Airbnb claims its “very disciplined” approach to marketing over the past few years is paying off.
“Our marketing intensity continues to be at a level far below that of any other company in the travel industry,” Chief Financial Officer Ellie Mertz told investors overnight (May 8).
The brand has increased its sales and marketing spend to $514m (£411m) for the first quarter of 2024, up from $450m last year. Merz said Airbnb has invested more in marketing since the second quarter, with marketing as a percentage of revenue “increasing year-over-year in the quarter.”
Even though Airbnb has focused its marketing spend on brand over performance in recent years, it reported “very high ROI on performance marketing” in the first quarter.
According to Mertz, these ROI improvements were driven by continued testing and execution improvements, as well as expanded audience.
“We've expanded our keyword coverage. We've made general improvements to our landing pages. And all of that has been very successful in that we've been able to increase our spend slightly and remain very efficient. I can say that there is,” she explained.
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Airbnb plans to have a “moderate slant” toward performance marketing later this year, and Mertz said these channels are a “clear minority” of its overall marketing spend and strategy.
Looking specifically at international markets, she explained that depending on how well its “full-funnel marketing investments” are working, Airbnb will aim to “replenish” this spending to accelerate growth.
Overall, Airbnb's revenue rose 18% year-on-year to $2.14bn (£1.71bn), with adjusted EBITDA of $424m (£339m), compared to the first quarter of last year. This was an increase of 6% compared to the previous year. Net profit was $264m (£211m), the best first quarter in Airbnb's history. However, Merz cautioned about marketing spending being squeezed to optimize the company.
“We may see some margin compression to drive growth,” he told investors.
nouns and verbs
CEO Brian Chesky said Airbnb is following the likes of Nike and Apple in how the two companies are trying to “expand our brands and open up to people.”
“One of the strengths of our brand is also something we have to manage: Airbnb is both a noun and a verb,” Chesky said. “It's synonymous with categories like Kleenex and Xerox.”
While this level of brand awareness is what many marketers dream of, it poses a potential problem for Airbnb as it seeks to expand its appeal beyond stays to include experiences.
“One of the challenges is that people open the app expecting to stay,” Chesky explained.
Last week, Airbnb launched Icons, a campaign that Chesky describes as “a new category of extraordinary experiences from the greatest names in music, film, sports, and more.” The company sees Icons as “primarily a brand positioning and brand investment” to help the proposition go beyond a staycation.
“We are currently laying the groundwork for plans to expand beyond our core business,” Chesky said.
“We're positioning ourselves as a more ambitious company. And I think people are now starting to think of us for the experience,” he added.
In Marketing Week, we take a deeper dive into Airbnb's marketing strategy, examining why in-house is the best fit for brands and why marketing and product need to work together.
