Expedia’s financials for 2017 were recently released, and it seems that they had an overall good year. One of the things that seemed to worry investors in the company, but should be a positive insight for marketers, is that the company spent $5.3 billion in overall marketing for the year. This is the most they have ever spent in a single year, and brings their total spend to 52.7% of their revenue.
The travel market is quite competitive, of course, and we see an example of that with Priceline, one of Expedia’s top competitors, spending $4 billion through September 2017 (full numbers should be released soon).
Alan Pickerill is the company’s Chief Financial Officer, and in the investor call he said, “As we invest aggressively in supply, we also expect to utilize higher cost performance-based channels to drive demand across our global growth brands causing sales and marketing expense to grow faster than revenue.”
Performance-marketing can be expensive for companies, but that is largely because the risk is so low. They only pay out when specific objectives are completed, and they don’t have to employ nearly the number of people for the same results, which is one of the reasons it is such a great option.
The CEO of the company, Mark Okerstorm, also commented on the marketing budget saying, “When we launch in new markets, for example, we’re starting from scratch in a way in the sense that we don’t have repeat customers. We don’t have brand recognition in those countries. And so, we have to make investments to get traffic in the store to please those customers to getting – get them coming back to us. And over time, the goal obviously is to build a repeat customer base, so that that particular point of sale can start to see at least better overall efficiencies, if not, leverage.”
While the investors certainly have concerns, if Expedia is able to keep up their aggressive marketing strategy, it will likely begin to pay off significantly over the course of 2018.
