Airbnb Case Analysis

Group 5 & Associates

Taylor McCutcheon, Francesca Badoino, Kwan Lee, Matthew Brooks, and Remi Manuel

Environmental Scanning

Since their startup in August of 2008, AirBed & Breakfast (Airbnb) has become a
premier online marketplace where homeowners can turn vacant rooms into nightly
rentals. This San Francisco-based company has created an online reservation system
that facilitates transactions between hosts and renters from around the globe. Reach
has expanded to over 2 million listings in over 190 countries. Based on this profitable
system, Airbnb has grown into a $1 billion dollar company (Edelman, 2012).

In addition to a reservation system, Airbnb has a review system that allows

renters to read about hosts before submitting reservation requests, and vice versa.
Profiles include details such as user reviews and shared social media connections to
build a reputation and trust among users of the marketplace. Another element is a
private messaging system that allows hosts and potential renters to communicate.

The Airbnb founding team acts as the key managerial staff for Airbnb. Co-
Founders include: Brian Chesky, CEO; Joe Gebbia, CPO; and Nathan Blecharczyk,
CTO. Airbnb's primary source of revenue comes from service fees from bookings. Fees
range between 6% and 12% depending on the price of the booking. Airbnb also charges
the host 3% from each guest booking for credit card processing (Couts, 2012).

Capitalizing on the sports industry and event sponsorship is a popular route for
many American companies as of late. In 2015, annual company spending for sports
advertising was $34.9 billion (Plunkett, 2015). The Denver Broncos have sold out every
home game since 1970, and they are the current Super Bowl champions, winning Super
Bowl L against the North Carolina Panthers. As the most recent Super Bowl champions,
this team is largely in the spotlight. They are the most viewed major league professional
sports team in Colorado. They have drawn crowds of over 70,000 at their large arena,
the Sports Authority Mile High Stadium. Peyton Manning is their celebrity quarterback,
recently retired as of March 7, 2016. In 2009, he was named the best player in the NFL,
and Fox Sports, along with Sports Illustrated, named him the NFL player of the decade
for the 2000s.

Problem/Opportunities

The main problem Airbnb needs to overcome is to regain consumer trust in terms
of their safety and overall lodging experience. Airbnb experienced negative consumer
sentiment after negative press spotlighted incidents renters and hosts experienced in
2011. Regaining consumer trust will increase the number of host, renters, and
reservations. By recovering consumer trust customers will feel more confident to reuse
Airbnb services when booking their lodging needs thus, increasing customer loyalty.
 A potential opportunity and solution for this problem is make it easier for hosts to
reject renters. Airbnb had a policy of penalizing hosts that turned down reservation
requests for a posted room. In return, the host would appear lower in the search results.
Airbnb had incorporated this policy that encourages hosts to only post rooms that they
were actually willing to rent, and to help guests find the rooms that were most likely to
be available. Hosts should not feel pressured or penalized to accept or deny
reservations. Airbnb can reconsider this policy and give the hosts better options for
turning down renters.

Airbnb also has the opportunity to provide insurance for hosts. Airbnb could
reimburse costs associated with unreliable hosts or damage caused by guests. This can
give peace of mind to hosts and renters knowing that Airbnb has backed them 100%.
EBay has implemented similar buyer protection to reimburse consumers who did not
receive items they ordered.

Lastly, Airbnb can have a better policy for prescreening hosts and renters. Airbnb
could add a screening process. The background-check services could verify a persons
name, address, phone number, and records, and even results on Google searches.
Airbnb could also add staff to interview users and examine properties in key cities, a
technique that has been implemented on several dating websites.

Critical Factors

Regain consumer trust towards Airbnb.

Increase awareness of the brand.
Build Airbnbs online reputation system as more reliable.
Establish an online presence to collect outside information on hosts and renters.
Provide discounts to guests so that they might become repeat customers.
Present more sophisticated consumer reviews.

Definition/Formulation of Alternatives

Our first alternative for resolving the problem is a campaign featuring Peyton
Manning as our celebrity endorsement, called Dont Let the Broncos Down. The
campaign's main focus would be Peyton Manning and John Elways reliability and
influencing power among this demographic. The campaign would have a series of
television commercials playing on traditional media, as well as, personalized videos on
Twitter answering frequently asked questions that consumers or celebrities have
reached out to the brand. Digital marketing will be used to increase interaction between
the target market and Airbnb. Memes and GIFs will be used to advertise the brand
under Peytons and Elways influence and amplify the fun character of the brand.

For the second component of alternative one, a sequence of commercials will run
year long featuring our celebrity endorsers promoting the brand. For example, Manning
would tag the person that posted the statement and respond directly to them with a
personalized video. For example, a Twitter user states, In three words describe why
Airbnb is preferred over a hotel. Manning would respond directly to that Twitter user
with a direct tone, which would appeal to a humourous audience. The personalized
videos would be short and snappy, and Manning would respond within 24 hours to the
response.

For the third component of alternative one, partnerships with national brands like
Papa Johns will help increase customer participation in our campaign elements. In
October 2012, Denver Broncos quarterback Peyton Manning became a franchisee in
the Denver area for Papa John's, and also purchased 21 franchises in the area.
Therefore, for first time users of Airbnb, there will be a prize of a large pizza with up to 3
toppings by Papa Johns. Since Peyton is a franchise owner of many Papa Johns
locations, the partnership will allow both parties to benefit financially by the increase of
customer satisfaction.

Alternative one would emphasize an individuals trust in Airbnb through the use
of a trustworthy spokesperson. The overall point is because Broncos fans trust
Manning, they can trust Airbnb when they travel to the games.
Our second alternative for regaining consumer trust in Airbnb is to launch the
Meet your Neighbor campaign. This campaign is designed to target Denver NFL fans,
specifically in ways that are relevant and interactive to the consumer. An advantage that
this campaign will spotlight is Airbnbs ability to offer consumers a social experience. In
order to overcome the stranger-danger bias consumers have over the brand the
campaign will echo a message of community, it will have options for consumers to
engage with content that positions Airbnb as a reliable resource. Consumer interaction
is a key component of our second alternative because it's designed to further encourage
the narrative between the consumer and Airbnb on trust.

The first process of the campaign involves fixing a few marketing bugs the
company faces today. One of which is the lack of a filtering system of their users. The
inclusion of a system of background checks will ease the percentage (35%) of our target
market who is worried about the danger behind interacting with strangers. Another bug
that needs to be fixed is the companys review system, customer word of mouth is
essential for the brands reputation, so it is crucial to encourage a review system that
incentivizes both the host and renter to write reviews about each other. In order to
further encourage the narrative between users we should position the reviews as
stories. People view stories as more inviting to write, as a few of our focus group
respondents explained. A promotional component that can fix this problem is the
implementation of contests that offer free gateways to users who enter their stories on
an Airbnb microsite titled Tell Us Your Story. To further encourage users to write
stories, new members will have the opportunity to get a reimbursement on their first
booking through airbnb when they share on social media their experience using airbnb
services with the hashtag #myairbnbstory. This interactive component of the campaign
will encourage consumers to talk about the brand on social media, thus increasing the
number of impressions the brand receives on social media channels.
 The second step of the Meet Your Neighbor campaigns involves spreading the
message of community to Denver fans, this step requires an integrated marketing
communications plan that targets the Denver fan when he is ready to engage with his
favorite sports team. Before the beginning of every season a series of digital marketing
ads and traditional ads will be launched to increase the brands awareness. This is a
crucial period of the campaign because this is the time our target audience is making
purchasing decisions on their lodging needs. The commercials will showcase Denver
NFL fans connecting through Airbnb, a commercial contrasting the experience Denver
NFL fans receive by lodging together versus the boring experience the fans of the
competing teams receive when booking through traditional lodging vendors will spotlight
the brands social experience (USP). These series of commercials will entice our target
market to try out the service. A sequence of digital ads with rich content, taglines, and
graphics that appeal to the target audience will be placed in websites like espn, fox
sports, etc. to increase awareness of the brand while the target market browses for
sports news.

During this step of the Meet Your Neighbor campaign Airbnb will sponsor
listings on properties owned by influencers in the sports industry. Renters will have the
opportunity to rent a room in the homes of Denver's most influential athletes like Champ
Bailey, John Elway, and Von Miller.These listings will increase consumer hype and
amplify the voice of Airbnb while belittling the voice of competitors. News stories on
local media will touch base with this component of the campaign to propel excitement
among the fanbase. Social Media ads showcasing these listing will be targeted to our
target market to increase knowledge of these listings, as well as, draw in more traffic to
Airbnbs website increasing revenue in sales.

The last component of the Meet Your Neighbor campaign will include
partnerships among the brand and Denver sports vendors. Through these
partnerships Airbnb will become the official sponsor of a variety of different sports. As
an official sponsor Airbnb will offer users access to pre-sales and advantage sitting
options on tickets. These perks will further incentivize the target market to be avid users
of Airbnb services. As an official sponsor of a variety of Denver sports team the brand
will get a lot of exposure at sports arenas, an environment where the Denver fan is the
most engaged. The end result is a campaign designed for the Denver fan that positions
Airbnb as the best service to use to connect the community of die hard Denver fans with
each other. During the course of this one year campaign Airbnb will resonate to the
consumer as a brand whose voice speaks to their lodging needs.

Pros/Cons Discussion of Alternatives

The first pro associated with alternative one is that, given our target market,
Denver Broncos fans will trust Peyton Manning as a spokesperson. From the
perspective of the average Broncos fan, Manning is a champion, a winner, a reliable
individual that took them to the Super Bowl 50 and won. This assumption will connect
Airbnb with Manning to create a trustworthy association. Another pro of alternative one
is that it would increase awareness of Airbnb. Twitter users are going to want to
respond to Airbnbs statements in hopes of getting Manning to respond to them directly.
Research suggests that 26 million tweets are tweeted during the Super Bowl in just one
game, on average (Gaille, 2015). This phenomenon would generate word of mouth
publicity and have the potential to go viral, bringing tremendous awareness to the brand
itself.

A con associated with alternative one is that 37% of NFL fans are aged 55+,
while only 12% of adults aged 50-64 use Twitter (Patterson, 2015). This gap between
NFL fans and Twitter users could create a greater lack of awareness. Another con for
alternative one is that not all Twitter users will receive a response from Manning. This
might create anger or jealousy within the feed, which could potentially create a negative
connotation with the brand.

A pro of alternative two would be that this option closely aligns with Airbnbs
USP. What is unique about Airbnb is the companys ability to bring together members of
the community. This campaign goes back to that initial mission statement and
emphasizes the companys core value while also addressing the problem of safety
through background checks. Another pro of alternative two would be that this allows
Airbnb to really delve into the world of sports sponsorships as opposed to just investing
in one specific player. Consumers interest in buying a product increases from 11% to
52% when attending a brand-sponsored event, and the most popular type of event
sponsorship is sports (Text, p. 405). If Airbnb is forming partnerships with multiple
Denver sports vendors, (providing choice seating, presale ticket options, and altogether
more comprehensively sponsoring sports), as opposed to just Peyton Manning, there
will be more benefits available to consumers through this campaign and an opportunity
for Airbnb to get more involved with the sports industry in Denver as a whole.

A con of alternative two would be that it may be difficult to get individual players,
or other influencers on Denver sports teams to open up their homes to Airbnb users
considering the privacy issues associated with celebrities. Another con of alternative
two has to do with the inherent possibility for negative reviews to be widely broadcast.
When you invite people to air out personal concerns and experiences on public forums,
and you draw attention to that aspect of the campaign, there is a higher risk that
negative reviews will receive extra attention and deter potential customers.

Recommendation:

We chose alternative one for multiple reasons. First, the alternative was inspired
by the success of Old Spices The Man Your Man Could Smell Like campaign. This
campaign, which was launched in 2010, was proven to work, given the fact that Old
Spices sales increased 107 percent (Monsey, 2010). The second reason we chose
alternative one is because the video responses have potential to go viral. Its been
estimated that a successful viral campaign can have 500-1000 times more impact than
a non-viral campaign (The Viral Marketing Cheat Sheet, 2016). This alternative will
regain consumer trust towards Airbnb, increase awareness of the brand, and build
Airbnbs online reputation system as more reliable.
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