An Analysis of the Cape Cod Bed and Breakfast PPC Market – Regional and Local Optimization

Integrating Search Marketing Into Your Small Business PPC Campaigns
One of the best travel-related lodging opportunities of Cape Cod is the abundance of bed and breakfasts all over the region. That also means that there is tremendous competition from both a regional and town-specific perspective. Even now, in the slow season of travel to Cape Cod, there are over 35 advertisers bidding to be seen when a user searches “Cape Cod Bed and Breakfast” in Google paying an average of $2.60 per click. The top advertisers are paying nearly $5/click to appear at the top. Google projects that advertisers will receive a conservative 2 to 3 clicks per day on effective ads, meaning advertisers will spend at least $5 to $15/day for their advertisements.

I find this to be conservative because my initial research using Keyword Discovery states that the term, “Cape Cod Bed and Breakfast” is searched somewhere between 75 and 100 times per day. When you factor in the competitive landscape, and the propensity for searches to click organic search results more frequently than PPC ads, it may make sense. But if advertisers do not cap their daily budget, PPC spend could easily exceed $100 in any given day.

While it makes sense that large players advertise for region specific advertising positions, should niche players or town-specific B&B’s really be advertising for a region-specific keyword? Analysis of your PPC campaign data will help reveal the answer, and possibly help improve your organic SEO strategy as well.

Setting PPC Goals for Conversion
Since I live in the Lower Cape area, I am going to reference the local advertisers in the popular town of Brewster, MA, that could run PPC ads region-wide (Cape Cod) and locally (Brewster specific). Here are two PPC Keyword Campaigns they are running, with the Average Cost per Click (CPC) and Max CPC for being the top position (definition of CPC).

  • Brewster bed and breakfast – Average CPC: $0.76; Max CPC: $1.72; Predicted Clicks/Day (For PPC Ads): 1
  • Cape Cod bed and breakfast – Average CPC: $2.60; Max CPC: $4.94; Predicted Clicks/Day (For PPC Ads): 3

Understanding What Keywords Provide the Optimal Conversions
The first task website managers should use in optimizing their PPC campaigns is in determining a “cost per conversion” associated with their PPC campaigns. The easiest formula for measuring cost per conversion is to take the amount of money spent on a given PPC campaign and then calculate how many people that actually clicked that PPC ad ended up reserving a room, filling out a reservation form, or called to make a reservation – whatever the desired “conversion” or action. The number of actions, divided by the total amount spent in a given interval of time (usually monthly) will represent your Cost Per Conversion and the lower the number, the more efficient that PPC campaign is.

Example Scenarios:
Let’s assume that an advertiser is bidding top CPC for a given term, and receives predicted Clicks, based on Google’s analysis:

  • For Cape Cod Region-Wide Campaigns: 3 Clicks/Day times 30 Days/Month equals 90 Clicks
  • For Brewster-Specific Campaigns: 1 Click/Day times 30 Days/Month equals 30 Clicks

My first suspicion in the scenario above is that the Cost/Conversion for the “cape cod” terms are much higher than the Cost/Conversion for the Brewster term. The predicted spend per month for Cape Cod ads would be approximately $445.00, and for Brewster: $51.00, given Max CPC rates and predicted click rates from Google averaged monthly. This leads to the next question – “should I be bidding on the term ‘cape cod bed and breakfast’ or should that money be being used for other campaigns?” – or – for SEO? The answer lies in the amount of conversions a Brewster B&B currently receives from their existing PPC Campaigns. Obviously, if the “cape cod” ad gets very little conversions (if any at all) and takes up the largest percentage of spend, then you may want to make some PPC adjustments.

Continuing the Scenario Above

  • If the Cape Cod Ad Campaigns yield 2 sales (which I would bet is a high rate), than the Cost/Conversion is somewhere around $225/sale, or (probably) a premium for what the actual room rates are
  • If the Brewster Ads have a comparable percentage of sales/clicks, there would be less sales overall, but also less cost/conversion (assuming 2 sales for 90 clicks would be a cost/conversion of: $77/sale)

First Steps in Optimizing Your PPC Campaign
The first steps for creating more efficient PPC should be (assuming that the Cape Cod ad is indeed performing poorly): reduce the average CPC for bidding on the term “Cape Cod Bed and Breakfast” so that visitors must actively be scanning the advertisements for your specific message. Make certain that your location is present in your ad copy, which eliminates searches looking for Hyannis, Falmouth etc from inadvertently clicking your ad. Create filters in the Google Adwords campaign to take away variations of the keyword that may be ineffective or unwanted (such as “cheap cape cod bed and breakfast”). It surprises me how many small businesses do not take advantage of this strategy. The next step is to evaluate the campaigns performance and how it translates into your compete search marketing strategy.

Tailoring Your Content For Conversion Efficiency (The SEO Part of PPC Campaign Management)
Let’s look at some additional data as it relates to organic keyword search volume:

  • Cape Cod Bed and Breakfast: Approximately 2,300 searches/day
  • Brewster Bed and Breakfast: Approximately 300 searches/day

Additional search marketing statistics that will be helpful in supporting future recommendations:

  • 70% of users click organic search results over paid advertisements in search (source)
  • 40% more traffic could be realized by being #1 for a search term in comparison to being #2, and 50% when in position 3 and even 35% will click the term at the bottom of the page (#10 in search results – source: 2006 Marketing Sherpa)

This means that of the 2,300 searches per day for “Cape Cod Bed and Breakfast”, around 600 will look at the advertisements instead of organic search listings. If you are getting even a 1% cost/conversion rate, that may only translate into 6 sales, and that’s assuming your ad is highly visible (driving costs up overall), and effective in terms of messaging and relevance to the searcher. Nearly 100 of the visitors searching for “Brewster Bed and Breakfast” may click your ad in organic search results even at the bottom of the first page and a full 200 visitors a day are just as likely to click top organic search results for that term.

Based on PPC data for Cost/Conversions and current SEO rankings for applicable keywords – should a local B&B consider not trying to optimize organically or through PPC for “cape cod bed and breakfast” and make “Brewster bed and breakfast” a primary focus as a number 1 term? The website owners need to answer the following questions:

  1. What is the percentage of clicks on “Brewster Bed and Breakfast” that lead to conversions, either through PPC data or complete analytics? What is the percentage for “Cape Cod Bed and Breakfast”? I would recommend factoring this monthly.
  2. What is the volume of search referrals, organic and paid, for both terms above per month?
  3. Would more traffic derived from that term compensate for the traffic/sales lost in relation to de-emphasizing “Cape Cod Bed and Breakfast”?
  4. Are there alternative, less competitive keywords that could be integrated into the Home Page title tag and body copy that would make more sense to target?

If the answer to question 3 is “Yes”, I would recommend shifting my page tagging and content strategy for my website to focus on Brewster-related keywords, with Cape Cod as the secondary focus, and a goal of appearing on the first page in organic search for “Brewster Bed and Breakfast” and related keyword terminology. In addition, I would reduce my advertising spend being used for appearing in paid listings for “Cape Cod Bed and Breakfast” to focus on lower cost/click terminology.

General SEO Recommendations Based on Poor Conversions for “Cape Cod Bed and Breakfast”

  • Focus Home Page Titling to: “Brewster Bed and Breakfast, in Cape Cod MA”, or similar referencing – This places the main idea of the page/website squarely on the theme of “Brewster Bed and Breakfast”. In addition, it provides visibility for less competitive keyword organically (but still popular): “Bed and Breakfast in Cape Cod” (similar CPC values, but less overall volume and click projections, as well as a less competitive advertising spectrum)
  • Run a PPC Campaign for “Bed and Breakfast in Cape Cod” in place of “Cape Cod Bed and Breakfast” to see how conversions end up. If results are better (and CPC is lower) it may make sense to specifically target that term, versus the larger volume “Cape Cod Bed and Breakfast.
  • Make sure to add relevance to “Brewster” across the website, especially on pages meant to convert users, such as reservation pages, room information, and points of interest locally.

Conclusions
It would be relatively easy for a similar industry or location of reference to swap in their details and run a similar scenario analysis. Here are some pointers on what should be considered:

  • Does your local market have a distinguished identity in comparison to the larger, regional market?
  • If so, do you see advertisers appear for localized terminology in search?
  • Use your Google Adwords tools to determine approximate search volumes, click rates and a better understanding of how competitive the market is for specific terms. In addition, use a free evaluation of Keyword Discovery to calculate relative searches organically. You can reference my keyword research tools post for more information on these two tools.

Final Thoughts and Notes on the Post
I have no inside knowledge of the effectiveness of the PPC Campaigns and traffic being generated and converting for this particular set of Bed and Breakfast keyword strategies but am very familiar with how regional and specialized advertising campaigns can make a difference when budgeting and looking at the bottom line. I also know that the market for this industry is highly competitive, and any money being used for advertising purposes needs to be maximized for optimal efficiency. A quick scan of Yahoo Yellow Pages lists 8 Brewster B&B’s competing in the local market, with 5 visible websites. Understanding the relative costs associated with keyword strategy in PPC can lead to better overall paid advertising spend, as well as mapping out a strategy for organic Search Engine Optimization and complete Search Marketing success.


Comments

2 Responses to “An Analysis of the Cape Cod Bed and Breakfast PPC Market – Regional and Local Optimization”

  1. innkeeper on February 21st, 2007 2:50 pm

    I really like this post. Would like to see you address two issues: Every website user/searcher I have ever talked to in our business claimed their search was broad and bounced all over. Basically they need to validate their choice by seeing that choice in multiple places. Cost per click advertising is difficult, maybe impossible to really quantify?

    secondly, while seo is essential, it only works if the website linked to meets the needs of the searcher and keeps the searcher on site long enough to purchase. This point, in conjunction with the first, means that I believe conversion rates are higher than raw statistics every say. A simple point, do you track people who bookmark the site for later perusal that might have come from a PPC ad?

    I basically agree with your approach and have used that for the last several years. However, once everyone else does the same technique, we (early adopters) then need to move to the next techniques.

  2. dedmond29 on February 21st, 2007 7:09 pm

    CPC is not hard to quantify if you are using the correct web analytics tools to track the PPC visitor from entry to conversion (or exit). There are web analytics packages available that are affordable and easily integrated into existing website templates, even for small businesses. I will be writing a post on some of these tools soon.

    I would agree that it can be difficult to identify the bookmarked visitor and establish how they initially found the site, without doing very detailed (and time consuming) data analysis or (much easier) asking via form, the way the visitor found the site. Of course, that relies on submission accuracy, which can be an issue (recommendation: use a drop down menu with set parameters).

    I would argue that it’s not always new techniques that make the difference, (although you should always be aware of new opportunities) as it is refining and optimizing your existing successful strategies and using web analytics and data to understand how, or if, poorer strategies can be improved.