Airbnb shows faith in brand by boosting marketing investment

Having previously cut marketing spend as it shifted its strategy away from performance, Airbnb’s marketing expenses have once again increased as the business looks to invest in brand building advertising.

Over the second quarter of 2021, Airbnb’s sales and marketing expense grew by 175% compared to the same period last year, reaching $315m (£228m). For the first six months as a whole, the travel brand spent $544m (£394m) on marketing.

According to the business, this boost in spend “primarily” reflects increased investment in brand marketing, particularly its international ‘Made Possible by Hosts’ campaign.

Launched in the first quarter of the year in the UK, US, France, Canada and Australia, the campaign is Airbnb’s first large-scale brand campaign in five years.

It 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, and over the second quarter of 2021 was expanded into markets including Italy and Spain.

Speaking on an earnings call last night (12 August), Airbnb’s co-founder and CEO Brian Chesky said the business is “really encouraged” by the results.How brands are overcoming the ‘artificial division’ of brand and performance

In countries where the campaign ran in Q2, overall traffic to the Airbnb platform increased by more 25% compared to the same period in 2019, before Covid-19. According to Chesky, this traffic was higher than in non-campaign markets.

Airbnb also claims to have seen the number of people making their first booking on its platform increase faster than returning guests in countries where it ran the campaign.

Similarly, traffic to Airbnb’s host page more than doubled and the business has ended the quarter with the largest number of active listings in its history. Chesky also claimed that brand favourability has moved forward positively.

“Now that Q2 is behind us, we can definitively say that the travel rebound is upon us and Airbnb is leading the way,” he claimed.

The firm posted revenue of $1.3bn (£942m) in the second quarter of 2021, a 300% increase on the same quarter last year, and a 10% boost compared Q2 in 2019.

Airbnb’s profit also increased, with adjusted EBITDA in the second quarter at $217m, substantially higher than the loss of $397m it made in 2020 and an improvement on 2019 when it posted a loss of $43m.

Cutting performance spend

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.

Over the first quarter of 2021, the business therefore cut its sales and marketing spend by 28% year on year to $229m (£163m), which it said reflected a decrease in performance marketing expenses.

At the time, Chesky confirmed cutting performance marketing spend had little impact on traffic, 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%.

While the business has now upped its spend once again, it is electing 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.

Speaking last night, Chesky suggested Airbnb will be continuing with this strategy, having already seen positive results from the shift.

“We remain focused on making progress towards achieving our long-term profitability goals through improved variable costs, high marketing efficiency and tightly managed fixed expenses,” he said.