How Airbnb bounced back from losing 80% of their business with long term brand building - Nancy King

0:06Welcome back everybody, it's The Uncensored CMO. So in this episode, I'm catching up with Nancy King, who is the VP for marketing at Airbnb. Now, Airbnb are perhaps most famous in marketing circles for making a really big shift from performance marketing over to brand marketing as a result of the pandemic. Imagine being at Airbnb during the pandemic where literally 80 % of their business disappeared overnight. It was a really, really challenging time, but they've come out of that stronger than ever, delivering some incredible results. So I'm talking to Nancy about how they survived that and how she has led the business on their brand marketing journey.

0:42So much to learn in this episode. I know you're going to love it. Nancy, welcome to the show. Thank you. I'm happy to be here. Great to have you. And we're here in San Francisco, right? Home of technology and home of Airbnb, of course. So before we get into it, because I've got a ton of questions I'd love to ask about, you know, about the brand and the company and how you've survived the last few years and what's gone on. tell us a bit about you and how you got to where you are today because your background is in the creative industries isn't it rather than in kind of client-side marketing so what was your journey to this role?

1:12Sure I would love to tell you I like to think it was an unconventional background I so I started college thinking I was going to be a doctor and was pre-med and left college with an English and art history degree and in that learned that sometimes you might disappoint people with choices. No one's parents get excited when you switch from pre-med to an English degree, but that when you find the thing that you really love, it all just starts to click. And I just realized I loved language. I loved creativity. I loved art. And so I moved to San Francisco after college and I joined an advertising agency.

1:56I knew absolutely nothing about advertising. I thought, wow, the creative department, that seems pretty cool. I think I want to be in that department. And so I started going to art school on the weekends and the evenings. I learned design and photography, Photoshop, Illustrator, all sorts of things, and put together a portfolio. And I got a job here in San Francisco at an agency called Goodby Silverstein and Partners, which was an incredible experience for me. I spent seven years there. I worked on all sorts of clients. I sold HP computers. I launched Britney Spears Perfume, which was a very interesting experience.

2:41And I think the thing that I took from that, well, there are a few things I took from that. One is that there is an immeasurable value to creativity. and the second is that creativity is incredibly hard and I realized after my time there that or during my time there that there were people that were much better at being creatives than I was I loved it I loved doing it but I felt like it wasn't I was a little off-center from where I wanted to be and I was really interested in how business decisions and creativity intersected with one another. And so I left Goodby. I moved to New York. I got a job as a junior strategist.

3:28Ooh, nice. Yeah. And so, and I kind of started over, not truly started over because I had so much experience in the industry, but I loved it. I loved consumer research. I loved working with clients. I loved understanding how to frame a problem and really being kind of the liaison between these two groups. And I did that for a number of years and worked for a bunch of different agencies. And in 2007, a number of people I knew were starting tech companies. There was a lot big tech boom in New York. And so I started a consultancy to work with anywhere from series A, series B, even some seed companies to help with positioning and go-to-market plans.

4:17And that was an unlock for me. I actually realized how naive I had been working on the agency side. I had no idea how a company ran. I had no idea how people made decisions about product and spending. I didn't know how an engineering team worked. And I kind of caught a bug in that. And it led me back to San Francisco. I took a job at one of the companies I was advising, which was a machine learning company that was building, they were building a social news feed, which was a totally different world to be in. It ended up getting sold to LinkedIn. But San Francisco then led me to Airbnb. And so right as that company was being sold, there was a job at Airbnb.

5:03It was 2015. It was one of the, it was the first time they had hired someone for strategy. It was a global strategy and consumer insights role, and I was lucky enough to get it. And that's where this chapter began. Amazing. Now, we'll get into it because I can't wait to talk a bit more about it. But just quickly before we do, what can people in agencies understand about clients and vice versa from experience? I guess you've got quite a unique background in that you've seen it from both sides. I would just say try to learn as much as possible about the business. Ask questions, understand how the decision gets made, understand what clients are worried about and what they're being measured against.

5:45Because, you know, internally, there's just a lot of different, a lot of different problems and challenges. And I think it can help people be more successful in pushing their creative ideas forward. That's top, top advice. I very briefly did pitch training for agencies. So I was client side 20 something years ends up getting fired uh freelance for a while and then weirdly found myself doing pitch training because um i was using my kind of cma experience to go and here's how you should you know pitch yourselves and it's exactly as you say right what's the what's the objective for the clients you know what are they measured on how do they make decisions you know what what's keeping them up at night what's most important all these things you know often in your in agencies rush to kind of present the idea or um be creative you know they forget that actually they're trying to solve a business problem, work out what it is, you know, and how will they decide?

6:37It's quite funny, actually. I used to say when the first question is when you're in a pitch process, let's say you're up against three other agencies, phone the client up and say, how will you decide between the agencies, right? Seems so simple, but they're like, really? Can you do that? I'm like, well, why not? Just say, give me 15 minutes. I've got to ask you a little bit about the brief and understand a bit more about you as a business. And, you know, four or five questions will probably win you the brief because it shows you understand, you know. But anyway, let's get back to Airbnb and say, you know, join the roles.

7:08Can you tell us a bit about the origins of Airbnb and maybe the phases you've been through as a, you know, as a brand over the last few years? Sure. So, you know, before I joined was sort of the early, early stage and three founders, two of whom met at art school who were trying to build a company, were running out of money and a design conference came into town and it birthed this idea, airbed and breakfast, where they rented out an airbed in their apartment to people attending the design conference. And what they realized was, wow, like not only can I make money doing this and be able to pay my rent, but it was a great experience.

7:51They had a good time. The people who with them, had a good time. And that's where it began. And, you know, I have such admiration for the founding team because everyone thought it was the craziest idea. I mean, no one thought that they would be a successful company, staying in a stranger's home, sleeping in their home. That was 2008. When I joined in 2015, definitely we had a global business. They had scaled the business. But, you know, we were still relatively unknown. And it's kind of hard to imagine now. In the US, when I joined, I set up a brand tracker and I learned that we had 24 % aided awareness.

8:33Wow, aided awareness. So one in four people had ever heard of you at this point. Wow. Right. We showed the logo with the words Airbnb underneath it. And so it's been incredible how much we have grown and scaled since then. I think that I see my experience at Airbnb in three chapters. There was the startup chapter when I joined, which is when everyone was just sprinting towards building a business, acquiring hosts. It was a one-by-one win over people strategy. Then I had the good fortune of working for Jonathan Mildenhall, who was my boss when I joined. And we did our first brand campaign. And I think really that put Airbnb on the map and positioned Airbnb as a way to travel like a local.

9:26And then there was chapter two, which I think is like a very typical tech chapter, which is growth at all costs. And we verticalized the business. We empowered teams to run towards different goals. We really, I think, ran the tech playbook. and did that until the pandemic hit. And then I would say chapter three of Airbnb for me is the post-pandemic, which I have to say is the chapter I love the most. And how did you, so in the chapter three where you're recovering and rapidly growing, what was different about how you worked as an organization compared to before? So you talked about everyone in their individual specialisms.

10:06How did that change after the pandemic? Well, I only know this because, you know, in retrospect, I could see things more clearly, But it's that when a company grows in scales, it starts to get cobbled together in strange ways. There are processes that are different across teams. There are acquisitions of people that don't really align necessarily with the brand or the culture. And so you sort of have this Frankenstein of a company. And when the pandemic hit, I mean, it was a very sobering moment. I think we lost 80 % of our business. Wow. How did that feel at that point? I mean, what was the emotion running around?

10:47Because you're dealing with a pandemic personally anyway, presumably everybody, and then suddenly you're looking at your business disappear in front of you. We had no idea. I mean, there were articles being written that said, you know, is this the end of Airbnb? Is this the end of travel? The idea of going and staying in a stranger's home during the beginning of the pandemic seemed nuts. I mean, why would anyone do that? Or opening up your home to a stranger. We weren't even going and seeing our parents. And so, yeah, it was a time of total uncertainty. But I think, and this was Brian, our CEO, who led this, it was a time to totally reset.

11:27I mean, imagine the luxury of being able to rethink, restructure, simplify your business. And that's exactly what he did. And he was an incredible leader during that phase. And, you know, there was an unfortunate period where we had to let a lot of the company go. But in that, we made a lot of hard decisions about where we wanted to focus as a company and radically simplified things. And what came of that was a very integrated, collaborative company with, you know, a single roadmap that we all work against. And so I think, you know, I'm a big fan of silver linings. I think that what came out of the pandemic was a company that was much stronger than where we were when we went into it.

12:16Yeah. And how did you maintain morale during that time? Because, I mean, that must have been quite existential as a threat, not knowing whether the business would recover, how are you going to continue funding the operation? You know, I don't know if every company had this, but we were so busy. And I think in some ways that is what drove a sense of purpose because we didn't know what was going to happen. So constantly we were looking at numbers of cases in different countries and looking at policy changes at every single, you know, we're in 191 countries around the world. Every single thing that was happening in all those countries.

12:54I mean, I don't know if that actually proved useful, but it meant we were really busy and really busy thinking about what were all the different ways we could emerge from this moment. And I think in some ways, you know, it brought people together around a common goal of trying to decide what the best thing to do was. It's funny, actually, it reminds me as you talk there of system one, we kind of do advertising testing, right? And the first thing that happened with COVID, everyone shuts their advertising down, right? And they certainly don't make a new ad. I mean, the last thing people, well, apart from the sort of social media kind of botched together ones, but literally everyone's shut down.

13:32And so we were like, what do we do? I mean, like, apart from kind of figuring out, you know, how we cut costs. So we ended up doing two things. We did a COVID tracker, which basically looked at sentiment towards COVID and people's responses and changes in patterns of behavior. because we thought, well, we might as well use our research intel to help the world kind of navigate their way through it. And then the other thing we did, we decided to test every bit of COVID communication in the world, right? Well, at least as far as we get hold of it. So it's quite expensive doing this, actually. But what we then did is we did these weekly briefings where we're going, because people didn't know what to say and how to say it.

14:08So people were coming to us going, can I show the ad that I ran three weeks ago? Is it appropriate to now? or you know you know should we lean into the coat you know into covid and go in these times you know what the kind of thing that's going on or can we show people holding hands i mean we were getting these kind of questions you know is it okay to show someone on holiday you know not wearing a mask you know so it's strange isn't it but we were dealing with what's in front of us weren't we in that kind of period of time and uh so i mean it was weirdly energizing and threatening at the same time really yeah i mean we had the exact same experience we um we started to see nearby travel pick up and i think it was people who were stuck in their homes relocating with their family with their friends finding an office to work from and i think as we started to see that emerging behavior that's when like the the what do we do as a marketing organization started to turn on and And when we had the same cautious approach, we didn't want to be seen as contributing to what was happening and as a travel company, that is possible.

15:13And so the first thing we did, and we joke now that we call it a campaign because it was actually just a series of emails. And we spent so long working on them, but it was called Go Near. And it was a rallying cry to go somewhere within 100 miles and be with the people that you love. And that kind of turned on the engine of thinking about selective marketing opportunities that were right in that moment of the pandemic. But it started to feel exciting then. It started to feel like that's when, like, we were thinking about our strategy. We were thinking about creative. We were thinking about the consumer again.

15:52We were mapping the different phases that consumers were going through where, you know, I think there was one where everyone was very afraid. and then there was this sense of yearning, you know, and wanting it to go back to the way it was or feeling nostalgic for the trips that people had done. And a lot of that is what led to the first campaign that we launched, which we called Made Possible by Hosts, which was a celebration of the types of trips that Airbnb hosts enable and a reminder of sort of the magic and variety of Airbnb trips. And that was such a great experience because we couldn't do production.

16:34And so we have a whole network of photographers that we work with. And we asked them, we said, hey, we'll get you an Airbnb if you pick people that you feel comfortable traveling with and take a trip and photograph it. And that was the brief. and all these photographers came back with the photos of their trips and you know our creative team found this magical way to put them together as essentially slideshows with music and that became our first campaign. There's something very interesting about that as well because do you know what we were finding because we were testing so many of these for free because how many customers well not many and um what we noticed is that that style of advertising can actually work very well and you know you didn't need to have a very expensive production overseas with a huge you know crew making making it did actually teach us what's possible remotely and and that you know there's you know it's about the idea isn't it but what you can achieve on a relatively small budget um let me ask a question about um investment i remember at the time there's a big debate about going dark in recessions and that brands recover when they invest through the dark times.

17:48But obviously, the business is under a lot of pressure. Sales, income was down a lot. How did you make the decisions about investing back into advertising again? A few things happened. Before the pandemic, like many companies, we were investing very heavily in performance marketing. Having all the lights turn off at once allowed us to look back at that and look at the performance and the impact in a new way. And I think it turned out that it really wasn't doing as much for us as we thought. You know, we were also going through the IPO process, and I think that it was really clear that Airbnb's brand is something that, outside of the walls of Airbnb, is really valued.

18:31I mean, most people, the vast majority of people, come to us direct with no marketing. and that's because of the strength of our brand over time and and so I think there was I mean this it really was led I think by a desire to start communicating again and an understanding that performance marketing probably wasn't going to be the thing that the world needed in that moment would you have got that conclusion without the pandemic do you think or did it accelerate or Did it bring it into the cold light of day? Yeah, it's funny. And a lot of CMOs reach out to me and say, what's the recipe? People who have been hired to build brands but feel pressured to deliver short-term results and end up torn between the two and not able to actually achieve the vision of building the brand.

19:26And I describe it as like we kind of got a hall pass because we were freed from the tyranny of weekly metric reviews and all the questions that come with how long does it take for brand to pay back? Is our measurement accurate? You know, our metrics were all over the place. And so it gave us six, nine, 12 months of running work where we really didn't know. where we build a lot of the foundational measurement. We put different trackers in place. We had this luxury of being able to do the thing that we thought was right without the questions that everyone gets. And I feel like I wish that there was, I had a great answer other than the answer is you need a pandemic to be able to run brand marketing.

20:25But hopefully, you know, as companies see others succeed by having a really brand forward playbook, there'll be more openness to it. I found it, I dug out this quote from Brian, actually, that was quite interesting. He said, we think of performance marketing as more of a way to laser in on balancing supply and demand rather than a way of purchasing a large amount of customers. So I thought that's quite interesting, wasn't it? Because, you know, it reframes the role of performance marketing a little bit differently to, you know, Rather than being about acquisition, more about, you know, managing supply and demand.

20:56That's quite an astute way of looking at it. Yeah. I mean, unlike most companies who can manufacture as many of the products as they want, we are limited by the supply that we have. Well, this is a really interesting question, isn't it? Because you don't, I mean, sorry, as we're talking about quotes, I'll dig out my friend Tom Goodwin's question. I thought it was fascinating. You know, he said this Uber, the world's largest taxi company, doesn't have any vehicles. Facebook, the world's largest media company, owns no content. And Airbnb, the world's largest accommodation provider, has no real estate.

21:24So you don't own your products, do you? Which is one of the, talk about the four P's of marketing, there's a very big P that you don't own. So what kind of challenge does that present? Well, I think it means that we have a brilliant business model because we don't own anything. You know, our business is really the app that is connecting our guests and hosts. So it's brilliant from a business perspective and super challenging from a marketing perspective. Because unlike a marketer that can show a shoe or a credit card or a car and say, this is what we sell and here's why it's great, we sell 4 million plus different things.

22:03And so I think the biggest challenge we have from a marketing organization is how do we talk about our product? Because if you show one version of the product, it might appeal to a very narrow audience. If you show another, it might appeal to a different audience. And so it's very hard to drive mass appeal when every product is totally different. So how do you overcome that? What's the answer to that in terms of your advertising? Yeah, so we have, you know, and I think this has evolved over time, but we have this model. And I think, well, I think fundamentally we have a model or principle that's don't do what everyone else does.

22:41And so rather than doing advertising where we have people write a script and we hire a director and then we make an ad, we have two versions of storytelling. One are authentic documentary style stories, which the photo stories is an example of that. Those were true experiences that we just turned into films. And the other is we use an animated style as a representation of Airbnb. be. And so that allows us to talk conceptually about what we offer and to talk about the broader proof points and benefits without being kind of bogged down by, well, which home do we show and what kind of people do we show and how do we reflect the inventory?

23:26And so that's the model that we've created. So far, it seems to be working. But essentially, we find that system when we talk to people about having characters or, you know, or mascots. In a way, the genius of them is because you're not showing a celebrity or a particular person, they appeal to everybody. You know, kind of in the same way, using animation is a good way of kind of appealing to everybody, rather than sort of excluding some audience because you're talking about a particular part of Airbnb. Yeah, we have a new campaign that we just launched, which we call Get an Airbnb. And we made it because what we realized was, because our company has changed so much over time and because what we offer is so variable, there really wasn't a shared mental model of what we offered.

24:10Everybody kind of has a different model. Oh, it's for backpackers. Oh, it's for rich people. Oh, it's homes. Oh, it's hostels. And so we realized we needed to take a step back and just lay the foundation. What do we offer? Why is Airbnb a good choice? And despite being a really big company, I think the thing that we always are humbled by is we're still a challenger brand. I mean, hotels are the dominant accommodations provider. And so if we want to grow, we've got to get people to switch from an Airbnb or switch from a hotel to an Airbnb. And that's what really got us excited about animation because we wanted to talk about what a hotel represents and the experience that it offers and juxtapose that to the what an Airbnb represents and the experience it offers.

25:01and yeah so that's what we that's what we've been doing now i did i did jump in the system on database actually and have a quick look at the best performing ad we've got quite a few of your ads on the database anyway um and the top scoring with a 4.5 out of 5 congratulations in the top three or four percent of our database was the yellow submarine one which i absolutely love i mean having kids in an ad is always going to help the music plays a lovely role but the other thing I liked about it is you kind of, you call it the oh my God category. And one of the smart things I think you've done is you've managed to sort of get over this challenge of want to talk to everybody, but you can talk to somebody at the same time by kind of categorizing quite cleverly, haven't you, how Airbnb fits into all these different scenarios.

25:47Yeah, yeah. So thank you for that. I'll put that in my annual review. Yeah, do, by the way. I'll send you a report later. Yeah. Yeah. So the categories campaign, I mean, we faced a similar challenge when we launched that. And it's how do you explain the range of inventory that we have? And our product team had been working on this massive taxonomy project to organize and sort and reflect all the different home types that we have through our product. And so what we did on the marketing side was brought that to life with these films about the different categories. And yeah, the yellow submarine one was lovely.

26:27And again, though, it wasn't planned. You know, we sent this photographer out and we had them stay in the submarine to see what would happen. and they came back with this lovely, lovely story of children and the delight and the curiosity and the magic of being in such an unusual place. And, you know, and it just was like, it was natural after that. Now, something else that stands out, I know, about how you run your business is you do a lot of that in-house, don't you? Rather than kind of rely on agencies, which is a little bit ironic given your background, but presumably given your background, And it also makes it, you know, you're in perfectly place.

27:07So what was the thinking behind in-housing so much of the kind of creative process? I mean, we've always had a big in-house creative team. And during the pandemic, Hiroki Asai, who is a legend, but came from Apple and really pushed on the value of in-house creative. And so all of the work we do is in-house. We have a tremendously talented creative team that works across everything we do. We have teams that work on our launches. We have teams that work on product marketing, teams that work on advertising. And we obviously partner with photographers outside or editing houses. But I think the benefit of it is we're all on the same team.

27:57We're all in service of the Airbnb brand. and when you work with agencies there's times and i mean i felt this myself as a creative where you're in service of your own portfolio and so i think that alignment between the marketing team and the creative team really helps us make great work and how do you get the balance between doing the going back to the kind of performance conversation and brand how do you decide the balance between those two things in the organization i mean it's like the old classic kind of 60-40 isn't it the kind of golden rule of mix between the two do you do you have a sort of a operating model that guides you in terms of where to where you put your your spend yeah probably different from other companies we i mean we look at our our revenue and how marketing is a percentage of our revenue and then we start with what we want to do on the brand side and who do we want to reach channels, which frequency, what objective are we trying to drive?

28:58And we model out what that costs. And then we look at what's left and think, okay, is that enough? That's usually the opposite. Most companies do, right? We've got to get the performance bit sorted. Oh, we've got a bit left for the brand at the end of the day. That's interesting. Yeah. And is that partly because, obviously, it's your journey, but the fact that you don't own the products, you don't have distribution channels beyond the website, right? Presumably like without that, you know, you're nothing. There's no other ways of building brand apart from directly, is there? Yeah. I mean, we don't have the benefit of consumers wearing our shoes or someone carrying our phone or someone driving our car with a logo on it.