One of the ways we earn a living out of Travelfish is through online advertising. We’ve got direct advertisers like AirAsia, but we also run Google Adsense intermingled with these adverts. All manner of adverts can appear in the Adsense adverts, but they’re generally fairly topical.
This morning I saw something I hadn’t seen before — an advert on the front page of Travelfish for Lonely Planet (see screenshot below).
The ad read:
“Airport backpackers
Book this hotel and other places recommended by Lonely Planet
www.lonelyplanet.com/hotels”
Seems fair enough — lots of our readers would be interested in airport hotels in Bangkok and what not.
Only problem is, the link actually went to http://hotels.lonelyplanet.com/accommodation/-P134638.html — to an airport hotel just outside Johannesburg — yeah, you know the one — in South Africa.
Also it wasn’t a hotel, rather a hostel, but I won’t quibble on minor details like that.
Upon further examination of the LP page, I could book a single room at this hotel, sorry, I mean hostel, for a mere US$43.62 a night. The reservation was handled through HostelWorld, with LP being an affiliate.
How this works is, Hostel World take 10% upfront, add a $2 surcharge and bill the customer — combined that’s their rake-off. This rake off is then shared with the affiliate — in this case Lonely Planet. So let’s do the math.
The standard split for affiliates with HostelWorld is 80/20 — but you can negotiate higher commissions — so let’s assume LP is operating at a special deal of say 50/50.
Room cost for a night: US$43.62
10% deposit: $4.36
50% of deposit $2.18 (the $2 surcharge isn’t normally split with the affiliate)
So, if someone books this guesthouse, sorry, I mean hotel, through Lonely Planet, LP earns around $2.18. Sure the guest might book multiple nights, which would increase the earnings, but it’s an airport hotel — why on earth would you stay at an airport hotel any longer than you had to?
Anyway, in the scheme of things, $2 isn’t too bad — here at Travelfish we earn loads of reservation commissions that are under a dollar — they all ad up.
HOWEVER
LP is promoting this particular place through Google Adwords. What this means is they pay the mighty Googleborg a rate, either per click, or per thousand impressions to have this advert displayed.
Let’s look at the pay per click scenario:
Let’s say they’re paying $0.15 per click — that means they’d need to average a sale every 15 clicks to stay above water (15 clicks will cost them $2.25) — a conversion rate of almost 7% — strikes me as pretty unlikely — especially once LP’s clunky booking interface is taken into account. Perhaps they’re paying less — let’s say $0.10 per click, they’d still need a sale every 22 clicks — not much better.
And don’t forget this is for a reservation at an airport hotel, sorry, I mean hostel, in Johannesburg — 7,500km from Bangkok airport on a travel website that specialises in Cambodia, Laos, Thailand and Vietnam, (the poor placement is primarily Google’s fault, though LP could better target their ads…) so that’s probably going to have some influence on their conversion rate.
So what’s really going on? My totally uneducated, Friday afternoon guess is that Lonely Planet is just buying traffic, which leaves the question, what on earth is the world’s leading travel publisher — owner of the brand of brands — doing buying traffic?
Tip to the online advertising crew at Lonely Planet — try mentioning South Africa in the ad next time, or better still, download our media kit.
And with that, I’m off to spend some of those 50-cent commissions on a few cold drinks at the beach. Have a good weekend!