Abstract
The present research provides insights into the complex landscape of online advertising channels to support tourism organizations in formulating their marketing strategies. People often use search engines and online travel agencies in a very similar way. The aim and sequence of actions that consumers perform on Google or Booking.com are exactly the same, but for the potential sellers each channel presents different costs and attributes. In the Google model, firms make bids and pay on a cost-per-click basis. In the Booking.com model, firms pay commissions based on the value of services sold. Under budget constraints, one of the first problems a company may encounter is determining the resource allocation to different channels. Hence, an analytical model is introduced to compare the profits generated from online search engines and online travel agencies. Assuming a trade-off between different online marketing channels, the study suggests the maximum cost per click that a tourism organization should pay to benefit from search engine marketing as much as from online travel agencies. The analytical model is tested empirically by using data from two hotels and managerial implications are discussed.
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