Priceline goes for Google, rejects others
Priceline Group spends feverishly on Google advertisements to grab users searching for a hotel because ads on Facebook and Twitter have failed to deliver results, chief executive officer Darren Huston said.
“For Facebook and Twitter, we have endless amounts of money,” Mr Huston said in an interview with Bloomberg. “But we haven’t found anything there.”
The comments by the chief of one of the biggest spenders on online advertising are set to stoke debate over which forms of digital marketing are most effective. Facebook and Twitter have grappled with questions of whether their social media ads provide a substantial return on investment for marketers, particularly at travel and e-commerce companies.
Priceline’s online marketing costs surged 41 per cent last year to $1.8 billion, outpacing sales growth of 29 per cent. Online travel agents need consumers to book through their sites to generate revenue and Google, as the best source for delivering that traffic, eats up about 90 per cent of Priceline’s digital ad spending, according to Mark Mahaney, an analyst at RBC Capital Markets in San Francisco.
Google’s search ads are based on keywords and often capture consumers looking for a specific vacation or hotel, thus leading to reservations. While Facebook and Twitter social ads can help companies communicate with their fans and can be used to target individuals based on characteristics like location and who they follow, they haven’t resulted in significant bookings for Connecticut-based Priceline, Mr Huston said.
He is seeking to diversify the company’s ad spending, tapping review site TripAdvisor, its own Kayak travel search engine and search site Trivago. “You never want to be overly reliant,” said Mr Huston. “But Google has been a great thing.” He declined to say if spending on Google is decreasing as a percentage of the company’s ad budget.
Mr Huston, a former Microsoft Corp. executive, joined Priceline in 2011 as head of the company’s Amsterdam-based Booking.com unit, which accounts for the bulk of its revenue.
Priceline is also investing in mobile as more consumers book last-minute travel from smartphones and as users opt for tablets over personal computers. Mobile bookings at Booking.com increased to $8 billion last year from $3 billion in 2012 and $1 billion in 2011, Mr Huston said.
Meanwhile Facebook wants to be more than a social network — it is planning to facilitate financial services in the form of electronic money and remittances, the Financial Times reports. The report cites sources as saying that Facebook is weeks away from getting regulatory approval in Ireland for a service that lets users store money on Facebook and use it to pay others — what’s known as “e-money”. This means that Facebook will be able to issue units of stored monetary value that represent a claim against the company, and the e-money can be used throughout Europe in a process known as “passporting”.
