Skift Take

Though Priceline has traditionally been resistant to letting ads disrupt its sleek user experience, the payoff may have finally become too lucrative to resist.

Priceline announced Thursday that it would launch a sponsored listing service that will allow hotels to pay for prime spots in users’ search results.

In the same model as the sponsored services of its competitors Expedia, Orbitz, and Travelocity, Priceline’s listings will be auction-based spots for which hotels pay each time a user clicks.

The price they pay will be determined by the hotels’ competitive bids: the high bidder gets top billing among the results customers see after searching for rooms in a given area and time period.

Priceline held out longer than its rivals in monetizing search results through advertising, and that’s partly because the company has made its name on giving users smooth and efficient conversions from its site to a completed booking.

But the hesitation could also have come from the company’s generally minimalist approach to advertising: Priceline made only 3.3 percent of its revenue, or $35.3 million, from “advertising and other revenue” during the second quarter of this year. In comparison, Expedia made 6.6 percent, or $80 million from that revenue source, while Orbitz made 6.8 percent of its revenue, or $15.5 million, from “advertising and media.”

Company Revenue from Ads % Total Revenue
Priceline $35.3 million 3.3%
Expedia $80 million 6.6%
Orbitz $15.5 million 6.8 %

Perhaps after seeing how significant that revenue stream was becoming for its competitors made Priceline decide it could no longer resist the increasingly popular tool.

Priceline explained the new system in a video, embedded below.

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Tags: expedia, otas, priceline, travelocity

Photo credit: Hotels will pay each time a Priceline user clicks on the sponsored search results promoting them. Screenshot / Priceline via YouTube

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