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The owner of Booking.com praises marketing effectiveness for achieving topline growth.

Booking.com intends to spend less on marketing this year as it continues to focus on efficiency and ROI.

Booking Holdings, the parent company of Booking.com, Kayak.com, and Open Table, among others, asserts that marketing efficiency was a key driver of profit increase in its second quarter financial results.

Revenues increased by 27% in the third quarter, above forecasts, while adjusted EBITDA increased by 64% year on year to $1.8 billion (£1.4 billion).

This was due to “better than expected marketing efficiency,” according to Booking’s CEO Glenn Fogel.

In total, the company booked 268 million hotel nights in the second quarter, a 9% increase year on year, while gross bookings of $39.7 billion (£31 billion) mark a 15% increase over the same period last year.

 

These are the company’s greatest quarterly gross bookings ever, and it has been aiming for mass reach with its marketing through its ‘Somewhere, Anywhere’ campaign, which stars Hollywood actor Melissa McCarthy.

Booking’s marketing spend increased by 4% year on year in the second quarter, although marketing expenses as a percentage of gross bookings were “about 50 basis points lower” than in the same period last year. Booking spent “around $1.8 billion” on marketing in the second quarter, which Fogel describes as “a large amount,” explaining why the company is focusing more on efficiency.

 

 The 50 basis point decline was attributed to “higher ROIs” in its paid channels and “a higher mix of direct business,” according to Fogel.

Putting the emphasis on ROI

In reaction to the company’s good results, it is revising its full-year forecast. Booking Holdings now anticipates gross bookings to increase “slightly more” than 20% year on year, rather than the mid-teens it previously predicted.

In addition, the business anticipates that its full-year marketing and merchandising cost will be lower than in 2022: “The improvement in our expectation is primarily driven by higher ROIs in our paid channels,” Fogel explained.

 

“Performance marketing ROIs increased year over year, in part as a result of our ongoing efforts to improve the efficiency of our marketing spend,” he added.

This goes in with what Booking.com’s CMO Arjan Dijk said last month to Marketing Week: “Every dollar should be performing.” Dijk does not believe brands should be divided by brand vs performance.

   

Booking expects its marketing expenses as a percentage of gross bookings to be lower in Q3 than last year.

 

According to Fogel, the company accomplished “a little bit more optimisation than [it] expected” in terms of marketing budget last quarter.

He also stated that the company is “consistently testing” its marketing budget, which means that it is “always looking for ways to optimize channels and approaches.” This is all part of Booking’s “ongoing journey to make marketing spend efficient,” according to Fogel.

Furthermore, as more businesses adopt artificial intelligence into their operations, Booking.com is relying on generative AI to help it deliver on its ongoing ‘connected trip’ strategy, which it hopes will allow travelers to book all aspects of a trip, from travel to accommodation, in one place.

 

 “We’ve always imagined the connected trip as having AI technology at its heart,” Fogel added.

“Generative AI may play an important role in delivering that connected trip experience to our bookers,” he added, adding that “our teams have been hard at work to integrate this exciting technology into our offerings in innovative ways,” including combining its proprietary data and machine learning models with the generative AI technology.

The existing travel experience, according to Fogel, is “much more complicated, fragmented, and frustrating to travellers than it should be,” and he expects that the company’s “connected trip vision will greatly improve it via technology.”

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