Airbnb hails early results from shift to brand building over performance marketing

Airbnb claims to have seen promising early results from its new marketing strategy, which has involved a substantial cut to performance marketing spend and increased focus on brand building and PR.

Over the first quarter of 2021, Airbnb cut its sales and marketing spend by 28% year on year to $229m (£163m). The business says this “primarily” reflected a decrease in performance marketing expenses.

The travel accommodation business said in February it would be making a permanent cut to its overall marketing investment, having noted that slashing spend during Covid had little impact on traffic.

We take a very different approach to sales and marketing than our competition.

Brian Chesky, Airbnb

Speaking on an earnings call last night (13 May), Airbnb’s co-founder and CEO Brian Chesky confirmed this trend has remained consistent during the first quarter of 2021, with 90% of traffic to the brand’s digital platform either unpaid or direct. Traffic levels remain similar to 2019, despite the business having cut overall marketing spend by 50%.

“We take a very different approach to sales and marketing than our competition,” Chesky said. “PR, in addition to word of mouth, is the thing that built our brand over the last 10 years. And because of that, Airbnb really is a noun and a verb used all over the world.”

Chesky added that Airbnb now looks at the role of marketing as “education”, not “to buy customers”.How one marketer went from architecture graduate to Airbnb CMO and beyond

Reflecting this shift in attitude, in late February Airbnb launched its first large-scale brand marketing campaign in five years, titled ‘Made Possible by Hosts’.

The campaign aims to educate guests about the benefits of being hosted and to inspire more people to become hosts. It launched on television and digital channels across the business’s five largest markets, including the UK, US, France, Canada and Australia, with plans to expand to Italy and Spain in Q2.

While still early days, Chesky said the campaign has been “well received”, driving an increase in visitors to the brand’s digital properties across those five countries. Overall traffic to its platform has grown at a faster rate than the rest of the world, he claimed.

Airbnb also saw an increase in the number of people making their first booking on the platform following the launch of the campaign and, based on survey data, Chesky claimed the campaign is driving “meaningful increases” in guest favourability towards the brand.

The business has elected to front weight its marketing spend this year, with sales and marketing expenses as a percentage of revenue in the first half of 2021 expected to be higher than in the second half.

“We are prepared for a travel rebound unlike any other, so we don’t want to spread spending across the year,” Chesky said. “We disproportionately put spending in Q1 to recapture as much of this demand as possible and what we’re seeing suggests that timing will bear out to be the right timing.”

Chesky said he believes the changes in travel behaviour over the last year will be “long-lasting”, with business travel, for example, unlikely to ever reach previous levels again.

However, Airbnb has seen opportunity in long stays of 28 days or more now that people are able to work remotely. Long term stays as a percentage of nights booked rose from 14% to 24% over the quarter.

Overall, Airbnb saw its revenue rise 5% year on year to $887m (£632m) in Q1, a 6% increase when compared to 2019. However, the business – which has never recorded a profit – continues to make a loss. It posted a net loss of $1.2bn (£854m) for the quarter, which shrinks to $59m (£42m) after adjusting for earnings before interest, taxes, depreciation and amortisation (EBITDA).