Airbnb claims its “very disciplined” approach to marketing over the past couple of years is paying off.
“We continue to have a much lower level of marketing intensity than really anyone else in travel,” CFO Ellie Mertz told investors overnight (8 May).
The brand upped its sales and marketing spend to $514m (£411m) during the first quarter of 2024, from $450m last year. Mertz explained Airbnb is investing more of its marketing weight behind the second quarter, with marketing as a percentage of revenue “growing in the quarter on a year-over-year basis.”
Despite having weighted its marketing spend towards brand rather than performance in recent years, Airbnb reported “very high ROIs in performance marketing” during the first quarter.
According to Mertz, these ROI improvements have been driven by continually testing and improving execution, as well as expanding the target audiences.
“We’ve expanded our keyword coverage. We’ve made general improvements to the landing pages. And all of that has been, I would say, quite successful in terms of allowing us to spend marginally more and maintain really great efficiencies,” she explained.
Airbnb plans to “lean in modestly” to performance marketing over the course of the year, with Mertz describing these channels as “obviously a minority” of the overall marketing spend and strategy.
Looking specifically at international markets, she explained that the extent to which “full funnel marketing investments” are working Airbnb will aim to “top off” this spend in a bid to accelerate growth.
Overall, Airbnb revenues grew 18% year-on-year to $2.14bn (£1.71bn), with an adjusted EBITDA of $424m (£339m), up 6% on last year’s first quarter. With a net income of $264m (£211m), this is Airbnb’s strongest first quarter in the brand’s history. Mertz did, however, warn of a squeeze in marketing spend to help the company optimise.
“You will potentially see some margin compression in order to drive growth,” she told investors.
CEO Brian Chesky described Airbnb as following in the footsteps of the likes of Nike and Apple with regards how both companies sought to “stretch the brand and open up in people’s minds” what they the stand for.
“One of the strengths of our brand also is something that we have to manage, which is Airbnb is a noun and a verb,” said Chesky. “It’s synonymous with a category, kind of like Kleenex or Xerox.”
While such levels of brand recognition are something many marketers dream of, this poses potential problems for Airbnb, which is trying to broaden its appeal beyond overnight stays into experiences.
“One of the challenges is that people open our app to expect to see stays,” explained Chesky.
Last week Airbnb launched Icons, a campaign Chesky describes as “a new category of extraordinary experiences by the greatest names in music, film, sports, and more”. The company sees Icons as “primarily a brand positioning and a brand investment” in a bid to help the proposition move beyond stays.
“We’re now laying the foundation for our plan to expand beyond our core business,” said Chesky.
“We are being positioned as more aspirational. And I think people are now starting to think of us for experiences,” he added.
Marketing Week will be digging deeper into Airbnb’s marketing strategy, with a look at why in-housing is best for the brand, and why marketing and product should work together.
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