One of Google's biggest advertisers is pulling spending on the ad giant even as it quietly hired a Google exec to market one of its biggest brands
- Booking Holdings, the parent of Booking.com, Priceline and Kayak, is shifting some of its ad spending to TV and online video ads from Google.
- The change in ad strategy comes as the company's flagship brand Booking.com brought on a former Google exec as its chief marketing officer.
- Booking is trying to fend off Google, which has increasingly been encroaching into online travel companies' turf.
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Online travel giant Booking Holdings, which spends billions in advertising on Google, is turning to TV and online video ads to diversify its spend, CNBC first reported this week.
The parent company of online travel aggregators including Booking.com, Priceline and Kayak spent $1.19 billion on performance marketing, most of which went to Google, in the second quarter.
Performance marketing, which advertisers use to measure direct results such as clicks and sales conversions, has not been yielding efficient results, so Booking is doing more brand advertising to drive people directly to its sites, Booking's CFO David Goulden said during the company's earnings call Wednesday.
"We have observed a long-term trend of decreasing performance marketing returns on investment, a trend we expect to continue," the company wrote in its quarterly filing.
"I think brand advertising is always going to be important for anybody who's in the retail business," CEO Glenn Fogel said during the company's earnings call. "I do believe that we need to continue to work on this and improve upon it. And I'm looking forward to us doing that."
Fogel also criticized the performance of other platforms like Instagram, Facebook, and Snap.
"The ROIs are not as effective and it's not as easy to scale yet as some of our other long-term use channels like Google, for example," he said on the call.
The change in advertising strategy comes as the company's flagship brand Booking.com hired Google marketing exec Arjan Dijk as its CMO, Skift reported last week.
Google is encroaching on online travel companies' turf
Google has been encroaching on online travel companies' turf with its Flights and Hotels services that allow users to book directly from search results.
That move has made it harder for travel companies like Booking, Expedia, Trivago and even Airbnb to reap the same rewards they once did on search ads, said a media agency executive who is familiar with Google.
"It's not just Booking; it's happening arcoss the board as Google is making inroads in the e-commerce transactions space," the executive said. "Google's losing search share on e-commerce to Amazon, so their entire strategy is to drive more e-commerce transactions that originate on search within Google."
But the executive expressed doubts that TV was the best way for a travel company like Booking to fend off Google.
"Social media is a better environment, where people are sharing so much more aspirational travel content," the exec said.