F7·Communications Strategy·Media Strategy Case

Airbnb — The Brand That Stopped Performance Marketing

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F7-03 · F7-06 · F7-08 · F7-10

Airbnb — The Brand That Stopped Performance Marketing

Module: F7 — Communications Strategy Type: Media Strategy Case Cross-references: F7-03 (the long and the short), F7-06 (media strategy), F7-08 (ESOV and share of voice), F7-10 (the relationship between brand and performance)

The Situation

For the first decade of its existence, Airbnb operated like most venture-capital-backed technology companies: it spent heavily on performance marketing — search engine marketing, retargeting, paid social, affiliate programmes — to acquire customers and drive bookings. Performance marketing was the growth engine. The logic was familiar: invest in paid channels with measurable, attributable returns; optimise for cost per acquisition; scale what works; cut what does not.

By 2019, Airbnb was spending over $1.1 billion annually on sales and marketing, a substantial portion of which went to performance channels — primarily Google search advertising and meta-search platforms. The company had built sophisticated attribution models that tracked user journeys from click to booking, and it optimised relentlessly against these models. Performance marketing was not an afterthought at Airbnb; it was the core of the marketing strategy.

Then the pandemic arrived. In early 2020, as global travel collapsed, Airbnb cut nearly all of its marketing spend. The company reduced its sales and marketing expenditure by approximately 58% year-on-year, from $1.14 billion in 2019 to $479 million in 2020. Performance marketing budgets were slashed. Paid search spend was dramatically reduced. The cuts were not strategic; they were an emergency response to a business crisis.

What happened next changed Airbnb's marketing strategy permanently.

Despite cutting hundreds of millions of dollars in performance marketing, Airbnb's direct and organic traffic held remarkably steady. Consumers continued to search for "Airbnb" by name. They continued to visit the website and app directly. The traffic that Airbnb had been paying to acquire through search advertising turned out to be traffic that would have arrived anyway — consumers who already knew the brand and were searching for it specifically, not for the generic category.

Brian Chesky, Airbnb's co-founder and CEO, described the insight bluntly in the company's 2021 earnings calls: much of the company's performance marketing spend had been "buying" traffic it already owned. The paid search campaigns were not generating incremental demand; they were intercepting demand that the brand had already created through years of word-of-mouth, PR, and cultural presence.

In 2021, Airbnb formalised this insight into a strategic reallocation. The company shifted its marketing investment away from performance marketing and toward brand marketing — primarily television advertising and large-scale, awareness-driving campaigns. Performance marketing spend was reduced by approximately $500 million relative to pre-pandemic levels. Brand marketing investment was increased. The company's overall marketing spend remained well below its 2019 level, yet traffic and bookings recovered and grew.

This case examines what Airbnb's reallocation reveals about the relationship between brand and performance investment, the mechanics of attribution, and the Both/And of brand building and activation.

The Data

The Financial Picture

The financial data from Airbnb's public filings tells a clear story.

2019 (pre-pandemic baseline):

Total sales and marketing expenditure: approximately $1.14 billion
Heavy investment in performance channels (search, meta-search, retargeting)
Direct and organic traffic: significant but not measured against the counterfactual of no performance spend

2020 (pandemic cuts):

Total sales and marketing expenditure: approximately $479 million (58% reduction)
Performance marketing dramatically cut
Direct traffic (consumers visiting airbnb.com directly) remained at approximately 90% of pre-pandemic levels despite the cuts
Brand search traffic (consumers searching "Airbnb" by name) held steady

2021 (strategic reallocation):

Total sales and marketing expenditure: approximately $542 million
Strategic shift toward brand marketing (television, brand campaigns)
Performance marketing maintained at reduced levels
Revenue recovered to $5.99 billion, exceeding 2019 revenue of $4.81 billion
Marketing as a percentage of revenue declined significantly — from approximately 24% in 2019 to approximately 9% in 2021

2022-2023 (sustained model):

Marketing as a percentage of revenue stabilised at approximately 16-18%
Brand marketing remained the primary investment
Performance marketing maintained at a fraction of pre-pandemic levels
Revenue continued to grow, reaching $8.4 billion in 2022 and $9.9 billion in 2023

The arithmetic is striking. Airbnb reduced its marketing spend by hundreds of millions of dollars, shifted the remaining budget from performance to brand, and achieved higher revenue, better margins, and improved marketing efficiency. The company's marketing expenditure as a percentage of revenue decreased by roughly one-third while revenue approximately doubled.

The Traffic Analysis

The most revealing data point is what happened to traffic when performance marketing was cut.

Airbnb's traffic is composed of several channels: direct traffic (consumers who type airbnb.com into their browser or use the app directly), organic search (consumers who search for "Airbnb" or related terms and click on organic results), paid search (consumers who click on Airbnb's paid search advertisements), and referral traffic (from affiliates, meta-search sites, and other partners).

When paid search spend was cut in 2020, paid search traffic declined — as expected. But total traffic declined far less than the paid search reduction would imply. The explanation: a substantial portion of the traffic that had been arriving through paid search channels was actually branded search — consumers searching for "Airbnb" by name, seeing a paid advertisement at the top of the results, and clicking on it. Had the paid advertisement not been there, these consumers would have clicked on the organic result immediately below it. The paid search spend was not generating the demand; it was capturing demand that the brand had already generated.

This phenomenon — paying for clicks from consumers who would have reached you anyway — is known in digital marketing as "cannibalisation." Airbnb's natural experiment during the pandemic revealed the scale of this cannibalisation: it was enormous. A substantial majority of the company's paid search spend was effectively paying Google for traffic that Airbnb's brand equity had already created.

The Brand Marketing Strategy

Airbnb's post-reallocation brand marketing took several forms.

Television advertising. Airbnb launched its first major brand television campaign in years, under the creative platform "Made Possible by Hosts." The campaign showcased real stories from Airbnb stays — not listings, not prices, not features, but the experiences that the platform enabled. The tone was warm, human, and emotionally resonant. The creative approach was consistent with the IPA evidence base: emotional, story-driven advertising designed to build mental availability rather than drive immediate conversion.

Product marketing as brand marketing. Airbnb's product launches — particularly the annual "Winter Release" and "Summer Release" events, led by Chesky himself — functioned as brand marketing vehicles. These events, styled after Apple product launches, generated substantial earned media coverage and positioned Airbnb as an innovative, category-defining brand rather than a transactional booking platform.

PR and earned media. Airbnb invested in PR activities that generated brand awareness without paid media: partnerships with cultural institutions, community programmes, and crisis response initiatives (offering free housing to refugees and disaster victims). These activities built brand associations — generosity, community, human connection — that paid advertising alone could not credibly claim.

The Binet and Field Framework Applied

Airbnb's reallocation maps directly onto the framework established by Binet and Field (2013) in The Long and the Short of It.

Brand building creates the demand; activation captures it. Binet and Field's central thesis is that brand-building advertising generates long-term demand by building mental availability — the probability that a brand comes to mind when a consumer enters the market. Activation advertising captures this demand at the point of purchase. Both are necessary, but they serve different functions and operate on different time horizons.

Airbnb's pre-pandemic strategy was over-invested in activation (performance marketing) and under-invested in brand building. The performance marketing was capturing demand efficiently — but the demand itself was being generated by the brand equity that Airbnb had built organically through word-of-mouth, media coverage, and cultural presence. When the activation spend was cut, the demand persisted — because the brand was strong enough to generate it without paid support.

The 60:40 ratio. Binet and Field's recommended budget split — approximately 60% brand building, 40% activation — is based on their analysis of the IPA Databank. Airbnb's pre-pandemic allocation was inverted: heavily weighted toward activation (performance marketing) with minimal investment in brand building. The post-reallocation strategy moved closer to the Binet and Field prescription, with brand marketing becoming the majority investment and performance marketing retained in a supporting role.

The payback curve. Brand-building advertising generates returns over years, not weeks. Activation generates immediate, measurable returns but creates no lasting effect. Airbnb's pre-pandemic attribution models — which measured performance marketing against immediate bookings — systematically overvalued activation (which has short payback periods) and undervalued brand building (which has long payback periods). The pandemic forced a natural experiment that revealed the true contribution of each.

The Analysis

The Attribution Problem

Airbnb's case is one of the clearest demonstrations of the attribution problem in digital marketing — a problem that Binet and Field, Nelson-Field, and numerous econometricians have identified as a systemic bias in modern marketing measurement.

Last-click attribution. Performance marketing is measured through attribution models that credit the last touchpoint before a conversion. If a consumer searches for "Airbnb," clicks on a paid search ad, and books a stay, the paid search ad receives credit for the booking. But the consumer already knew about Airbnb — they searched for it by name. The actual demand was generated by brand equity built over years of cumulative exposure. The paid search ad was the last touch, but it was not the cause.

This is the fundamental flaw in last-click (and most multi-touch) attribution: it systematically credits activation channels for demand that brand channels created. It makes performance marketing look more effective than it is, and brand marketing look less effective than it is. The result is a measurement-driven cycle: invest more in performance (because it looks attributable), invest less in brand (because it looks unattributable), and gradually hollow out the brand equity that generates the demand in the first place.

Airbnb's natural experiment. The pandemic cuts served as an unplanned controlled experiment. By removing performance marketing spend and observing that demand held steady, Airbnb demonstrated that the attribution models had been crediting performance channels for demand they did not generate. The conclusion: the brand was the primary demand generator; performance marketing was, to a significant degree, a toll paid to platforms for access to the brand's own customers.

The Brand-Performance Relationship

The Airbnb case does not argue that performance marketing is useless. It argues that performance marketing is dependent on brand.

This distinction is critical. Performance marketing works — but it works primarily when there is brand-generated demand to capture. Search ads for "Airbnb" convert at high rates because consumers already want to use Airbnb. Search ads for generic terms ("vacation rental") are far less efficient because the consumer has no brand preference and is merely comparing options. The brand makes the performance marketing work; not the other way around.

Binet and Field (2013) describe this as the "brand priming" effect. Brand-building advertising creates a predisposition toward the brand — a warm feeling, a mental association, a sense of familiarity — that makes every subsequent activation touchpoint more effective. A retargeting ad shown to a consumer who has never heard of Airbnb is far less effective than the same ad shown to a consumer who saw an emotional Airbnb brand campaign last week. The brand campaign does not generate a measurable click. But it makes the retargeting ad's click more likely to convert — and this contribution is invisible to the attribution model.

The ESOV Implications

Airbnb's reallocation also illustrates the ESOV dynamics described by Binet and Field and by the IPA Databank.

In the pre-pandemic period, Airbnb's share of voice in the travel category was dominated by performance channels — paid search, meta-search, and retargeting. This spend was largely invisible to consumers as "advertising" — it appeared as search results and display banners, not as brand communication. Airbnb's share of voice in brand-building media (television, outdoor, print) was minimal relative to established travel brands.

The post-reallocation strategy increased Airbnb's share of voice in brand-building channels. Television advertising, in particular, gave Airbnb a presence in a medium where its competitors (Booking.com, Expedia, Hotels.com) had long been active. By entering this media channel with emotional, story-driven creative, Airbnb achieved excess share of voice in brand communication — and the ESOV theory predicts that this should drive growth. It did.

What Airbnb Did Not Do

It is equally important to note what Airbnb's reallocation was not.

It was not the elimination of performance marketing. Airbnb continued to invest in performance channels — particularly for new market expansion, for non-branded search terms, and for retargeting. The reallocation was a shift in the balance, not an abandonment of activation.

It was not the elimination of measurement. Airbnb did not stop measuring marketing effectiveness. It changed how it measured — moving away from last-click attribution toward econometric modelling and media mix analysis that could account for the long-term, indirect effects of brand-building advertising.

It was not applicable to every brand. Airbnb's brand was already strong before the reallocation. It had years of word-of-mouth, PR, and cultural presence that had built substantial mental availability. A new brand with no awareness could not replicate Airbnb's strategy — cutting performance marketing when you have no brand equity to fall back on would simply eliminate your traffic. The lesson is about rebalancing a mature brand's investment, not about abandoning performance for brand as a universal prescription.

The Questions

F7-03 Application. Using Binet and Field's "long and short" framework, analyse Airbnb's pre-pandemic marketing strategy. Why was the strategy over-invested in activation and under-invested in brand? What structural factors in digital marketing drive this imbalance?
F7-06 Application. Analyse Airbnb's media strategy shift from performance channels to brand channels. Using the media strategy frameworks from F7-06, explain why television advertising was chosen as the primary brand-building medium. What role does reach play in this decision?
F7-08 Application. Explain the ESOV dynamics of Airbnb's reallocation. How did shifting spend from performance to brand channels change Airbnb's effective share of voice? What does the ESOV theory predict about the commercial outcomes of this shift?
F7-10 Application. The Airbnb case demonstrates the dependency of performance marketing on brand equity. Explain this dependency using the brand-performance relationship frameworks from F7-10. Why does last-click attribution systematically overvalue activation and undervalue brand?
Both/And Application. Airbnb's strategy is "brand building AND performance marketing" — not "brand OR performance." Analyse the Both/And of this approach. Why is neither pure brand building nor pure performance marketing sufficient on its own? What does the optimal balance look like, and how should it be determined?

Sources

Airbnb, Inc. (2020, 2021, 2022, 2023). Annual Report (Form 10-K). United States Securities and Exchange Commission.

Binet, L. & Field, P. (2013). The Long and the Short of It: Balancing Short and Long-Term Marketing Strategies. IPA.

Chesky, B. (2021). "Airbnb Q2 2021 Earnings Call Transcript." Airbnb, Inc.

Nelson-Field, K. (2020). The Attention Economy and How Media Works. Palgrave Macmillan.

Sharp, B. (2010). How Brands Grow: What Marketers Don't Know. Oxford University Press.

Ritson, M. (2021). "Airbnb proves that brand building is the ultimate performance marketing." Marketing Week.

Field, P. (2019). "The Crisis in Creative Effectiveness." IPA TouchPoints. IPA.