Expedia Brands Dominate TV Ad Spending by Travel Booking Sites in 2015

Expedia Inc.’s spending last year on U.S. television advertising ($218.3 million) left the Priceline Group far behind ($86.1 million) and Expedia’s Germany-based Trivago brand, which offers comparison shopping for hotels and television pitches from the Trivago Guy, led all of the booking sites by far, shelling out just a few bucks less than $100 million in U.S. TV advertising spend.

The figures come from iSpot.tv, which estimates that the U.S. national TV advertising of travel-booking sites in 2015 increased 21.5 percent to $354.1 million, and included 123 spots from 27 brands that paid the bills for 176,000 airings.

That contrasts with 18 brands cutting checks for $291.5 million in 96 spots and 213,068 national airings in 2014.

In other words, the number of brands and spots increased significantly in 2015 compared with the prior year, although the number of national airings declined.

Looking at the spending patterns in a different way, Expedia Inc. paid the bills for 61.6 percent of all travel site TV advertising in the U.S. in 2015 — and its Trivago brand represented 45.7 percent of all of Expedia’s U.S. TV advertising spending.

Let’s look at the top 10 advertisers, including Expedia Inc. and Priceline Group brands, as well as TripAdvisor and Airbnb.

Top Booking Sites in U.S. TV Advertising 2015

Source: iSpot.tv

Trivago ($99.9 million), Expedia.com ($52.7 million) and Hotels.com ($35.1 million), all Expedia Inc. brands, were the top three U.S. booking site TV advertisers in 2015 and the Priceline Group’s Booking.com ($32.8 million), Priceline.com ($28.1 million) and Kayak ($25.2 million) broke in as fourth, fifth and sixth, respectively.

Top Booking Sites in U.S. TV Advertising 2015

TripAdvisor, which has vowed to all but vanish from global TV advertising in 2016, was seventh ($20 million) and was in a virtual dead heat with Airbnb ($19.5 million) at eighth. Expedia brands Travelocity($17.9 million) and Hotwire ($12.7 million) rounded out the top 10 at ninth and 10th.

Orbitz, which was acquired by Expedia in September, didn’t do any TV advertising in the U.S. last year, and HomeAway which joined the family in December, likewise didn’t run any U.S. TV advertising, although it did in some international markets.

So far in 2016, according to iSpot.tv, Trivago and Expedia.com are leading the pack and spending close to the same levels. Rival Booking.com is barely getting involved so far, and Kayak, TripAdvisor (as expected), Airbnb and Hotwire have gone dark in this early stage in 2016.

Hotels.com, which has spent about $5 million so far in 2016 on TV, according to iSpot.tv, debuted a new spot, Captain Obvious Runs for President, on February 22 and spent an estimated $783,000 on it for 184 national airings in the first five days.

Priceline.com deliberately reduced its U.S. TV advertising spend in the second half of 2015 as it worked on repositioning the brand, and it launched a national TV campaign early in 2016, spending about $4.5 million to date.

While Expedia, which gets a little more than half its revenue from the U.S., dominated U.S. TV ad spending in 2015, on a global basis Expedia Inc.’s total selling and marketing expense in 2015 just edged out the Priceline Group’s, $3.38 billion versus $3.36 billion.

See the following chart:

Booking Sites’ 2015 Selling and Marketing Costs

Source: Q4 and full-year 2015 earnings reports

Part of the reason that Expedia’s total selling and marketing costs were higher than Priceline’s on a global basis in 2015 was that Priceline decreased its offline advertising 7.1 percent to $214.7 million as it ramped down its advertising spending for Priceline.com in the U.S. during the site’s revamp.

If iSpot.tv’s estimated $86.1 million in U.S. TV advertising spend in 2015 for the Priceline Group brands is correct, then the Priceline Group, which is larger outside the U.S. than is Expedia, spent some $128 million on TV and other offline advertising in marketside beyond U.S. borders.

Scale and Marketing Efficiency Begets Scale

While Priceline and Expedia spent themselves into a virtual dead heat in selling and marketing expense in 2015, Priceline did it more efficiently.

Priceline’s brands generated $2.74 in revenue per marketing dollar spent in 2015 while Expedia’s core online travel agency brands (excluding HomeAway, Trivago and Egencia) generated $1.79 of revenue per marketing dollar spent.

However, both Priceline ($2.91 of revenue per marketing dollar) and Expedia ($1.84 of revenue per marketing dollar) got less efficient at it in 2015 than they were in 2014.

Still, Priceline has the ongoing edge in marketing and advertising efficiencies, contributing to its maintaining a lead over its closest rival.

There indeed seems to be something to that “competitive moat” that Priceline’s CEO recently was talking up in the face of all of Expedia’s high-profile acquisitions.