This relatively small deal tells a larger story about the structural reasons why hotels have been behind the curve in digital marketing relative to retail and other sectors.
Koddi, a bid automation platform mostly in travel metasearch that’s based in Dallas-Fort Worth, has acquired the travel performance-marketing business of Criteo, a publicly held French digital advertising company that delivers online ads for brands.
After this acquisition, Koddi argues it will be more easily able to drive traffic to its clients via HookLogic’s channels and to get closer insights into ad performance at the property level.
The companies did not disclose the terms of the deal.
HookLogic has primarily helped retailers buy sponsored listings for consumer products such as shoes, smartphones, and bags, across its network of retail commerce sites and apps. It had raised around $40 million in venture funding from firms like Bain Capital Ventures.
Criteo is only passing to Koddi its non-core hotel-focused services and employees. Criteo retains HookLogic’s retail-focused business.
Separately Criteo has a large retargeting business, including for travel brands like Expedia, that it will also retain.
Criteo’s HookLogic travel practice had 27 employees in support, sales, engineering, and other positions. In the next few months, those will move across town to new offices in Ann Arbor, Michigan, and join Koddi 35 employees in Texas, New York, and Germany.
Nicholas Ward, co-founder and president of Koddi, said both HookLogic and his own business are profitable. Koddi has not taken external funding.
Odd Move for a Public Company
Public companies rarely sell assets to small private companies. Experts cite a couple of possible reasons for this deal.
First, Criteo has been religious about being after the next billion-dollar platform play in e-commerce, observers said. That means that opportunities that may be viable and presumably profitable but that don’t notch 10-figures on the balance sheet, such as HookLogic’s travel practice, may get severe scrutiny.
Second, Criteo believes retail-based ad products are more scalable because consolidation in online travel prevents it from knitting together a comparable network of e-commerce sites to place ads on.
Why Hoteliers Are Behind
The concentration of power in a handful of players like Expedia Inc., Priceline Group, and Google, isn’t the only factor that has made it challenging for big companies like Criteo to build advertising solutions at scale. The complex ownership structure of hotels is another reason.
When you look at U.S.-based hotels, the large chains tend to use asset-light models, such as through franchising. That creates a disconnect in goals and incentives between the owners of the national brands and the independent entrepreneurs or ownership groups at the property level.
Koddi’s clients have tended to be the corporate brands. The brands are focused on generating demand for rooms cost-effectively at an corporate level.
The HookLogic team has focused on serving owners at the property level. The owners are focused on goals of filling vacant rooms, setting rates to gain local market share, and managing the trade-offs of advertising on third-party channels against driving direct bookings.
HookLogic has focused on serving a few thousand direct owner clients. The hotels use it to drive demand for specific properties via sponsored listings in the search results of Expedia and other channels.
Over at Koddi, chains representing more than 215,000 hotels have been using its platform mainly to place ads in travel metasearch — primarily Google Hotels, but also Kayak, TripAdvisor, and Trivago. Koddi has been increasingly helping brands make the most of paid placements through Dynamic Ads for Travel on Facebook.
Koddi also tries to help brands market rooms at thousands of hotels in campaigns via online travel agencies.
After this acquisition, Koddi will be able to drive traffic to its clients via HookLogic’s network, and to get enhanced insights into ad performance at the property level.
Given this ad tech activity, hotels may finally get comparable scalable tools for marketing on e-commerce platforms to what other sectors have had for years.
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Photo credit: Some of Koddi's employees at its Dallas-Fort Worth, Texas, headquarters. It also has offices in Dusseldorf, New York, and Ann Arbor, Michigan. Koddi