After ten years of experience in the travel metasearch industry and being on both sides of the table I decided to summarize the best negotiation tactics you can use to get a better deal with a metasearch company like Kayak, Skyscanner or any other player.
CPC vs CPA
Probably the most important outcome of a metasearch contract is whether it’s going to be CPC (cost-per-click) or CPA (cost-per-acquisition) and of course, its value.
First of all, it’s important to clarify that none of this is better or worse and it depends on other variables.
Conversion Rate
This represents how many of the leads end up being actual sales, but how do you use this as leverage? One easy way is to compare the metas against each other and also compare with other traffic acquisition channels. Your goal is to find at least one big segment of your traffic where one particular meta behaves far worse than their competition. Then you can use that data to show their traffic is less valuable so you can’t pay the same as their competitor.
If the conversion rate is higher than other channels, then you are better paying a CPC. On the other hand, if the rate is lower, then you need to use that to ask for a CPA deal otherwise you will loose money on most of your sales.
Routes Regions
You should never analyze data on the channel as a whole. Instead, segment your reports by regions. This typically means domestic vs international (one segment for each continent).
Having done that, try to find regions where the traffic is high and the conversion rates are low. Then ask to lower the CPC based on that or at least make a deal with a different CPC for each main region. When doing this, find low traffic regions and offer a higher CPC there. This will give the illusion that the “average” price remains similar, but when you take into account the actual traffic you make more money on the deal.
Building Leverage
Following are some strategies you can use to get a better deal overall. Keep in mind that on the other side are expert negotiators so don’t expect them to come down easy, but if you follow through you will see the results.
Crisis Advantage
After the covid-19 crisis everyone knows travel companies suffered a lot from it. Use this context as an advantage to make them understand your tough financial situation and ask for a temporary discount. Even though it’s temporary it will be very hard to raise it again after the crisis is over, so you will have a lot more leverage to negotiate next year.
Keep Your Enemies Close
Both local and global metasearches manage their deals very dependent on each country where the customer is based. This means that even if the meta is a major global brand, you need to see them as a smaller local company that only has traffic there. This means that in each country they usually depend on the top brands to actually exist. If they risk losing any of them and their direct competitor (e.g. kayak-skyscanner) has them, they are doomed on that market. And remember, the person you are negotiating is responsible for that specific country, doesn’t matter if they keep doing fine on others.
Here what you need to do is try to partner up with at least one or two of your main OTA competitors who are also leaders in that country. You don’t need to share the details of your existing deals, you just need to agree on a specific discount you will all ask together. If the discount is reasonable, the meta will never say no. If they do, threaten to finalize the contract completely. I can assure you they will never go through with it, so be patient. They will try to stall and maybe even turn you off to see if you flinch, but after a few days they will come back and agree on the discount.
Package Deals
Most of the metas right now have alternative ways of making money by selling ads. This could be a classic display or some native in-line placements.
Those kinds of ads tend to have higher margins for them, that’s why you can use this as an incentive. Offer to buy a fixed amount of monthly ads on their site in exchange of lowering the CPC/CPA on your existing deal. The higher you are willing to commit on the monthly deal, the better your discount will be.
Final Thoughts
All these insights are based on actual personal experience and they have worked. Of course, don’t throw them all at the same time. Try to stick with only one or two on each negotiation.
The final outcome will also be very reliant on your existing relationship, so always try to build a friendly connection with your go-to person on the other side. Don’t just write to them when something is wrong. Do regular meetings to catch up and get to know each other, that will always pay out long term.
