- Office coworking company WeWork filed on Wednesday its paperwork for an initial public offering.
- WeWork’s path to an IPO has come at a cost. It has considerably increased spending on sales and marketing over the past two years.
- WeWork spent $378.7 million on sales and marketing in 2018, up 164% year-over-year.
- WeWork has been spending heavily in marketing as it tries to fend off competition from numerous rivals taking an aim at the coworking business.
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On Wednesday, office coworking company WeWork filed its paperwork for an initial public offering, in what is likely to be one of the most highly anticipated — and scrutinized — market debuts of the year.
But its path to an IPO has come at a price.
WeWork parent company The We Company’s filing with the Securities and Exchange Commission revealed billions in losses, a sprawling collection of leases, and growing revenue — as well as burgeoning advertising expenses.
WeWork has steadily pumped more money into advertising
WeWork spent $378.7 million on sales and marketing in 2018, the company reported in its filing. While this is small compared to other companies that have gone public recently like ride-hailing startup Uber, which shelled out $3.2 billion, it is a whopping 164% more than what WeWork spent in 2017.
In fact, sales and marketing spending has increased as a share of WeWork’s revenue, the company stated in the filing. In 2018, sales and marketing accounted for 21% of revenue, from 16% the year before.
113 mentions of marketing in the filing.#marketingmatters
(…though they are spending a lot.) https://t.co/fF1Qmw06Nt
— Michael Duda (@MikeDuda) August 14, 2019
Where the advertising money is going
As it gears up for an IPO, WeWork has significantly ramped up its advertising spending across various channels.
The company worked with former Airbnb marketing exec Jonathan Mildenhall’s new branding firm TwentyFirstCenturyBrand, and also rolled out its first-ever brand campaign last summer as it sought to fend off competition from numerous rivals trying to carve a piece out of the coworking business.
The campaign, created by its internal shop Creative Studio, consisted of a series of digital spots that tout its office spaces as spacious and accommodating.
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The 30-second spots were also circulated in shorter 15- and 6-second versions, as well as in the form of GIFs and static images across Facebook, Instagram, LinkedIn, and YouTube.
— WeWork (@WeWork) May 2, 2018
Facebook, in fact, has a case study from WeWork on its website, where it shows how WeWork’s video ads on Facebook and Instagram boosted online conversions and achieved an 88% reduction in cost per desk sold at its locations.
Among the other expenses was a flashy contest series that the company hosts, which has invited some scrutiny, according to Fortune, as it costs more than $40 million.