This week’s Airbnb announcement shook the marketing world. After generating the same percentage in online traffic as the pre-pandemic levels in 2019, Airbnb decided they are making a permanent cut in the amount it invests in paid performance marketing for the foreseeable future. The company revealed that it will be moving its spend away from performance marketing and into brand marketing, while also focusing more on public relations.
The overall amount that Airbnb invests in marketing as a percentage of revenue will “never” return to pre-pandemic levels, the company stated.
Many brands will be asking the question, how can Airbnb do this? The answer is simply because Airbnb is an incredibly successful company. Part of the justification for cutting marketing budgets is a direct result of the strength of the brand.
Airbnb Co-Founder and CEO Brian Chesky points out that Airbnb has become both “a noun and a verb in pop culture”. If we want to rent out our home as a holiday let, we say “I’m going to Airbnb it.”
Needless to say, Airbnb has been the market leader since 2008, and the company has significant brand awareness. Customers know and love the brand - normally going direct to the Airbnb site, without typing “vacation rentals” into Google. Ultimately as the market leader 95% of their searches happen organically. This is not the case for most brands.
It’s important to note that Airbnb is not stopping all performance marketing, Dave Stephenson, the Chief Financial Officer of Airbnb, still deems performance marketing to be an “absolutely important lever” to the strategy of building a successful brand. Although Airbnb won’t be going back to spending the same amount of money on marketing as they did in 2019, it will continue to use performance marketing where it makes sense.
Airbnb is smart. Cutting all marketing spend would be a very short-term strategy and this is what other brands need to realise. Airbnb wants to shift its focus to a full-funnel marketing approach, with the top of the funnel being PR. For the time being, this will ensure they stay front of mind for customers, and they will maintain that organic traffic through brand awareness and affinity.
It’s evident that competitors will need to rise to the challenge, while stepping up their brand awareness and activations. Competing with a brand that is so all-pervasive to the point where “Airbnb” is a word under review to include in the dictionary is not easy. Although they are cutting marketing budgets, Airbnb is about to do even more large-scale brand activations to cement its position, and competing brands will need to keep up. We know that listing a home on a rental website takes trust and consideration - it’s a big decision. Competitors that want to inspire home-owners to list their properties on an alternative platform to Airbnb need to do more to asset their brand identity and values, so now is not the time to be cutting marketing budgets.
For competitors, Airbnb’s news means that performance marketing will be more important (and more affordable) than ever. PPC bids will be cheaper, offering the perfect opportunity to distract customers who are down the funnel, but may not have decided on Airbnb or may not know about other brands who have a similar offering.
Now, more than ever, is the time to invest in performance marketing. Rather than following in Airbnb’s footsteps, competitors need to realise that they most likely don’t have nearly as much brand equity, but they do have an advantage and opportunity to build their presence.
Tourism may have been brought to a near halt by the pandemic, but come summer 2021, the industry will find itself in a unique position to help put the global economy back on its feet. With Biden promising vaccines for every adult in the U.S. by the end of May, and the UK set to offer the same in June, summer will be key for ravel brands, with everyone desperate to finally travel again.
It’s important that travel brands seize the opportunity by spending the right way. They need to find the right balance between a mix of performance and brand campaign spend, to ensure they bounce back strong this year, and fight to stay front of mind moving forward. Storytelling and new consumer demands are likely to be key post-COVID so it’s important for brands to think wisely about their marketing strategies.
What works for Airbnb won’t necessarily work for competitors, and in a post COVID-19 world, performance marketing will be more important than ever.