Choosing the Right Brand Names Helps Priceline Shine

By Eric Novinson - February 28, 2012 | Tickers: EXPE, OWW, PCLN | 0 Comments

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Priceline (NASDAQ: PCLN) reported very strong financial performance on February 27, almost doubling its profit from the same quarter last year. For 4Q 2011, the company reported $226 million in income, which was much higher than the $135 million it earned in this quarter last year. One reason for this earnings growth may have been the company's effective use of search engine optimization to select domain names that were easy for bargain shoppers to find.

The British company TravelJigsaw created an original brand name to promote itself, which Priceline originally retained when it purchased the company in 2010. TravelJigsaw achieved great market penetration throughout the world, renting cars to travelers in more than 80 nations, but its name was not intuitive for people who were searching for rental cars. After Priceline placed TravelJigsaw operations under its American rentalcars.com brand in 2011, its international car rental outlets became much easier to find in search engines for travelers who were not familiar with the brand names of car rental outlets in other countries.

Priceline's own brand name combines search engine optimization strengths with a unique brand name. By adding the word price in its brand name, Priceline made itself more visible to any traveler who uses a search engine to find rental prices. At the same time, Priceline established its own brand, instead of using a more generic term to describe the company. Although rentalcars.com is a generic term, it is now part of the Priceline brand, so travelers can still become familiar with the company's core business.

Priceline pulled off another search engine optimization feat with Booking.com, which it created in 1996. Booking.com helps international travelers find low-priced hotel rooms, and Priceline announced that Booking.com also showed good results in 4Q 2011, improving its share of the international hotel market. As a company that relies heavily on international sales, it is even more important for Priceline to use names that are simple and obvious. A traveler from one country may not see ads that are meant for the audience of another nation, so the naming policy helps reduce Priceline's advertising costs.

Expedia (NASDAQ: EXPE) also demonstrated growth when it released its 4Q 2011 earnings results, although its profits did not climb as much as Priceline's did. In the last quarter of 2011, Expedia reported $787 million in revenue, an improvement over the $738 million it earned during the last quarter of 2010. Priceline actually brought in less revenue than Expedia in 4Q 2010, $731 million, which it improved to $991 million in 4Q 2011. Expedia's quarterly income increased from $60 million to $63 million, a slight improvement, but not nearly as dramatic as Priceline's announcement. Expedia owns one of the strongest search engine optimized brands, Hotels.com, and it also owns Carrentals.com, which is part of Hotwire. The company did recently spin off one of its brands,Tripadvisor.

Orbitz (NYSE: OWW), a smaller rival of Priceline and Expedia, lost $47 million in 4Q 2011, although this was less than the $78 million that it lost in 4Q 2010. The company also reported a $37 million loss for the full year of 2011. Although the company's 4Q 2011 revenue, $177 million, was lower than the $182 million it reported in 4Q 2010, Orbitz did improve its annual revenue from $757 million to $767 million. Orbitz does control some search engine friendly brands of its own, which include cheaptickets.com, ebookers.com, and hotelclub.com. Hotels.com and rentalcars.com are probably still better brands for search engine purposes, as a search engine user would not necessarily include the adjective cheap before tickets, or search for a hotel club instead of searching for a hotel.

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