Airbnb's Brand Vs. Booking.com's Performance Marketing – is There a Playbook for Recovery? – PhocusWire

Airbnb’s IPO filing provided some precious marketing lessons on how the 13-year-old company challenged conventional wisdom by mostly shunning away from traditional performance marketing channels.

In stark contrast, Booking.com started to build its online empire years earlier, thanks to the flawless execution of a simple but extremely efficient formula: siphoning as much traffic as possible from performance channels and maximising conversion by A/B testing to death each pixel in the funnel.

It is a perfectly oiled and laser-focused marketing machine that outperformed the rest of the industry during the last decade and a half.

Marketing during travel’s recovery: branding or performance?

Green shoots of travel demand are popping up in the U.S. and we are finally seeing light at the end of the tunnel in some regions. But which one of the aforementioned contenders will ride the wave of recovery more successfully?

Travel tech expert Mauricio Prieto provides a compelling argument in his insightful piece comparing both players: “When it’s time again to push on all cylinders, Airbnb will need to push the performance marketing accelerator to drive growth, adding pressure to its already fragile bottom line…

“Performance marketing is a growth lever and an engine to bring in new customers who could become loyal in the future. Relying on direct traffic could be insufficient for businesses that need tremendous scale and constant growth.”

One solid counterargument to his line of thought can be found in the Airbnb SEC filing: the platform attracted 14 million new active bookers during the first nine months of 2020, despite the significantly lower investment in performance marketing.

Add to it the company’s extremely loyal customer base, with 69% of total revenue in 2019 generated by repeat bookers and you get the picture: Airbnb powerful brand seems to be fuelling the growth flywheel without any need for performance marketing.

This strategy worked well during a pandemic that turbocharged travelers’ desire for less crowded accommodation alternatives, but will it work in the long term?

Airbnb CEO Brian Chesky seems to be confident it will, declaring in its debut earnings call: “We don’t intend to ever again spend the amount of money as a percentage of revenue on marketing in the future as we did in 2019. In Q4, more than 90% of traffic was direct or unpaid. And we think that will continue in the future.”

In a CNBC interview, he added: “What the pandemic showed is we can take marketing down to zero and still have 95% of the same traffic as the year before. So we’re not going to forget that lesson.”

Not unsurprisingly, Booking.com, the unrivalled champion of search marketing, plans to stick to its successful formula, as CEO Glenn Fogel declared in Q3 2020 earnings call: “We’re always looking for high-quality traffic at the right price… And that’s what we’re going to continue to do.”

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