Priceline Launches New Ad Campaign Down Under For Booking.com

by Trefis Team
-46.85%
Downside
1208
Market
642
Trefis
PCLN
Priceline
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Last Monday Priceline (NASDAQ:PCLN) launched a major branding campaign on multiple platforms, including online, TV networks and cinemas for its Booking.com website in Australia. The campaign, which is called Booking.yeah, was first launched in the U.S. in January 2013 and helped Priceline attract travelers to the website. Australia is the first market outside the U.S. where the campaign has been rolled out.

The Booking.com website gets about 5.3 million monthly visits in Australia. Hitwise, a firm that provides insights based on measurements of website traffic, recently rated Booking.com as Australia’s biggest and fastest growing online travel agency (OTA). However, a majority of Australians have not yet tried the Booking.com website, and it is through this campaign that Priceline aims to attract Australians and get them to try the website. [1]

What Does Australia Have In Store For Priceline?

Australia/New Zealand’s $35 billion travel market presents immense growth potential for OTAs. With close to 40% of total travel sales generated through online channels, the region has one of the highest online penetration rates in Asia-Pacific and globally. Leading market research firm eMarketer forecasts online travel sales in the region to continue growing at a healthy 7.4% CAGR during 2011-2016.

Additionally, the smartphone and tablet adoption is growing rapidly in Australia/New Zealand. There is also a considerable overlap among travelers and mobile device owners in the region that leaves scope for OTAs such as Priceline to tap into the mobile channel to increase their mobile bookings. ((Opportunity knocks Down Under – travel agents eyeing social media and mobile, Tnooz, June 2013))

Potential Drawbacks For Priceline’s Australian Ad Campaign

1. High Investment To Make Campaign Effective: One major drawback for Priceline’s new advertising campaign is the relatively high ad spending per person ($535) in Australia. The U.S. and Norway are the only two countries globally that have higher ad spending per person than Australia. [2] This means that Priceline might have to spend more money on advertising to compete with other advertisers and reach customers effectively.

2. Cannibalization of Agoda’s Market Share: According to Hitwise, Priceline’s Booking.com and Agoda.com are among the top 10 travel destination and accommodation websites in Australia. [3] While the new ad campaign for Booking.com will help Priceline increase awareness about the brand, it could also lead to cannibalization of Agoda’s market share in Australia as travelers could merely switch from Agoda.com to Booking.com.

See Our Complete Analysis For Priceline

Our price estimate of $642 for Priceline is at a discount of about 35% to the current market price.

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Notes:
  1. Booking.Com Launches First-Ever Australian Brand Campaign, Priceline Investor Relations, September 2013 []
  2. Regional Economic Woes Drag Down Worldwide Total Media Ad Spend Growth, eMarketer, July 2013 []
  3. HotelsCombined enjoys sudden, under-the-radar growth, Tnooz, August 2013 []
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