Booking.com owner to cut paid media spend as it prioritises direct bookings
The travel business is aiming for more direct bookings over those generated through paid marketing investment, something that it claims will benefit its P&L.
Booking.com’s owner has said it is “gradually” reducing the amount of investment it makes in paid media channels as it seeks to drive a higher number of direct bookings on its site through loyalty.
Booking Holdings, which owns brands including Kayak.com and Open Table, as well as Booking.com, said bookings made through direct channels grew faster than room nights acquired through paid marketing channels in its most recent quarter, ended 31 March.
“We see paid marketing channels becoming a gradually smaller proportion of our business over time,” said the business’s CEO Glenn Fogel speaking to investors yesterday (3 May).
The business will instead look to drive direct bookings through initiatives like its Genius loyalty programme and the “connected trip”, which gives travellers the ability to book all aspects of a trip through Booking.com, not just the accommodation.
Ensuring the best customer experience is also a key component of the company’s strategy to drive more direct bookings.
When we find things that actually are not incremental and are actually duplicative, we pull it out and say, well, let’s not spend the money there.
Glenn Fogel, Booking Holdings
“By creating a much better experience for our travellers and solving more of the challenges they face when planning, booking, and experiencing a trip, we believe travellers will choose to book directly and more frequently with us,” Fogel said.
He reported Booking.com has seen “high growth” in repeat travellers, particularly among Genius loyalty members who have a higher frequency of booking than the average customer and are more likely to book directly.
Over its last four quarters the mix of its total room nights coming to the business directly was in the “mid 50% range”, reported Fogel, with each quarter outperforming the comparable period the year before.
Driving direct bookings reduces Booking’s reliance on paid media channels, thus driving “higher efficiency” of its marketing spend as a percentage of gross bookings, it said, while “benefitting” its P&L.
In the first quarter of its financial year, gross bookings were $43.5bn (£34.64bn), up 10% from the same period last year. Marketing spend was also up from $1.52bn (£1.21bn) in the first quarter of 2023, to $1.61bn (£1.28bn) in its most recent quarter. Although this is up as an absolute figure, as a percentage of gross bookings, marketing spend has decreased slightly from 3.9% of gross bookings last year, to 3.7% this year.
While gradually decreasing its investment in paid media channels is a goal for Booking, it understands “it is important for [it] to remain proactive in these channels in order to bring new travellers to [its] platforms”, Fogel said.
He added the caveat: “So long as we are able to do this at attractive ROIs.”
Marketing efficiency has been a key focus for Booking in recent times. Yesterday, Fogel underlined the business’s “holistic” approach to its marketing spend and said that it was actively looking to cut out spend that was not driving impact.
“We’re always looking for what is the best use of the money? What’s the best way to put it to work?” he said.
“When we find things that work, we put more into it. When we find things that actually are not incremental and are actually duplicative, we pull it out and say, well, let’s not spend the money there.”
