Price Accuracy: Demystified

Why (And How) Price Accuracy Impacts Campaign Performance

The King of Ad Quality

Of the ad quality metrics for Google Hotel Ads, price accuracy is king. Not only can poor price accuracy push your campaign’s positioning into terra incognita, it will also impact your CVR once users start landing on higher prices than they clicked. This is why we take price accuracy very seriously at Koddi and built real-time price accuracy alerts into the platform from day one.

When we first saw Google scale its price verification tech, we gave an overview of what technical factors cause price accuracy to drop. However, one common question we hear is how low price accuracy scores impact your performance — this is what we’ll dig into here.

Refresh: What is price accuracy?

Price accuracy refers to how often the price a user lands on lines up with what they were originally offered. Periodically, Google will crawl your landing pages via multiple entry points to compare your final displayed price to what they have available in cache.  When a discrepancy is seen between what is cached and what is displayed, Google records the difference between fetched and cached price, as well as the exact route it took to find that discrepancy. This info is made available through the Partner Dash’s price accuracy report — a very helpful tool when diagnosing price accuracy issues.

The amount of discrepancies Google finds determines your overall price accuracy score. Google breaks price accuracy scores into five groups — see below for a helpful infographic from Google:

Price Accuracy for Google Hotel Ads

Below Excellent, your positioning starts to be adversely impacted by your price accuracy. If you hover around At Risk too long, you could you see your score dropped to Failed — meaning your account has been temporarily suspended due to your price accuracy.

Anecdotally speaking, we see a mild impact when dropping to Good from Excellent. Where we start to see large impacts is in the Poor and below range. Once we see price accuracy dip to these levels, understanding what caused the drop and finding a long-term solution should be a top priority.

Refresh: How does price accuracy impact the auction?

That price accuracy affects the auction seems to be common sense, but we still see questions on the mechanics of how your price accuracy score actually affects your CPCs and positioning.

Like other metas, your positioning on Hotel Ads (HA) is not decided by bid alone. Instead, your ad quality score plays a large role in determining how your bid will compete against other players in the auction. With a high enough ad quality score, you could out-rank competitors with a low ad quality score despite paying a lesser CPC. Price accuracy is a big component of ad quality on HA, and your ad quality score is determined daily by comparing your recent price accuracy scores as well as your historical accuracy over a period of time.

When your ad quality score drops, it will take increased CPCs to maintain the same positioning day over day. Roughly speaking, an account whose accuracy drops to Poor will see the following changes:

  • Impression share and rank will decrease
  • CPCs will increase
  • CVR will decrease

But it’s not so simple…

It should be noted that the effects listed in the above section are just a rough overview. Because HA is a second price auction, how poor price accuracy actually affects your performance depends on how competitively your bids are positioned against competitors. To help illustrate this, let’s imagine two quick market scenarios:

Scenario 1: Small Market, Low Competition, Large bid difference between competitors

Market Features

  • Low CPC for top position
  • Fewer large competitors
  • Your highest possible bid (i.e. your first price bid) is much greater than competitors 

When looking at the effects of price accuracy in smaller markets, we tend to see impression share stay flat or decrease slightly, while CPCs will increase dramatically (up to ten percent)!

The reason for this is that your total bid, even with a poor ad quality, is still competitive enough to keep you in top position. However, because your ad quality score is now low, your bid must pull more weight in determining your position. Therefore, you see an increase in CPCs for the same volume. The end result is that you see similar traffic as before, but at a decreased ROAS, due to the increase in CPCs and the cost you’re now paying.

Scenario 2: Large Market, High Competition, Small differences in bids between competitors

Market Features

  • High CPC for top position
  • More large competitors
  • Your first price bid is close to competitors

In larger markets, we see CPCs increase slightly, while impression share and ranking takes a big hit. Depending on your original positioning, you could see your average rank decline by 20 – 30%.

The reason for this is that your total bid is close to other competitors’ bids. In this scenario, your total bid is not able to make up for your drop in ad quality, and you see lower positioning at your previous level of CPCs. The overall performance impact of this is that you take a big hit in volume, and can see lower efficiency due to higher CPCs.

Now, these are two extremes — In actuality, this calculus is going on at the hotel level, and the overall effect of poor price accuracy on your account will be determined by how your hotels are positioned on average. This means you’ll have to dig in more granularly to get a clear picture of how and where price accuracy is affecting you, and what the required bid maneuvers will be.

The Silver Lining

Nobody likes having their well-manicured HA account disturbed by a drop in price accuracy, and optimizing when price accuracy is shifting can be challenging. However, if you apply the above learnings and dig into performance shifts when your price accuracy drops, you can yield a better understanding of how you compete in the market.

For example, if you isolate a group of properties that see a big downward shift in impression share while CPCs stay relatively in line, you can bet these properties are hotly contested by other marketers. Once your price accuracy recovers, you might try increasing bids on these properties to maintain top position should other competitors try and increase bids.

On the other hand, if you find a group of properties whose impression share stays steady while CPCs increase, you know you’re positioned aggressively in this market. You might try lowering your bids to limit the effects of a competitor’s increase, or of any further drops in ad quality score.

Recap

Hopefully, this has shed some light on what we see when price accuracy drops. As a quick recap:

  • The effects of price accuracy are dynamic and depend on how your bids are positioned in the market
  • Aggressively positioned hotels tend to see moderate decreases in impression share with a larger increase in CPCs
  • Moderately positioned hotels tend to see larger decreases in impression share with moderate increases in CPCs
  • By monitoring the effects of a downward shift in price accuracy, you can better understand how your hotels are positioned relative to competitors.

As always, feel free to reach out to your account manager at Koddi for a better understanding of price accuracy. This is a top-ten conversation to have when managing an HA campaign, and we love to help clients better understand and avoid drops in price accuracy. 

Categories
Google , Metasearch