Why Invest in Brand Marketing: Learn from Airbnb’s Example

A recent article from the Wall Street Journal reported that “Airbnb’s strategy of drastically cutting advertising spend, investing in brand marketing, and reducing its reliance on search engine marketing continues to bear fruit.” This observation has sparked discussions among many advertisers, wondering whether a similar strategy could work for them. In 2019, Airbnb began shifting its budget from search marketing in favor of broader marketing initiatives. The pandemic accelerated the change, with video and social media claiming the largest share of digital spending in 2021, according to data gathered by Semrush e Pathmatics.

In the fourth quarter of 2021, the company expanded its digital strategy to OTT and CTV, further reducing the budget share for PPC. With rising CPCs across performance media channels, advertisers are asking if moving away from performance marketing channels is the right move.

But before making a similar leap, let’s take a look at three key considerations.

1. What external forces are impacting your business?

The pandemic played a significant role in Airbnb’s strategy shift.The company reduced its marketing expenses from April 2020 to November 2020, when it reappeared with a strong presence on social media.Then, in December, Airbnb reminded customers through video ads that the brand would be there when people were ready to travel.

Consumer behavior changed, and Airbnb needed to use a medium that would reassure and build trust. What better way to do that than with video?It is crucial to be aligned with the external forces influencing your marketing mix.Are you creating a new category? Or trying to change consumer behavior?If so, it might make sense to shift to brand marketing.

2. Have you reached a critical point?

90% of Airbnb’s traffic comes directly to the site. Their market share in the space is nearly 20%, according to Second Measure. Airbnb had already reached its tipping point. Its category was well established and it was a leader in that category.Instead of using performance media to acquire new customers, they could leverage them as strategic tools for demand and supply.Think of their brand awareness spend as the big workhorse, and performance media as fine-tuning.Before deciding where to spend your marketing dollars, you need to know where you stand.Are you the leader in your category?Does most of your traffic come directly to your site?If so, it makes sense to place greater emphasis on brand advertising and rely on performance media for fine-tuning.But if you need to acquire more customers to reach a critical mass, consider a higher-performance media strategy.

3. Do you have wasted spending?

From the outside, it is difficult to say how much of Airbnb’s performance marketing spending was wasted.But surveys byRakuten Marketing and Commerce Signals indicate that marketers routinely waste 25-40% of their marketing budgets.Simply cutting this wasted spending and reallocating the dollars to broader marketing initiatives can yield advertisers results similar to those seen by Airbnb.Evaluate yourexisting performance marketing dollars to find wasted spending that’s hidden in plain sight. Online audit tools can help, as can audits from marketing agencies.

Rethink your marketing mix based on your unique situation

It’s worth emphasizing again that Airbnb still spends about 50% of its budget on performance media.Therefore, while their mix has changed from the previous 80%, the company still relies heavily on performance channels to help balance supply and demand.As advertisers consider whether to shift budgets toward brand awareness, the roles of marketing channels should be reassessed.Allowing each channel to play to its strengths can create a wonderful symbiotic relationship within your marketing mix.So if you are considering a strategy change similar to Airbnb, it’s important to think critically about your own business before making the move.Consider your category, consumer behavior, and market position. Finally, evaluate any wasted spending.And if you’re ready to take the big leap, remember to test, measure, evaluate, and repeat.

Source: Searchengineland