Volume 13 No. 4: How Airbnb used brand awareness to drive profitability
As marketers, we constantly chase the holy grail of measurable ROI by prioritizing channels like search and social media. But what if focusing solely on these channels was holding your brand back?
That's what Airbnb recently discovered.
Why brands like Airbnb are leaning into brand marketing
Each week, we break down another marketing concept so you can skip the hype and get directly to what works.
Airbnb is the only public VC-backed company founded in the US in the last 15 years that is meaningfully profitable. How did they do it? They dramatically changed their approach to marketing.
Airbnb had fallen into the same trap many startups face as they scale. For years, they overinvested in bottom-of-the-funnel marketing, especially search advertising. This isn't uncommon. Based on brands’ prioritization of performance marketing, digital is expected to make up more than 80% of media ad spend by 2026.
But two years ago, Airbnb did something in opposition to many modern marketing best practices. They slashed paid search spend and prioritized brand marketing through TV advertising and PR instead. The results? Airbnb's return on ad spend improved and expenses declined.
To be clear, Airbnb isn't suddenly betting everything on brand advertising alone. They invest in both brand and performance. But finding a healthy balance between the two has already proven more effective.
Because the value of brand cannot be underestimated. By educating travelers about their new services and offerings, Airbnb has been able to build greater awareness and preference for their brand, which ultimately has driven revenue. And they're far from alone in this shift. Already in 2019, Adidas had realized brand activity was driving 65% of their sales across wholesale, retail, and ecommerce, and adjusted their marketing strategy accordingly.
It's also important to look beyond last touch attribution. By relying solely on short-term performance metrics, we risk missing out on the big picture. Econometric modeling, as used by Adidas, helped them see first-time buyers, not returning customers, were driving the bulk of their revenue. Airbnb similarly shifted its focus from search to TV after recognizing they weren’t seeing the results they’d like.
Key Takeaway: Follow the lead of brands like Airbnb and Adidas and find a balance between brand and performance to turn marketing into a business growth-driver.
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