ONE STAT THAT MATTERS

The surprising relationship between brand and performance marketing

After being a poster child for performance marketing success, Airbnb raised eyebrows in 2021 when it began shifting marketing dollars to brand and PR. Was CEO Brian Chesky no longer sold on digital and search? Was he wise to take a step back from a reliable revenue generator? One eye-opening stat may help explain.

This finding from Analytic Partners underscores an important truth: performance marketing’s power is often derived from other sources, like brand marketing, loyalty or category trends. After looking at 750 brands, Analytic Partners found “last click and simplistic attribution metrics overstate the role of clickable activities by 2–10X, on average.”

The law of diminishing returns
Performance marketing has also been shown to wear over time. Forrester analyst Nikhil Lai recently sounded this alarm: “Search and social can feel like sources of endless ROI, but… when marketers increase spend past the point of diminishing returns, they saturate core audiences, cause excess frequency, and force spend on less responsive audiences.”²

Airbnb was experiencing some of these issues. With its core audience increasingly saturated by performance marketing, the company was resorting to “buying customers” through promotional offers.

Seeing a need to pivot, Airbnb evolved its marketing approach to prioritize expanding its user base. By investing in its first-ever brand campaign, Airbnb stimulated demand for listings by highlighting new activity-centered products like Experiences. And it increased listings from new hosts by promoting a mentorship program, SuperHosts.³ After these moves, Airbnb’s revenue increased 40% year over year and its listings increased 16%.

The spending balance is starting to shift
Will more CMOs follow Airbnb’s lead? The answer seems to be yes. While they recently reported spending 60% of their budget on short-term performance marketing vs. 40% on brand and long-term, CMOs believe a 50/50 balance is ideal,⁴ in line with what renowned marketing scientists Binet & Fields recommend.

If you’re feeling it may be time to rebalance your investments in performance and brand marketing, we can help. Let’s talk ›

¹ Analytic Partners, “Brand marketing outperforms performance marketing 80% of the time”
² Nikhil Lai, Forrester Research, Performance Marketing Underperforms, August 2022
³ Airbnb Q422 earnings call transcript, February 2023
⁴ Deloitte, The CMO Survey, March 2023