The $400M Cut Driving Airbnb's Success

Airbnb, personally, big fan myself, have vacationed in many homes using their service. But unfortunately, the pandemic absolutely tanked their business. It dropped by 72%. So in this video, I'm going to dig into exactly how that happened and some of the strategies that they implemented to help them quickly recover from that big old blow that they took. I'm also going to dig into how the lessons learned by Airbnb in emergency response, branding and product marketing can apply to your own business. This comes as a surprise to absolutely no one, but when the pandemic hit, the entire travel industry went into a nosedive. And I'm not talking like, oh, we're jumping off the starting block for the 50 meter freestyle in the Olympics. I'm talking like Red Bull Stratos. All right? If you don't, that is, look it up. And they ended up losing $4.5 trillion trillion by the end of the year. This crash cost Airbnb over half a billion dollars in 2020 alone. Facing this large crisis, one of the first things they did was launch an emergency response. To help Buoy, its upper management worked with government agencies to provide financial support to hosts who lost income. The comms team created content to educate these hosts on how to access those critical funds. And the customer service team expanded its one to one communication so hosts and guests could get their questions answered as quickly as possible. But Airbnb didn't stop there. Their product team also launched online experiences to help hosts find new sources of revenue during the lockdown. Even though those emergency responses were good, not everything Airbnb did was a success. Many hosts who supply inventory that Airbnb rents out were furious at refund policies that left them holding the bag. And the Kindest Card campaign that encouraged previous guests to send donations to their hosts was met with confusion. So while the company had to deal with their hosts and the public, they also had to decide what to do with its massive marketing budget. In 2019, the company spent more than 1.1 billion with a B dollars on marketing. Much of that was on performance campaigns like Google Ads and affiliate programs. With new bookings gone, spending valuable dollars to directly capture bookings became. No one knew how long the freeze on performance marketing would last, but everyone assumed it would come back at some point. You know what I mean? And then, I think we all know where this story is going. By spring of 2021, vaccines actually made it possible for folks to start traveling again. Within a few months, Airbnb's online traffic reached 95% of its pre pandemic level. And this is the crazy part, this rebound took place without turning the performance marketing budget back on. 90% of this online traffic was coming from organic or direct sources, the result of SEO, PR and good old fashioned word of mouth. In describing the change Airbnb, Airbnb CEO Brian Chesky made headlines when he said we are never going back to spending the same amount of money on marketing as a percentage of revenue as we did in 2019. As you could probably imagine, this was pretty big news in the world of digital marketing. If you're a marketer, you might be wondering if this means you should consider slashing your own performance marketing budget. Probably not, to be honest with you. The truth is Airbnb invested in performance marketing for over a decade. It's a major part of what built Airbnb into a brand big enough to not need performance marketing anymore. So for anyone else, definitely keep up your efforts. Lesson here is that performance marketing alone isn't enough. Every marketer needs to be thinking about how to create and maintain a strong, positive brand. This includes awareness, advertising, pr, experiential marketing, and a whole lot more. If you want to learn more about brand marketing, you can download our free ebook, how to Build a Consistent Brand from the link in the description. Before you know it, I'm going to have turned you into a Don Draper, Steve Jobs, Mickey Mouse, you know what I'm saying? All people that are really good at their brands. Mickey Mouse is a person. Don't try to correct me on that. With business back on track, Airbnb just announced a massive update to their service designed to reflect the new ways people are working and traveling after the pandemic. The most significant change is a new search segment called Categories. This lets users search for Airbnb rentals based not on the destination, but rather the experience they can have. These categories include homes near the beach or national parks, homes with chef's kitchens, homes with unique designs or creative spaces, and dozens more. In addition to Categories, Airbnb has also released Split Stays, which let users book multiple homes as part of the same trip. The decisions to make these sorts of changes were not taken lightly. As I'm sure you can imagine, Airbnb has gone all in, updating its homepage on both its website and the Airbnb app to push these new initiatives. And there could be billions of dollars at stake if users don't like the new Airbnb features. So lesson three to learn from Airbnb is if your product is getting ready for a major update, you need to have a full marketing plan ready to support that initiative. And I'm sure you're thinking to yourself, well, geez, Jamal, that's real, real neat. But I don't know where to start personally. Luckily for you, HubSpot has a product go to marketing kit that you can use to prepare to roll out a new product or service or major update. Check it out for all your needs so your product or service launch goes as smoothly as possible. You can get it down in the description below. And remember, whether your business is upgrading its offer, evaluating its marketing strategy, or facing a major crisis, the best thing you can do to achieve success is to be prepared. So subscribe to this channel and we'll make sure you're a star student when it comes to digital marketing. Because the one lesson we've all learned over the past two years is can't really know what's next. Now if you'll excuse me, I'm gonna go book every single stay in every single country on Airbnb. I'm gonna experience it all. Not gonna see me for a while? If you wanna get in touch, please DM me on Venmo because we all know that that's the final frontier of communication and social media. Until then, I'll see you next time.

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