Brand marketing pays off for Airbnb
Long-term vs. short-term effectiveness
Hotels
Marketing function management
Focusing on its brand is paying off for Airbnb, the digital accommodation platform, which is now using performance marketing as a “laser-focused” strategy.
The financiers
Airbnb has released strong quarterly results over the past three months, including:
- 100 million reservations for overnight stays and experiences, up 25% year-on-year.
- Gross booking value of $15.6 billion, an annual increase of 31%.
- Revenue of $2.9 billion, a 29% increase from 12 months earlier, and its highest ever figure for this metric.
- Net income of $1.2 billion, a year-over-year peak of $400 million and its most profitable quarter.
Marketing strategy
- Dave Stephenson, CFO of Airbnb, said on an earnings call that the company has “drastically adjusted our marketing spend to be significantly lower”.
- Specifically, this change – which began before the outbreak of Covid-19 and accelerated during the pandemic – involved an “increased focus on Airbnb’s overall brand”.
- This means being “less dependent on search engine marketing” – an outcome encouraged by the fact that 90% of Airbnb’s traffic is direct or unpaid, with public relations playing a vital role here.
- This “generates great ROI for new active bookers,” Stephenson said, with those users performing as well, and often better, than pre-pandemic users.
- “In terms of advertising ROI [return on investment]we are really happy with our approach to the marketing strategy that we had,” he added.
Education is important
Airbnb CEO Brian Chesky suggested brand marketing is an important way to “educate people about our new features.” These features include Airbnb categories, allowing users to discover “one-of-a-kind” destinations, and an insurance product called AirCover.
Airbnb Experiences, on the other hand, offer users the option to purchase activities on the ground and are another point of interest.
“The great thing about Experiences is that we don’t need significant additional investment to make it work,” observed Chesky. “It’s just about integrating experiences more into our existing marketing and integrating experiences more into our existing products.”
Role of performance marketing
In this context, performance marketing – often central to digital-focused companies early in their history – takes on a different role.
“We think performance marketing is more of a way to laser in, balance supply and demand, rather than a way to buy large numbers of customers,” Chesky said. This development, he continued, “allows for a very effective and very dynamic marketing approach which should become more effective every year”.
And after?
- The impact of Airbnb’s brand marketing has encouraged the organization to roll it out more widely in 2023.
- “It’s been so successful that we’re expanding to more countries,” Stephenson said.
- As for expenses, “you should anticipate similar marketing as a percentage of revenue,” he continued. “And we can certainly scale it based on income.”
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