Brand Differentiation: Driving Marketing Effectiveness, According to On the Beach CEO
On the Beach CEO attributes improved marketing effectiveness to brand differentiation, resulting in reduced marketing spend from 45% to 38% of revenue The travel brand's strategic focus on offline channels and a unique brand image have maximized the impact of their investments
On the Beach has celebrated the effectiveness of its marketing expenditure, made possible by a progressively distinct brand and targeted offline investment in the first half of the year.
The travel company's marketing expenditure dropped as a proportion of its revenue in its most recent fiscal year, which ended on September 30, 2023. Its marketing budget accounted for 38% of its revenue, a decrease from 45% the previous year, and below the brand's historical investment rate of 40%.
On December 5th, On the Beach emphasized its marketing investment as a top priority in its full-year results. The company has increased the effectiveness of its spending in order to disrupt the traditional tour operator market. On the Beach is focusing on communicating its unique perks and app offerings, such as free fast-track and lounge access, to set itself apart from competitors. In 2023, the brand invested £5.1m in these perks.
CEO Shaun Morton informed investors today that having this differentiation enhances the efficacy of our marketing efforts, both offline and online. He emphasized that it provides us with the chance to discuss quality in a concrete manner, which in turn boosts our brand, expands our appeal, and attracts new customers.
The distinct brand not only increases rebooking rates but also enhances the likelihood of consumers recommending it to a friend. According to him, On the Beach now boasts an awareness level of 88% and its highest-ever top three consideration at 30%. Among consumers aware of the brand's perks, the figure is 44%. Additionally, customers with a perk are more likely to rebook, and among this group, the brand's net promoter score is +19%.
The brand reported that it improved its marketing spend over the past year by reallocating it toward offline channels. Overall marketing spend rose to £40.6m from £38.9m, with adjusted revenue increasing by 23%, resulting in a decrease in the budget as a percentage of revenue.
While online marketing costs decreased by 4% to £26m, offline marketing costs increased by 23% to £14.6m.
On the Beach experienced an increase in sales due to its biggest offline marketing campaign, 'The most wonderful time of the year.' The brand shifted its spending from online to offline and strategically invested in seasonal timing to maximize its impact. Additionally, it leveraged the halo effect created by its significant investment in 'The most wonderful time.'
"In the first half of the year, we focused on offline marketing to boost bookings during the peak period. As a result, we anticipate a decrease in offline spending in the second half, with a greater emphasis on online performance channels. This shift aligns with our expectations and has proven successful," stated Jon Wormald, the company's chief financial officer. Looking ahead, the company foresees a similar pattern of marketing spending in the current financial year, which will conclude in September 2024."
