Wednesday, May 09, 2007

The price of success

Fascinating meeting this morning with the marketing boss of a well known online ancilliary firm, which will have to remain nameless (for obvious reasons, once you read below) but would obviously be a hotelier, car hire firm or airline.

The company, like most, has a set marketing budget for the year. It uses, alongside pay-per-click advertising and its existing partnerships with third party websites, UK meta search giant TravelSupermarket and sees a decent amount of leads coming through, with nice conversion rates of around 9%-10%.

At the beginning of this year, however, as TravelSupermarket suddenly started seeing its traffic surging (coinciding with its high profile TV ad campaign), the number of referrals increased dramatically.

Obviously this has led to the amount of money for cost-per-acquisition fees also requiring a healthy boost.

But the marketing cashpool has been set. Dilemma!

"You have to be seen or not at all," says the director with the fast-evaporating budget.

The solution: put up the prices on specific products being fed to TravelSupermarket so that they no longer appear high on the site's search results, cutting down on the number of leads but without curtailing the brand's exposure.

Sounds very tricky, but what else can you do?

Kevin May, editor, Travolution


Alex Bainbridge said...

Thats a bit "old school" having a fixed PPC budget!

Time to convince the finance director that an "infinite" budget (setting budget based on revenue rather than fixed annual figure) would work best.

I have written an example calculation on my blog post at

Example PPC calculation

Sam I Am said...

No offense to the person in question or his company, but this just sounds stupid! The whole point of cpc is that you pay to get more traffic. Providing the traffic continues to give you the same conversion (or else you should be paying less per click), you should be making more money with more traffic (duh? moment here). The key to all of this is keeping the conversion ratio the same of course. If the person in question can't convince whoever controls the budget of this, then they should really not be doing this job...