Direct Destination: What you can learn from Airbnb’s marketing strategy

Browse any fortune 500 company report and you’ll see marketing spend is often a substantial proportion of a companies budget. Historically large brands use hundreds of millions of dollars to try to reach their customers. Whilst this will include a mix of tactics over the past two decades many have focussed substantially on lower funnel conversion tactics such as search and social ads - often referred to as ‘performance marketing’.

Whilst these tactics can drive conversion, they are only reaching users who are showing the intent to purchase such as searching for a product. By largely focussing on these users, brands are competing in an endless scrap for the highest search ranking position, and if they convert these users they are often converting a user who has little to no relationship with their brand. The user has a deeper relationship with Google Search than they do with the brand they eventually land on. Ultimately this approach involves ‘buying’ customers at the last click of their journey and businesses can become over reliant on it.

But times are changing, successful digital brands like Airbnb are fundamentally shifting this approach. The online travel category is one that has traditionally been a scrap a the bottom of the funnel, with each major player spending vast proportions of their revenue ultimately on trying to appear highest in the search rankings. Since its founding in 2008 Airbnb has built a strong brand, with much of it initially built on the back of word of mouth between users.

Airbnb spends a much smaller percentage of its budget on marketing than its competitors like Expedia who rely on search advertising.

Airbnb’s ecosystem is designed to directly owning the relationship with the customer, pathing any user into their app experience. Once a known user they will return directly to the Airbnb platform via either the website or app. Owning the customer relationship through offering a product of ongoing value to the consumer is the single most effective and efficient way to go to market as no traffic is wasted. Their competitors however largely rely on transactional website experiences with very little value beyond that.

Airbnb’s Categories enable users to search properties and experiences around their interests

As Airbnb has grown it has built a marketing model that is complementary to its ecosystem approach. Whilst there is still a layer of bottom funnel performance marketing, this has a defined role beyond buying customers “We think of performance marketing as more of a way to laser in to balance supply and demand rather than a way to just purchase a large amount of customers” said CEO Brian Chesky. Airbnb invests heavily in its brand marketing and content, in particular establishing messaging around its approach to categories which reflect a way to find homes based on users’ interests such as surfing or skiing. This is a strategy is built upon Airbnb’s first-party data and segmentation, possible through their deep understanding of their users through their direct relationship.

Airbnb’s brand campaign built around its product categories and users’ interests

Over 90% of Airbnb’s traffic now comes directly to the brand unaided by search advertising, which reflects a fundamental shift in the relationship Airbnb has to its audience when compared to its competitors. It also reflects the value the audience sees in the brand experience itself, compared to the bottom of the funnel value that its competitors play in - which is largely one of price.

Establishing a direct relationship is the most important aspect of becoming a successful brand. The right Ecosystem Approach will path users directly into the brand experience and then retain them through ongoing value, drastically reducing the cost per acquisition of new users. Whereas brands that rely on bottom of the funnel performance marketing to drive a transaction more often than not spend again to reacquire those same users.

THE TAKEAWAY

Build an ecosystem approach that delivers value and owns the relationship.
Focus on building a content and engagement strategy that delivers on your audience interest.
Ensure any users you convert remain in your experience by focussing on engagement and retention so you don’t have to reacquire the same users.

GO DEEPER

Read more on Airbnb’s approach to brand marketing on the WSJ here.