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The Priceline Group and Expedia Inc. went at it tit-for-tat in the high-stakes advertising competition of 2014 and each increased their spending by about one-third.
It was as though they each had a mole in the other’s advertising-planning meetings as the Priceline Group increased its advertising spending 34.5 percent to nearly $2.6 billion in 2014 while Expedia Inc.’s 2014 advertising expense jumped 33.3 percent to $1.6 billion.
As such, the Priceline Group spent 62.5 percent more on advertising in 2014 than Expedia Inc. did but the latter ceded no ground and basically kept pace with the Priceline Group’s increase, according to their respective financial filings.
Keeping Google Happy
That combined $4.2 billion in advertising includes both digital advertising and TV advertising and the vast majority of the spend went to the online side, making Google very happy.
Both the Priceline Group, including Booking.com, Priceline.com and Kayak, and Expedia Inc., including Expedia.com, Trivago, Hotels.com and Hotwire, got much more aggressive in TV advertising in 2014 and will likely up the ante in offline advertising in 2015. Booking.com has already pledged to do so.
In its financial reports, the Priceline Group breaks out its offline advertising and Expedia Inc. doesn’t.
The Priceline Group’s offline advertising, mostly TV, leaped 81.3 percent to $231 million in 2014. That’s just 9 percent of the company’s total advertising spend, but it’s up from 7 percent in 2013.
Priceline’s Worries About Metasearch
In life and advertising, the rich get richer and the Priceline Group’s advertising scale begets efficiencies, or so the argument goes.
Still, in its 10-K filing yesterday, the Priceline Group noted that increased shopping by consumers across the Web could reduce the efficiencies of the company’s digital advertising.
“To the extent any such increased shopping behavior leads to growth in our Kayak meta-search business, such growth may not result in sufficient increases in revenues from our Kayak meta-search business to offset any related decrease in gross profit or increase in advertising and other customer acquisition costs experienced by our OTA (online travel agency) brands,” the Priceline Group states.
The same problem would likely hold true for Expedia.com and Hotels.com as Expedia Inc.’s Trivago metasearch unit continues to grow.
TripAdvisor Tiny But Growing Advertising Spend
TripAdvisor’s advertising spending is paltry compared with the Priceline Group and Expedia Inc., which are large advertisers in TripAdvisor.
TripAdvisor’s total advertising spending in 2014 increased 42.8 percent to $347 million, including $33 million on TV advertising.
TripAdvisor has already pledged to double its TV advertising spend in 2014 to around $60 million.
As TripAdvisor increasingly takes direct bookings on its sites and within its apps — somewhat online travel agency-style — its total advertising spend will likely be trending upwards too.