A recent Wall Street Journal article stated that "Airbnb's strategy to reduce advertising spending, invest in brand marketing and reduce reliance on search engine marketing continues to pay off."
The announcement sparked controversy among many advertisers who thought a similar strategy could work for them.
In 2019, Airbnb began reallocating its budget away from search marketing in favor of broader marketing initiatives.
The pandemic accelerated the shift, with video and social media accounting for the largest share of digital spending in 2021, according to data compiled by Semrush and Pathmatics.
In the third quarter of 2021, the company expanded its digital strategy to OTT and CTV, further reducing its share of the PPC budget.
With the increase in CPCs in the Performance Media channel, advertisers are wondering if removing the Performance channel is the right move.
But before we make that leap, let's consider three key points.
1. What external forces affect your business?
The pandemic played a big role in changing Airbnb's strategy.
The company cut its marketing spend from April 2020 to November 2020, when it resurfaced with a strong social media presence.
Then, in December, Airbnb reminded customers with a video ad that the brand will be there when people are ready to travel.
Consumer behavior has changed and Airbnb needs to use tools that persuade and build trust. What could be better than videos?
It is very important to align yourself with the external forces affecting your marketing mix.
Have you created a new category? Or do you want to change consumer behavior?
If so, it makes sense to go for high-profile brand advertising.
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2. Have you reached a tipping point?
90 percent of Airbnb traffic goes directly to the site. According to Second Measure, their market share in the space is about 20%.
Airbnb has reached tipping point. His category is stable and he is the leader in this category.
Instead of using performance metrics to attract new customers, they can use them as strategic supply and demand levers.
Think of what they spend on brand awareness as a workforce and adjust as a performance enhancer.
Before you decide where to spend your marketing dollars, know where you're going.
Are you a leader in your category? Are most of your visitors coming directly to your site?
If so, it makes sense to place more emphasis on brand advertising and rely on media for personalization.
But if you need to reach more customers to break even, consider a high-impact media strategy.
3. Did you miss something?
Finally, it's hard to tell from the outside how much Airbnb spends on performance marketing.
But a survey by Rakuten Marketing and Commerce Signals shows that retailers typically waste 25-40% of their marketing budgets.
Cutting unnecessary costs and reallocating dollars to broader marketing initiatives could have a similar effect to what Airbnb has seen for advertisers.
Evaluate your current performance marketing spend for hidden waste. Online audit tools as well as marketing agency audits can help.
Rethink your marketing mix for your unique situation
It's worth noting that Airbnb still spends about 50% of its budget on performance support.
So, although their mix has changed from the previous 80%, the company still uses high-yield media to balance supply and demand.
When advertisers decide to budget for brand recognition, the role of the marketing channel should be reevaluated.
Letting each channel use its own superpower can create a beautiful symbiotic relationship in your marketing mix.
So, if you're thinking of switching to a strategy like Airbnb, it's important to think critically about your business before making the move.
Think about your category, consumer behavior and market position. Finally, evaluate the wasted costs.
And if you're ready to take the plunge, remember to test, measure, evaluate, and iterate.
The opinions expressed in this article are those of the guest authors and are not necessarily those of Search Engine Land. Staff authors are listed here.
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