[Video] What is commission bidding (CPA) and why is Google removing it?

Google recently announced the end of commission-based metasearch models (CPA) for hotels. In this blog we’ll explain what commission-based bidding is, and why Google is removing it.

Watch the video clip below from our recent webinar on Google’s change to their commission bidding model, or read on for an explanation on what commission bidding is, and four potential reasons why it’s being taken away. Need to know what to do next? Find out more about the five options for hotels currently using CPA bidding models here. 

What is commission bidding?

Commission bidding is a low risk performance-based advertising model that allows hotels to pay Google for each booking generated. It gives hoteliers the flexibility to choose their commission rate. Hotels pay Google a fee for each booking they bring them (or potentially per stay) and the hotel doesn't have to pay for bookings that cancel.

It was introduced and gained huge traction during the pandemic, when hotels were understandably pulling back on their ad spend. Google essentially agreed to take on that risk for them, to ensure that hotel availability and prices would still appear in Google results.

Four reasons why Google is removing CPA bidding

1. Tourism has returned to pre-pandemic levels

As you can see in the UN World Tourism Barometer graph below, international tourism has now recovered to 88% of pre-pandemic levels. Customers are back, which means hotel marketing budgets are back. That means Google no longer needs to provide this level of support.

2. Google is phasing out third-party cookies this year
   
   CPA bidding models are reliant on third-party cookies. With Google phasing out third-party cookies this year, this move could be seen as the company getting things organized so that all of their products are aligned to that and not reliant on third-party cookies.
   
   
3. It makes Google’s product suite more consistent
   
   Commission bidding models on metasearch were very out of line with what Google offer on their other channels. You can’t do this kind of commission-based bidding on paid search, display or YouTube for example. So it felt a little out of sync with with Google’s traditional auction systems. This move makes their product suite more aligned and consistent.
   
   
4. This move may increase adoption of Performance Max for Travel Goals
   
   Google has been heavily promoting their Performance Max product over the past couple of years. Performance Max allows hoteliers to access all their Google Ads inventory (Search, Display, YouTube, Gmail, Maps, Travel and Discover) from a single campaign. The fact that hoteliers could still opt for CPA models on metasearch was likely to have been a blocker to them wanting to try Performance Max. If you already have an easy, guaranteed system in place, why would you go to the effort of switching to something new? Now that Google are removing the commission bidding option, there could be a spike in adoption of Performance Max.
   
   

What should hotels on CPA models do next?

If you’re not sure whether your current metasearch provider is using Google’s commission bidding model, you need to find out. Understand what your provider’s plans to mitigate the risk are, or potential look to switching your provider or your metasearch strategy going forward. There are five options available to hotels on CPA models. Click here to find out what they are.

Triptease Metasearch outperforms Google and offers a commission model

Triptease's industry-leading Metasearch product will continue to offer a CPA model with no risk to performance or cost, and no change or disruption for hotels. Triptease Metasearch offers hotels:

• More than five years of experience building AI-powered bidding models.
• Game-changing functionality like Price Match which allows hoteliers to win on metasearch every time by applying small, controlled discounts automatically when they’re being undercut by OTAs.
• The ability to utilize unique hotel data that Google doesn't access allows us to tailor our algorithms based on extensive global hotel data, enabling Triptease Metasearch to consistently outperform Google's algorithms.

Interested in learning more about Triptease Metasearch? Get in touch with the team today via the form below.