Google Ads and Airbnb
Airbnb recently decided to pass their advertising cost from Google AdWords to its users who choose to and did benefit from the ads. They increase the host fee by 12-15% for reservations made as a result of people clicking through the ads. The host fee for reservations made otherwise will not change. Hosts can choose to opt out of this service by simply ticking off a box, so the difference in their value for the Google Ads will actually create a small market inside of the Airbnb site, and their choice of whether or not to pay for the Google Ads will determine whether they will be shown to the customers that Airbnb attracts through Google Ads. However, paid searches account for 23.7% of Airbnb’s total traffic, which means that although a large amount of users directly goes on to the website to make reservations, about a quarter enter the website by clicking the ads. It seems reasonable for the hosts to choose to pay for the service and attract more customers.
However, it’s not news that Airbnb is using Google AdWords to attract new users for a long time. So passing the cost to hosts will actually decrease hosts’ profits and increase list prices. Eventually this burden will be passed onto the guests who are using this site to rent accommodations. It is no doubt that Google AdWords do help small enterprises to promote their product, but because they sell their ad spaces using generalized second price auction, it’s still very hard for small businesses/individuals to occupy a hot spot on top of the page and increase their sales significantly. So they have to rely on companies built based on the idea of sharing economy and their willingness to play a fair game with its users. Because for now, an increase of host fee from the original 3% to 12-15% sounds like a lot. Maybe as time go by there will be a balance in the small market inside Airbnb based on hosts’ value for the ads.
Sources:
http://all-about-airbnb.com/post/127174229801/airbnb-hidden-revenue-hack-extra-host-fees-google-ads