SEO marketer Wordstream recently analysed the economics of AdWords, Google's pay-per-click advertising platform.
While Google's recent financial results disappointed Wall Street, AdWords overall impressions and clicks increased in the third quarter, leading to a 16% year-over-year bump in revenue for the Internet giant.
The news for travel brands
Travel companies spent more on pay-per-click advertising than any other industry except for finance, according to Wordstream's analysis of 2,600 accounts. The top ten travel advertisers using Google AdWords are Expedia, Hotels.com, Booking.com, Priceline, and Kayak.
Despite its big spend, the travel sector has the lowest conversion rate (1.45%) of the ten largest online industry verticals.
It also has the second lowest cost per click (CPC), averaging 29 cents.
Dramatic increase in impressions and clicks
In the third quarter, the world's most popular search engine enjoyed impressive growth of ad impressions and clicks. Clicks were up 21% for Google Search and 29% for Google Display Network.
The average costs per click (CPCs) for Google Search declined significantly—down 16.5% for Google Search—while click-through rates (CTR) were down 12%. In Google's own financial statement, it reported that its CPCs fell in both Q2 and Q3 of this year. Many analysts attributed this to Google placing more ads on search pages.
Says Wordstream's report:
The dramatic increase in impressions and clicks is in some way contributing to the decline in average CPC’s and CTR’s.
Generally speaking, higher supply means lower prices, and showing a greater number of ads on a page inevitably means that any one individual ad is less likely to be clicked on.
Alternatively, the massive increase in impressions could be a deliberate strategy on Google's part to monetize more of their search inventory to increase clicks and revenues.
Wordstream's infographic has also published AdWords performance in other industry verticals for comparison.
Decline in searches for "flights" and "hotels"
Icelandic metasearch site Dohop recently pointed out that general searches on the words "flights" and "hotels" have steadily declined over the years. A straightforward historical search on the keywords reveals that search volume has dropped in half in the past eight years.
The declines will impact Google's effort to promote its new search tools Google Flights and Google Hotel Finder.
The cost of other travel-related keywords has continued to climb over the years. For small businesses that spend less than $10,000 a month on AdWords (or about 96% of businesses that use AdWords), these are challenging times. Google recently released a statement that The New York Timesparaphrased as:
Small businesses can compete by making their ads more relevant to consumers and they should use multiple strategies to pursue customers: “search, social media, earned media and more.”
The world of AdWords is clearly in flux.