Measuring Hotel Marketing Results: Which ads actually earn revenue?
TLDR: Hospitality businesses deserve to know what their marketing spend gets them in the form of revenue. Fortunately, ad platforms offer built-in analytics that measure ROAS (return on ad spend) based on customer activity.
What many people don’t realize however, is that different ad platforms calculate these values using different measurements. Marketers call this “revenue attribution modeling.” Some of these models are very direct. Others might claim that they earned you a sale on activity that only influenced a sale.
When in doubt, (or even if you’re just curious!) ask your agency to break down the ways that marketing led to bookings and sales. You might discover new hotel marketing opportunities in the process. Read on for a more in-depth breakdown of revenue attribution, including some of the more nuanced practices out there.
Why Marketing-Attributed Revenue Matters for Hotel Advertising
Many hoteliers, presented with a marketing report, might find them confusing. Marketers track so many metrics: ad clicks, engagement, video views, website visits, email opens, etc. All of these can be fantastic leading indicators, and even key performance indicators for a new hotel opening or major initiative.
However, when we’re asked for hotel ad campaign results, our clients are most interested in one figure: revenue. What actions resulted in a booking, an upsell, or a lead? We don’t mind. For O’Rourke, reporting on revenue earned by advertising campaigns is our primary focus.
Revenue Attribution Helps Spend Hotel Ad Budgets Efficiently
By integrating with your booking engine, marketers help the ad platforms themselves track activity all the way to a sale. Analyze this activity, and marketers can increase investment in the ad channels that drive more revenue at lower cost, effectively growing your business. While it’s important to diversify your advertising channels to reach as many of your ideal customers as possible, revenue attribution helps us make the most efficient use of your marketing dollars.
Revenue Attribution Feeds Platform Optimization
Marketers watch audience segments and bidding strategies to help target ads on the most likely customers. When we know who ultimately books a room, we can find more people like them. This is one example of optimizing a marketing campaign. Increasingly, this activity is automated using machine learning, enabling even faster decision-making and precise bidding.
In other words, when experienced marketers set campaigns up properly, you reach your dream guests for less investment.
How Platforms Calculate Revenue Attribution
There are several methods used by advertising platforms to assign earned revenue to their marketing activities. Some of them are very straight forward, crediting revenue when someone clicks an ad and buys something. Others are more open, taking credit for activity occurring during a period of time. At O’Rourke, we are as transparent as possible with our clients, so they understand exactly where our revenue figures come from. Here are some models in use today to measure hotel marketing revenue:
Last-Click Attribution
This is the simplest way to understand hotel ad results in terms of revenue. This method assigns credit to the click that happened right before the sale. Google ads tend to fare well, because search ads often lead to direct sales. However, this overlooks all prior research that led a customer to that moment.
First-Click Attribution
Hotel marketers using first-click attribution will see revenue assigned to the first click on one of your ads, even if the customer didn’t buy at that moment. If your customers typically book quickly, this model helps identify and invest in key ad channels that get them excited about your hotel. Be careful not to exclude other channels that might be giving customers that final push!
Post-Impression Window Attribution
Many hotel ad platforms like Sojern, Expedia, Adara, and Trip Advisor claim credit for transactions occurring in the 30 days after a customer saw an ad. While this exposure can be an important step in their journey, this model can lead to claims of hotel marketing ad results at high ROAS — think 20X+ ad spend. This rarely tells the whole story, as other ad platforms almost always nudge hotel customers toward booking.
Linear Attribution
Some hotel marketing campaigns can assign equal credit to all clicks that led to a purchase. This is very helpful in seeing the total picture of a customer’s engagement. The downside: it takes additional digging to highlight the touchpoints that really influenced action.
Complex Modeling
Several additional attribution models are used to track hotel advertising performance toward revenue. These data-intensive models analyze and track customer activity across several platforms and optimize spend to the different ad channels that influence revenue. For example, it might spend 15% on YouTube, 25% on Facebook, 30% on Google Search, 20% on Display Remarketing, and 10% on Performance Max. They’re powerful but complex, and they only make sense when investment (and return) are quite high.
Ask Your Hotel Marketing Agency About Revenue Attribution
Many hospitality owners and operators have only a passing awareness that marketers can link hotel ad results to revenue in different ways. That’s okay! We’re hoping to educate businesses that with the right marketing expertise, they can gain access to powerful tools that help them spend ad dollars wisely and ultimately get more for their investment through learning and optimization.
If your agency reports on revenue (they should!), talk to them about how it’s measured, and whether there are opportunities to dig deeper into channels that ultimately earn money.
At O’Rourke, we’re transparent with our models, proactively bringing strategies to the table that could get increased value for our clients. Curious about how we could set up a digital marketing strategy for your hotel? Get in touch with us today.