Internet media company Travelzoo runs a big Web site that draws big traffic. The Travelzoo.com property publishes trip and lodging deals from more than 600 travel suppliers, and 11 million members in the U.S. , U.K. Germany and Canada access those deals for free through the site’s newsletter, e-mail subscriptions or the on-site Super Search vertical search engine.
“That’s more than the combined paid circulation of the New York Times, the Wall Street Journal and USA Today,” says Erik Qualman, the company’s head of North American marketing.
Many of those subscribers are drawn by the list of Top 20 Web travel deals the company puts out every Wednesday. In fact, Qualman says, he was a user of Travelzoo’s services before he came to the company from internet provider Earthlink. “I’d just sit back and wait for a great deal,” he says. “I wouldn’t necessarily know where I was headed. The deals would just come up weekly, and I’d say, ‘Wow, this deal’s phenomenal—I’m going to Singapore and Hong Kong.”
The deals come from Travelzoo’s big-brand suppliers ranging from JetBlue and Ritz-Carlton to Orbitz, Expedia and HotWired. They pay Travelzoo a fee for their listings; in return, Travelzoo posts their offers, draws the traffic and then hands the prospects off to the supplier sites. You can’t actually book a trip on Travelzoo.
The deals on offer at the site are actually vetted by Travelzoo’s staff before being posted. In fact, Qualman says, the company was founded by president and CEO Ralph Bartel in 1998 because he grew frustrated that so many travel packages touted over the Internet turned out to be mere marketing come-ons. Travelzoo now runs test-booking centers in Chicago and Munich where employees call up and make travel arrangements as civilians to make sure the offers are on the up-and-up, the promotional codes work properly, and so on.
Travelzoo also hand-picks some deals from sources other than paying providers and inserts them into the Top 20 listings.
Users who go to the Travelzoo.com site looking for a specific trip or flight can use the metasearch engine to input their travel details. In return they’ll get a list of recommended travel search sites including providers like American Airlines, online agencies like Orbitz or CheapTickets.com, and vertical searches such as Kayak. If the user clicks on the search button for one of those sites, he’ll find the search form already populated with his travel dates and times—a big convenience rather than having to re-enter that information.
When Qualman came to Travelzoo in 2005, the company was following a rules-based approach to search marketing under which the company had a maximum cost per acquisition to which its keyword bid prices were rigidly linked. If the bid on a particular keyword—even a high-converting one—went above that target, Travelzoo dropped the word until the price came down into range again.
Qualman says he felt there was a better way to manage his company’s keywords. “We were looking to generate both more revenue and more profit margin from our search marketing efforts—to become more efficient,” he says.
So Qualman, whose career had taken him through Yahoo!’s small business division, reached out to Efficient Frontier, a search-marketing firm founded by fellow Yahoo! alumna Ellen Siminoff. Efficient replaced Travelzoo’s rules-based bid management system with its patented portfolio approach that permits advertisers to exceed maximum bids on some important keywords by re-adjusting the overall bid mix in real time using current market prices—rather like a financial hedge fund.
The Efficient platform tests and predicts the highest return on all possible keyword bids, factoring in match type (broad or exact), ad copy versions, landing pages, and such variables as geo locations, seasonality and time of day. The system then chooses and deploys the optimal bids to achieve a set business goal and ensure the best possible return on investment.
Travelzoo started the migration to Efficient Frontier’s platform by handing over two months’ worth of current keyword management data, which Efficient used to set up the optimized bid policies and run simulations on the impact the new technology would have on Travelzoo’s business. (“Important to us, because search marketing affects our business dramatically,” Qualman says.)
When the Efficient optimizer platform went live, Travelzoo’s search performance actually dipped below par for three or four weeks. “Then all of a sudden the optimizer got all those learnings and performance started to jump through the roof for us,” says Qualman.
From bidding on about 20,000 keywords before switching to Efficient, the company now runs a keyword list of almost 170,000 terms, and bid adjustments on those keywords are running at about 69,000 a day. Efficient also expanded the company’s search marketing campaigns from the big two engines, Google and Yahoo!, to include MSN and Ask.com as well.
Travelzoo had been considering bringing its search marketing in-house to make it more responsive, but Qualman says outsourcing to Efficient was a better choice. “There’s just no way we could have managed that scale of daily adjustments by hand.”
Taking a holistic approach to optimizing search bids has also reduced Travelzoo’s exposure to high-priced terms such as “travel”, “airline tickets” and “discount airline tickets”. “In the former model, we were about 80% dependent on our top 10 keywords,” Qualman says. “When you get fluctuations in the market for keywords, they usually happen at the top. Now that we’ve built out our keyword list, we’re only 50% dependent on those top 10 terms. That makes the ship a little more stable.”
Other features of the Efficient platform work to make sure that the ads that get served most often are those that suit Travelzoo’s business goals and not just the ones that Google sees getting the heaviest clickthrough traffic.
Finally, with the tactical burden of bid management lifted, Qualman says his team can now devote more time to strategizing ways to attract quality subscribers rather than simply driving warm bodies to the site.
“It’s important for us to maintain a high quality of user” he says. “Sixty-five percent of our base is married, 75% have a college degree, 34% have a post-graduate degree and 34% have above $100,000 in household income. We employ quality scores for our ad channels. With the Efficient Frontier platform, we can now push data back to them and report that for whatever reason, this engine has a lower quality score than that one, so let’s push more money over there.”