Ask the experts: “CPA means the hotelier only pays for revenue generated!”
Hi Nicole, hi Ronnie. Tell us first: What is the CPA model?
Nicole: CPA stands for Cost Per Acquisition – meaning the hotel pays a fixed commission for each confirmed booking.
Ronnie: Exactly! And with the CPA model, hotels select a commission value as a percentage of the revenue generated that they are willing to pay. At the end of each month, the hotel gets charged the commission based on the tracked revenue and the selected CPA percentage.
What are the advantages of the CPA model?
Nicole: Costs only arise for actual bookings that are generated. So there is no real risk for hoteliers and no advance budget payments to run campaigns.
Ronnie: Yes, that means hoteliers do not need to earmark any of their budget for marketing channels. They only pay for the revenue generated, reducing the risk of spending too much budget without a decent return.
Are there any disadvantages or risks with the CPA model?
Nicole: There are risks, yes. For example, there can be a lack of control over online visibility and less flexibility as the campaign stays at the same cost level.
Ronnie: As compared to classical CPC (Cost Per Click) models, CPA allows for far less granular campaign optimization. So there is a risk of hoteliers paying too much CPA to generate the revenue (e.g. if 14% CPA has been agreed on but CPC models at 10% could have achieved them similar visibility), or they are missing out on significant visibility and revenue they could have achieved if they had been willing to accept 15% in CPA. So much more revenue could have been generated at a slightly higher cost. So the CPA model is more static, less dynamic, as opposed to CPC.
Why should hoteliers still choose the CPA model?
Nicole: Because it's one other way to boost direct sales and traffic to their website. Plus, it’s risk-free for them because, as mentioned, they only pay a commission on confirmed bookings. Which is perfect.
Ronnie: It’s a means of simply going live on metasearches without major upfront investment in marketing budgets. CPA will absolutely ease the hotel’s first steps in metasearch and provide some initial insights about the potential offered by such placements for the hotel.
Which hotels would you recommend the CPA model to?
Nicole: Any hotels that have no time and/or no experience of running marketing campaigns by themselves.
Ronnie: CPA is the best model for hoteliers who want to start raising visibility on the metasearch platforms without putting too much effort into bid management. Not having to prepay any marketing budgets is ideal for more risk-averse hotel managers.
Which placements can the hotelier use the CPA model for?
Nicole: As of now, from the platform side, it’s currently only possible for Google Hotel Ads.
Ronnie: … and trivago also offers CPA models directly to hotels.
Nicole: With us as your marketing partner, you can go live on CPA on all available placements, i.e. Google Ads, Microsoft (Bing) Ads, Google Hotel Ads, trivago, tripadvisor and kayak. This holds true for campaign management and full management customers. For hoteliers choosing the entry-level campaign management light product and for LINK agency partners, they can go live with the CPA model on Google Hotel Ads, trivago and tripadvisor.
The CPA model is available at all myhotelshop service levels – which means both new and existing customers can use it, right?
Ronnie: With pleasure!
What costs can the hotelier expect?
Ronnie: Apart from the one-time setup fee, hoteliers only pay the agreed CPA, i.e. the amount of tracked revenue times the CPA level.
Nicole: So for 11% CPA, hoteliers get limited visibility on the metasearches and therefore only a smaller share of the revenue potential.
For 14% CPA, hoteliers get much more visibility and secure the chance of getting significantly more revenue. So they capture much more of the demand and funnel it into their own website.
Hoteliers looking to get the full revenue potential will opt for the 17% CPA level, in order to maximise demand and revenue through direct bookings.
Thank you so much Nicole and Ronnie for your time and this very helpful information.
If you’re interested in using the CPA model to increase your hotel’s visibility, please contact us using the form below. We’re looking forward to hearing from you!
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