advertising technology
Three Models For Travel Industry Advertising: CPA, PPC, and CPM
If you want to succeed in a highly competitive industry like travel, you need to choose an advertising strategy that is aligned with your business’ goals and priorities. Fortunately, there are a lot of strategies on how to promote your brand online. We decided to compare the most popular of them and evaluate their pros and cons.
To be honest, it is impossible to choose a single model that is best everywhere and always. Major brands use several models, or even all of them at the same time, depending on the situation.
Pay-Per-Click (PPC) Model
Pay-per-click (PPC) advertising is one of the most popular forms of advertising. It works very simple: businesses purchase ads in exchange for clicks. To buy these ads, companies often use platforms like Google Ads and contextual advertising.
PPC is popular with brands because it is simple and easy to manage. Depending on your needs, you can determine where your audience resides, adding whatever characteristics you need. Moreover, traffic volumes are unlimited (the only limitation is your budget).
A common practice in PPC is brand bidding, when businesses bid on the brand terms of a third party to beat them and attract their customers. Often companies are forced to do this because competitors buy advertising based on competitors’ brand requests. For example, when you search Booking.com in Google it will be the first in the free section but the ad block with Hotels.com and other brands goes first. The audience eventually goes to the one who buys PPC advertising; hence, Booking.com needs to pay even when it is the leader of free search. If the company you are looking for doesn’t appear in the ad section, it might lose clients in broad daylight. Thus, such advertising has become widespread everywhere.
However, the PPC model has a huge disadvantage: conversions are not guaranteed. Companies can evaluate the results of campaigns so they can discontinue the ones that aren’t effective. It is also possible for a company to spend more than it is earning. It is the most important risk to consider at all times. For mitigation, I recommend making sure your campaigns are reaching your target audience. Keep an open mind and stay flexible.
Cost-Per-Mile (CPM) Model
Cost-Per-Mile is one of the most popular models for those who want to get coverage. Companies pay per one thousand views or impressions of an advertisement. It is often used in direct advertising, like when an outlet mentions your brand in its content or elsewhere.
CPM works especially well for building up brand awareness. Companies can measure the impact using a variety of indicators. For example, to increase brand recognition, a company would examine the number of times people search for the brand, the number of sales, etc.
CPM is ubiquitous in influencer marketing, which is still a relatively new field. In recent years, there has been an exponential increase in influencers in the industry.
The global influencer marketing platform market size was valued at USD 7.68 billion in 2020. It is expected to expand at a compound annual growth rate (CAGR) of 30.3% from 2021 to 2028.
However, CPM also does have some drawbacks. For example, some companies reject this strategy in the early stages of their business because it’s difficult to gauge the impact of these advertisements.
Cost-Per-Action (CPA) Model
CPA is the fairest model for traffic attraction – businesses pay only for a sale or other actions. It is relatively complicated, since it is impossible to launch an advertising company in 2 hours, like PPC, but the results are much more reliable. If you get it right at the start, the results will be measurable in every aspect. This will let you reach your target audience and give you quantitative data about your campaigns’ effectiveness.
I know what I am talking about: the affiliate marketing network that my company – Travelpayouts – provides operates on the CPA model. Both travel companies and travel bloggers are interested in good cooperation since companies pay only for the action, while at the same time receiving coverage and impressions, and traffic owners are very interested in advertising relevant products or services to their audience, as they earn higher commissions if customers purchase tickets or book a hotel,tour or other travel service. The affiliate marketing in general – and Travelpayouts in particular – is used by giant travel companies like Booking.com, GetYourGuide, TripAdvisor and thousands of other travel corporations.
Even though CPA might seem like the best ad strategy, I recommend thinking more broadly. If you hope to engage a large segment of your target audience, this can’t be your only strategy. When you incorporate it into your business strategy, though, you’ll reach a larger audience overall because you’ll combine your partners’ audiences. It’s not possible for contextual advertising to accomplish this.
As a final note, here is a tip: it’s important to remember that none of the listed strategies are the ultimate solution. There are pitfalls to each of them, so ensure you find the right combination of strategies based on your budget and goals.
