouraging organic clicks to their own products, which they've prioritized in search results.
Google HotelFinder and FlightSearch were launched in August and September 2011, respectively, and provide a direct search experience for users seeking to book flights and hotels.
Of course, Google now offers advertising products within each of these services, which don't appear as a keyword targeted ad buy (for example, paid placement of hotel bookings into HotelFinder results).
Regardless, the organic placement of an interactive tool for hotels and flights within the search experience is clearly having an impact on user click behavior.
The drop in paid clicks in favor of organic clicks may or may not be of concern to Google - notoriously tight lipped on the travel front - although there is plenty to be said about the shifting landscape. From the import of Priceline-Kayak to the changing SEO realities of Google's travel plays to the newly minted Instant Buy feature, Google is at the center of an industry tempest.
The research continues to the most popular keywords, as represented by this word cloud of both generic and navigational searches.
While Google enthusiastically discourages bidding on navigational searches, or searches aimed at navigating to a specific brand, the bidding is fierce on the generic travel keywords like "cheap flights" and "hotels."
Of these keywords, Adgooroo highlights the most popular 25 travel keywords by clicks during the first 3 months of 2013:
Perhaps a factor of the Star Trek film, or perhaps due to the difficulty to spell correctly, "enterprise" enjoyed the number 1 spot on travel keyword clickthroughs. Research showed that the "enterprise" keyword had a 12.1% CTR, while the category leader was Expedia, which 1 out of every 4 users presented with a paid ad clicked on said ad (25.9% CTR).
Beyond the click-through rates of ads, the Adgooroo team also gleaned some perspective from the Top 100 most clicked terms:
• The growing popularity of the keyword “vrbo” (vacation rental by owner), which rose to position 51 in 2013 from 78 in 2012, may indicate a new trend in consumer travel habits and a threat to the hotel business• Average clickthrough rate was 8.1%, with navigational terms posting much higher rates and generic terms yielding much lower clickthroughs (“flight” was lowest at 1.4%)• Queries on “Airlines” yielded the most paid ads: 10.6 per SERP, while searches on “Greyhound” yielded less than 1, on average• “Hyatt” got the highest ad coverage (appearing 95.2% of the time) while “United Airlines” got the lowest (37.7%)• “Vacation packages” was the term with the most bidders, with 259 advertisers gaining first SERP impressions during the first quarter of the year. “Greyhound” had the fewest bidders (4).
Of the top spenders in the travel category on AdWords, Priceline and Kayak dominate - pointing out perhaps one of the most compelling reasons for the linkup: the ability to act as a counterweight to Google's movements into travel, given that they both rely on Google for so much of their paid traffic.
1. kayak.com – 883 million impressions
2. priceline.com – 699 million impressions
3. orbitz.com – 670 million impressions
4. tripadvisor.com – 663 million impressions
5. cheapoair.com – 629 million impressions
6. expedia.com – 595 million impressions
7. booking.com – 538 million impressions
8. travelzoo.com – 469 million impressions
9. bookingbuddy.com – 353 million impressions
10. hotels.com – 349 million impressions
Google has most certainly done a cost/benefit analysis, given that the value of capturing more travel queries for their owned and operated products - and then selling access to that targeted traffic most likely at a higher rate - is much more compelling than losing PPC revenues.
In addition, as can be seen with other products like Google Product Listing Ads, Google seems to believe that the PPC ad model is not one of the future - but contextual ads within user-facing interfaces are.
Google declined to comment on this story.