Why for Airbnb brand building beats performance marketing

Just over two years ago in early-2021, Airbnb launched a new brand campaign called ‘Made Possible by Hosts.’ The company asked a handful of people around the world who were great photographers to book an Airbnb with their friends and families and to submit the photos. Airbnb made videos from this user-generated content aimed to educate guests about the benefits of being hosted and inspire more people to become Airbnb hosts. The campaign launched initially on TV, social and digital channels in the US, UK, France, Canada, and Australia, the firm’s top-five markets.

 

 

This signalled the next step in the company’s journey to shift its marketing spend away from performance-based ads and into brand building. As co-founder and CEO Brian Chesky said at the time: “We take a very different approach to sales and marketing … PR, in addition to word of mouth, is the thing that built our brand over the last ten years … because Airbnb has an offering that’s really unique, and so people are deeply passionate about it, they tell one another, and Airbnb has become a noun and a verb used all over the world.”

 

In Q3 of 2021, six months into the campaign, Airbnb posted its highest ever profits, with net income up 280% year-on-year. Adjusted EBITDA broke the billion-dollar barrier for the first time, as the business reached another milestone of one billion guest arrivals. Meanwhile, YouGov’s brand health tracker, Brand-Index, showed that ad awareness had risen more than threefold from before the campaign began.

 

Airbnb has also used its brand marketing spend to support product innovations such as a redesigned host onboarding flow, an ‘Ask a Superhost’ programme, and the launch of an expanded travel protection service, ‘AirCover.’ Additionally, the company has been working to simplify the guest experience by introducing ‘I’m Flexible’, a new way to search on the Airbnb platform without time and date restrictions.

 

Other upgrades include a search function to make it easier for users to discover homes in locations they might not have thought of. Now, when a user opens the platform, they are presented with categories that organise homes based on style, location, or proximity to a travel activity. Style categories range from ‘amazing views’ to ‘earth homes.’ Location categories include places such as national parks and vineyards. While activity categories include things like camping and golf. Another innovation, ‘Split Stays’ lets people divide their trips between two homes. For example, when browsing the National Parks category, Split Stays might suggest a pair of homes near Zion National Park and the Grand Canyon.

 

When Chesky and his two co-founders launched the company in 2008, investors were sceptical of the idea that people would invite strangers into their homes for overnight stays. Rejected by the venture capital world, the trio turned to their own customers for fundraising. Specifically, they sold self-designed cereal boxes at the Democratic national convention in Denver, featuring presidential candidates Barack Obama and John McCain. The breakfast cereal proved popular, making $30,000 for the company. That turned at least one investor’s head back in their direction. Tech start-up accelerator Y Combinator co-founder Paul Graham, offered them an investment specifically because of the cereal. “If you can convince people to pay $40 for $4 boxes of cereal, maybe, just maybe, you can convince strangers to live with each other,” Graham told the trio. Y Combinator was responsible for one of Airbnb’s earliest investments, giving the then-start-up $20,000 in exchange for 6% of the company.

 

Today, Airbnb has a market capitalisation of over $75 billion making it one of the most valuable start-ups in the US, and is refocusing on three core areas of its strategy. First, making it easier for guests to live on Airbnb, with many people using the platform for extended trips and staying for weeks, months, or even whole seasons at a time. The second is to unlock the next generation of hosts by tackling obstacles raised by people thinking about hosting. The third and last priority is to become the ultimate host. As Brian Chesky explains: “Our goal is to provide the ultimate service to our guests, anticipating their needs and going above and beyond just like a good host. Now, by offering a more personalised service, we can dramatically improve the experience for millions of guests around the world.”

 

One thing is for sure, Airbnb has attained such a high level of brand awareness and relevance that it no longer requires performance marketing to drive traffic. Instead, it needs to remind travellers of what the Airbnb brand has to offer, while continuing to optimise its digital offering to ensure it stays ahead of the competition. This kind of ‘build a better mouse trap’ strategy is often forgotten in today’s world, which has become dominated by short-term data analytics and digital performance. Many other businesses could benefit from a shift in their priorities towards more investment into long-term brand value, instead of relying solely on performance marketing.