March 13, 2013

Google benefits as Priceline outspends Expedia in advertising


Priceline.com has boosted annual ad spending to more than $1 billion for the first time, extending its lead over Expedia in the hotel-booking market and stepping up a rivalry that’s benefiting Google. OTAs place most of their ads on search sites, where consumers can quickly compare prices and complete a transaction in a matter of clicks.

Even as social-networking services Facebook and Twitter capture a widening share of the Web-advertising market, the top online travel agents still choose to place most of their ads on search sites, where consumers can quickly compare prices and complete a transaction in a matter of clicks.

“One of the secrets to Priceline’s success has been its ability to manage search campaigns,” Mark Mahaney, an analyst at RBC Capital Markets in San Francisco, said in an interview. “There is a major new marketing war going on between Priceline and Expedia, and Google is the beneficiary.”

Priceline, fueled by its Amsterdam-based Booking.com unit, has more than tripled spending on Internet advertising to $1.27 billion in the past three years. About 90 percent of that goes to Google, according to Mahaney. The surge in search spending coupled with rapid global expansion has helped Priceline grow faster than Expedia, which is racing to catch its larger rival.

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