- Airbnb halted marketing spending as it looks to save $800 million this year and offset losses from the coronavirus pandemic, Reuters reported, citing an anonymous source. The Information also reported the news.
- The home-rental startup also enacted a hiring freeze, barring for a handful of key roles. Company founders will not take a salary for the next six months, and other top executives will receive a 50% pay cut, according to Reuters.
- Airbnb has already seen hundreds of millions of dollars in losses, sources close to the company told The Information. During a conference call with employees last Thursday, CEO Brian Chesky said that layoffs are not out of the question.
Airbnb joins other brands in freezing marketing spending to lessen the financial blow brought on by the coronavirus pandemic. While businesses across the board are grappling with economic disruptions caused by the virus, the travel and hospitality category has taken a particularly hard hit as consumers stay sheltered in place and countries restrict travel.
Companies like Airbnb cutting off spending could have a direct impact on the digital advertising market in the near term. Travel accounted for 8.4% of total digital advertising spend in the U.S. last year, and was the sixth-largest vertical overall, per eMarketer estimates. The researcher noted that travel also leans heavily on search to reach consumers. Subsequently, platforms like Google that rely on search could see a serious revenue slide when those taps are suddenly turned off.
Google and Facebook together could lose up to $44 billion this year as marketers continue to pull back spending during the pandemic, a recent Cowen & Co. estimate found. While the two companies are expected to remain highly profitable, major slides in their revenue offer a grim signal for the digital sector they dominate.
For Airbnb, the downturn poses larger existential questions to its business. The company announced plans to go public last September, reporting it made over $1 billion in revenue for Q2 2019. However, muted IPOs for companies like Uber and Lyft had already raised investor scrutiny toward tech firms focused on rapid growth over profitability. Airbnb's losses nearly doubled in Q4 last year, before the pandemic became a global issue, according to Bloomberg.
Even categories less disrupted than travel and hospitality are taking dramatic measures to adjust their marketing due to the coronavirus. Coca-Cola stopped all marketing in the U.K. through Q2 due to economic uncertainty and will continue to monitor the situation heading into Q3. Seventy-four percent of marketers now believe the pandemic will have a bigger impact on advertising than the 2008 financial crisis, according to a recent IAB report.