Published: Monday, 06 September 2021 17:06
Like any online travel agency, eDreams Odigeo spends plenty on marketing to obtain new customers, but is currently spending next to nothing outside its own channels on getting travelers to sign up for its “Prime” subscriptions. No YouTube or banner ads, but this could change soon. — Dennis Schaal
If you build it they will come, or in the case of Spain’s eDreams Odigeo, if you entice travelers to visit your websites then they’ll sign up for the company’s Prime subscription program.
In a somewhat stunning statement, eDreams Odigeo CEO Dana Philip Dunne told analysts during the company’s fiscal first quarter earnings call that the online travel agency does no specific paid marketing to convince travelers to sign up for its subscription program, which is seeing its membership booming.
“When I think about customer acquisition in this context, we don’t do any Prime-specific customer acquisition,” Dunne said September 1. “So let me just give you some examples. You could see a YouTube ad that talks about Prime and people click on the ad and they come to us. We don’t do that. You could see banners, right, on different websites as you go around or even on mobile as you’re reading a news article and you could see embedded in that an advert about Prime. We don’t do that.”
He added that eDreams Odigeo, which is the second largest online travel agency flight-retailer in the world by revenue and the largest in Europe, doesn’t do Prime-specific paid marketing.
To be sure, eDreams Odigeo, which trades on the Spanish stock market and has five online travel agency and metasearch brands, spends considerable amounts on paid marketing to acquire customers, but next to nothing outside its own websites to attract Prime signups.
Instead, eDreams Odigeo gets Prime signups once website visitors arrive with promises of “exclusive prime benefits,” including discounts on every flight and pledges of better customer service than for non-members.
EDreams Odigeo charges travelers 55 euros (about $65) to join Prime, which saw its ranks climb by 500,000 members to some 1.26 million during the quarter. As of August, the subscriber roster grew to 1.5 million.
To be sure, eDreams Odigeo does plenty of paid marketing to obtain new customers, who may just book a flight or hotel on its websites and may not ever sign up for Prime. And once travelers do sign up for Prime, the company engages in paid marketing to encourage repeat bookings.
In the quarter that ended in June, the company’s marketing costs rose 288 percent compared to the year ago period based on tapping into pent-up demand, but the marketing costs were still 39 percent lower than during the pre-Covid quarter that ended June 30 2019.
“The marketing costs for repeat Prime bookings are much lower than the marketing costs for the transactional customer and the marketing costs of a first-time Prime customer because the first-time Prime customer has come to our websites normally through the same proportion of channels paid and non-paid than the transactional customer,” said chief financial officer David Elizaga Corrales.
The company’s approach to getting Prime sign-ups could be changing, however. Dunne said in the fall the company will begin testing paid marketing to obtain Prime subscriptions, but the amount it will spend initially will not impact its financial results materially.
Meanwhile, Tripadvisor, which debuted its own subscription plan, Tripadvisor Plus, earlier this year, intends to engage in both digital and offline marketing to obtain subscription sign-ups as the travel industry recovers.
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