Airbnb Charges Clients To Run Google Search Ads

In a move showing how brands or retailers can pass advertising costs on to their customers, Airbnb is building advertising into the price of its listings, and publicly acknowledging the move on its Web site. The online marketplace for vacation rentals says in a test it will charge rental hosts more to run notices on its platform to cover the cost of Google AdWords advertisements when hosts directly profit as a result of the advertisements.

Users of the site are either categorized as "Hosts" or "Guests" of the property. Both must register with the site. A message tells the host of the property that he can receive additional bookings from travelers that learn about Airbnb through Google ads, but there will be a 12% to 15% host fee for reservations, resulting from running the ads. The host will have the option to accept or decline the reservation requests as usual. 

"When new Airbnb travelers find your listing through these specific ads, we'll let you know that online advertising brought them your way, and their booking requests will display the updated host payout," per Airbnb. "You can choose to opt out and not receive additional guests from the campaign at any time, and while the trial is running, you can always opt back in. If you opt out, travelers who come to Airbnb directly through these ads won't see your listing, but nothing else in your account will change."

One source reports that Airbnb gains 20.58% of traffic from paid search, and the remainder from organic searches -- and that the AdWords spending is not new, the charges are new, perhaps because it now accounts for roughly 5% of the inbound traffic.

The Airbnb help center attributes the increase in the host fee for the bookings to increased traffic for hosts. The company says it spends as much as it can on marketing, such as its first TV commercial and other types of online advertisements. By charging a higher fee when hosts directly profit as a result of the advertisements, the site can finance additional advertising options such as paid-search advertising through Google AdWords.

Not all bookings go through search advertisements and engines, according to data released in a research note from RBC Capital Markets. The data, which comes from a conference call with SurveyMonkey, finds that 15% of Airbnb users typically book directly with hotel Web sites, and 10% in the case of millennials, whereas 30% of Airbnb users typically book via OTAs such as Priceline, whereas 36% in the case of millennials.

The top reasons for Airbnb users to book vacation lodging via Airbnb, rather than direct with a hotel, include relatively high hotel prices, more options on Airbnb, and Airbnb enabling the entire family to stay together, according to RBC Capital Markets.

Airbnb says it's running the Google AdWords campaigns as a trial and will take into account their effectiveness and feedback from hosts before making any official additions or changes.

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