Case Study: Airbnb's brand renaissance: Navigating challenges, building

community, and crafting a new marketing paradigm

Introduction
In a fascinating twist of events, Airbnb, a prominent player in the travel accommodation
sector, has orchestrated a remarkable 175% surge in its marketing expenditure during the
second quarter of 2021. This strategic increase in marketing investment played a pivotal role
in propelling the company's revenue to soar by an astonishing 300%, shedding light on
Airbnb's newfound dedication to fortify its brand identity. This resolute move to amplify
marketing spending signifies a shift away from performance-driven marketing tactics. In the
face of challenges posed by the pandemic, Airbnb recognized the potent potential of investing
in brand recognition and cultivating a robust brand image.

1. Company profile and history:

Established in 2008 by Brian Chesky, Nathan Blecharczyk, and Joe Gebbia, Airbnb has
revolutionized the global travel landscape by offering distinctive and localized lodging
experiences. With its headquarters situated in San Francisco, California, the company has
masterfully crafted a global platform that seamlessly connects hosts possessing available
spaces with travellers seeking authentic and tailored accommodations. The underlying
mission of Airbnb is to foster a world where inclusivity knows no bounds. The company
endeavours to provide travellers with the avenue to relish destinations as if they were locals,
concurrently affording hosts the opportunity to generate supplementary income through
space-sharing.
In its nascent stages, Airbnb encountered skepticism and apprehension concerning its
proposition of welcoming strangers into private abodes. De-spite the initial challenges, the
founders persisted, employing innovative marketing tactics to garner their first 1000 users.
By strategically targeting conferences, enhancing listing visuals, and even poaching listings
from Craigslist, the founders strategically fortified their inventory. Airbnb's marketing
strategy orbits around engendering a sense of community, trust, and authenticity.
Usergenerated content, strategic partnerships with social media platforms, and referral
programs synergistically engage Airbnb's user base. Moreover, the company has
meticulously tailored its product strategy to provide a userfriendly interface for both hosts
and travelers, culminating in a seamlessly immersive experience for both stakeholders.

Meteoric Growth and Expansion: After enlisting in Y Combinator's incubator program in

January 2009, Airbnb embarked on an expansive journey, transcending the realms of shared
spaces to encompass a wide array of abode options, including apartments, entire houses, and
diverse property types. This diversification set the stage for exponential growth, catalyzing
momentum throughout the year. By November 2010, Airbnb secured a substantial $7.2
million in Series A funding from venture capital heavyweights Greylock Partners and
Sequoia Capital, making waves with the revelation that 80% of the 700,000 nights booked
transpired within the preceding halfyear. This trajectory persevered as Airbnb celebrated the
monumental milestone of achieving one million bookings by February 2011. Notably, in July
2011, the company clinched an impressive $112 million investment, attaining a remarkable
valuation of $1 billion. Galvanized by this infusion of capital, Airbnb embarked on a fervent
journey of international expansion, marked by its acquisition of Accoleo, a German
counterpart. This international reach rapidly expanded to encompass regions spanning South
America, Asia, and Australia by the close of 2012.
Airbnb's Operating Model: At its core, Airbnb operates as a vibrant, communitydriven
marketplace, seamlessly connecting discerning guests with verified hosts offering an array of
distinctive living spaces. Registration is effortlessly free, and listing properties comes at no
cost. Facilitating this exchange is a usercentric interface, enabling travelers to tailor their
preferences and uncover cost-effective alternatives to traditional lodging. The booking
process is intuitive, allowing guests to initiate bookings, furnish payment details, and directly
communicate with hosts once a fitting listing is discovered. The culmination of this
interaction occurs upon host confirmation and guest checkin, culminating in a credit card
charge coupled with a transaction fee ranging from 6% to 12%, channeled to Airbnb. This
reciprocal dynamic extends to hosts, who receive notifications regarding guest interest and
the prerogative to accept or decline reservations. Upon confirmation, hosts are remunerated,
with Airbnb retaining a nominal 3% transaction fee.

Disruptive Business Model: At the crux of Airbnb's revolutionary approach lies its offering
of free membership and listing access, encapsulating a usercentric experience for both hosts
and guests. The company's revenue generation strategy is chiefly anchored in transaction
fees, granting it the capacity to facilitate a high volume of prospective transactions. Pivotal to
Airbnb's approach is the prioritization of customer satisfaction and personalized encounters.
The bedrock of this strategy is the establishment of a trustoriented ecosystem, fortified by
measures such as robust customer verification, extensive insurance coverage, genuine guest
feedback, and social connections. This synergy of strategies culminates in an exponential
scalability, cementing Airbnb's position as an industry trailblazer poised for financial
triumph.

2. Brand management challenge:Airbnb's shift to brand building over performance

marketing:

Amid the evershifting landscape wrought by the COVID19 pandemic, Airbnb embarked on a
strategic reevaluation of its marketing modus operandi. The outcome of this introspection
was a marked reduction in performance marketing expenditures and a rekindled emphasis on
nurturing its brand identity and reputation. In the early months of 2021, Airbnb orchestrated a
bold maneuver, slashing its sales and marketing budget by a substantial 28%, driving it down
to $229 million. This calculated move was predominantly attributed to the deliberate
diminution of investments in performance driven marketing initiatives. This strategic pivot
was underpinned by the realization that curbing marketing expenses during the pandemic
yielded minimal impact on overall website traffic.

A New Brand Campaign: This strategic metamorphosis culminated in the inception of

Airbnb's monumental brand marketing campaign titled 'Made Possible by Hosts'. At its core,
this campaign is engineered to kindle awareness of the brand's unparalleled travel experiences
and foster connections between intrepid travelers and gracious hosts. Emblematic of Airbnb's
inaugural worldwide advertising thrust in five years, this campaign operates as a dynamic
conduit, casting Airbnb as a conduit for the creation of enchanting and authentic travel
narratives. The campaign unfurls its visual narrative through TV commercials beamed across
five pivotal countries: Australia, Canada, France, the U.K., and the U.S. These commercials
also resonate in the digital realm, pulsating through the veins of YouTube, envisaging the
engagement of a staggering global audience, numbering around 300 million individuals. By
amplifying the ethos of voyagers preparing to embark on transformative journeys or
envisioning their sojourns, Airbnb aspires to inscribe its indelible imprint on the
consciousness of globetrotters.
Figure 1. 'Made Possible by Hosts' commercial
Source: https://www.rentalscaleup.com/airbnbtvcommercials2021-made-possible-by-hosts/

Central to the campaign's thrust is the spotlight on the value of exclusive encounters and
symbiotic bonds nurtured between sojourners and local hosts within the tapestry of the
Airbnb community. This concerted campaign endeavours to carve Airbnb's niche as an
unparalleled portal, steadfast in evading the perils of commoditization, steadfastly
underscored by an emotional resonance and a community centric approach.

Success and Early Impact: Despite its nascent stage, Airbnb's brand campaign has already
yielded promising dividends. The campaign serves as a catalyst, propelling a surge in website
visitors within the five major markets. Notably, Airbnb has reported that the upswing in
traffic to its platform within these regions has outpaced the global trajectory. In addition, the
campaign has galvanized an increased influx of first-time bookings on the platform. Data
from surveys further attests to a tangible elevation in guest favourability towards the brand.

Strategic Spending and Growth Outlook: Airbnb's strategic blueprint involves

concentrated marketing expenditure in the initial half of the year, a strategic alignment with
its prescient anticipation of a distinctive travel resurgence. The company discerns this
targeted approach as an efficacious means to capitalize on the rekindled demand more
adeptly. Brian Chesky, at the helm of Airbnb, contends that the shifts in travel behavior
crystallized during the pandemic are poised to be enduring in their impact, with business
travel unlikely to scale the summits of yore. As part of its adaptability, Airbnb identifies a
silver lining in the emergent trend of prolonged stays, catering to a cohort that seeks extended
accommodations to facilitate remote work.

Conclusion
The narrative of Airbnb's captivating journey is one characterized by innovation, resilience,
and strategic repositioning. From its audacious inception, wherein it navigated skepticism
with aplomb, to its meteoric ascent marked by strategic acquisitions and global expansion,
Airbnb's narrative is one of transformation and triumph. The paramount transition in its
marketing orientation, away from performancedriven marketing to an amplified emphasis on
brand building, attests to its agility and adaptability in the face of adversity. The 'Made
Possible by Hosts' campaign stands as an embodiment of this evolution, encapsulating
Airbnb's commitment to forging emotional connections and engendering unique travel
narratives. As Airbnb continues to navigate uncharted terrain, its focus on community, trust,
and authenticity remains unwavering, rendering it a beacon of inspiration within the dynamic
landscape of travel and hospitality.
Questions for students
1. How has Airbnb's unique marketing strategy contributed to its distinct positioning in the
travel accommodation industry? Explain how the company's focus on community, trust, and
authenticity differentiates it from traditional competitors.
2. Discuss the factors that have facilitated Airbnb's rapid growth and expansion since its
inception. Highlight specific milestones and strategic decisions that enabled the company to
become a global player in the travel market.
3. Analyze Airbnb's response to the challenges posed by the COVID-19 pandemic. How did
the company adapt its marketing approach to navigate the uncertainties brought about by the
pandemic? What impact did this adaptation have on Airbnb's brand identity and revenue?
4. Explore the key elements of Airbnb's "Made Possible by Hosts" campaign. How does this
campaign align with Airbnb's brand identity and values? Discuss the significance of
emotional resonance and community centric messaging in this campaign's success.
5. Assess the potential risks and benefits of Airbnb's strategic decision to concentrate its
marketing spending in the first half of the year. How might this approach help Airbnb
capitalize on the anticipated travel rebound? Provide insights into how this strategy aligns
with the changing dynamics of the travel industry post-pandemic.

These questions encourage students to critically analyse Airbnb's history, brand strategy,
response to challenges, and future outlook, fostering a deeper understanding of the company's
journey and decision-making processes.

The extra reading materials

 https://www.businessofapps.com/data/airbnb-statistics/
 https://www.rentalscaleup.com/airbnb-tv-commercials-2021-made-possible-b
 https://www.marketingweek.com/airbnb-performance-marketing/
 https://www.airbnb.com/