I finally decided on a schedule for my trip to Las Vegas next week for Internext, and I did a search on Google to find the Bellagio website. I was pretty sure that it was bellagio.com, but I searched just to be sure. Here is a screenshot of my results:

What’s wrong with this picture?

Well, the marketing team over at Bellagio is paying for Adwords clicks on this search when the same site they are buying clicks to is actually ranking #1 for the search. What does this mean? Essentially, they are wasting money.

Why pay for a sponsored link when you are number one for a search? I tend to buy adwords clicks only on search terms that I have a shitty ranking for.

How much money is Bellagio wasting? I used the Adwords keyword tool to come up with the following estimate:

Even though the estimated average costs are hardly ever correct, the results prove that this ineffective Adwords buy could be quite costly over time. I don’t expect the people over at Bellagio to go broke over this considering that they have tons of money to burn, but why waste money when you don’t have to?

I did a little more detective work using the Overture keyword suggestion tool. For those of you who don’t know, this tool gives an estimate of the monthly search volume for a given term. I used values for the US. Here are my results:

You can see for yourself by performing all three of these searches, that the official Bellagio site appears as both the first organic (non-paid) result AND the first sponsored result.

Let’s Do Some Math

These three search terms yield a total of around 24986 searches each month. This number, in reality, is much more, but we’ll use it for fun.

Let’s say that Bellagio’s Adwords campaign for these three search terms has a click through rate of 7%. I think this is realistic considering that the Adwords domain is the official Bellagio site, which will cause users to see it as relevant. In addition, Bellagio is obviously bidding enough to be placed in sponsor position number one, which also accounts for the high click through ratio. Ad copy is mediocre, but does mention an ‘online special,’ which will raise CTR.

At a click through rate of 7%, of the 24986 searches performed each month, about 1749 will yield an sponsored link click to the Bellagio site.

Let’s say Bellagio pays $7.25 for each of these clicks. This could, or could, not be close to what they are paying. I do not have Adwords experience with anything hotel-related, but Bellagio is obviously the top bidder for all of these search terms. At $7.25 per click, Bellagio is spending $12680.39 each month on this ad campaign when they are ranking number one for the same search term. At $12680.39 each month, Bellagio spends $152164.74 each year on the campaign.

Again, this does not break Bellagio’s bank at all, but why spend it when you don’t have to?

Why Does Bellagio Do This?

The only reason that I could think of for what seems to be a waste of money on the part of Bellagio is that they do not want to have another site, such as Expedia or Orbitz, outbid them for this spot. I wonder if they have worked out the costs of being outbid on this campaign and found that it is more cost-effective for them to ensure that the majority of Adwords clicks go to them so they do not have to pay out commissions on hotel rooms bought through Adwords clicks.

With Adwords, it is easy to exclude search terms for which your campaign will not appear, so what I noticed caused me to think a lot about whether this result was a calculated effort on the part of Bellagio to make sure that users book rooms directly through them, or if this was simply overlooked by Bellagio marketing. Or if Bellagio doesn’t give a fuck about $152164.74 each year. The latter is very likely.

The results above are the same for nearly all Las Vegas hotels, with more popular hotels receiving even more searches, and thus causing Adwords spots to cost more.

Is there a method to this madness, or are the results due to simple oversight on the part of Bellagio? I’ll probably never know, but I enjoyed investigating this one. See you in Vegas.

This entry was posted on Monday, January 8th, 2007 at 11:09 pm and is filed under Technical Writings. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.