Google is eating the world. When metasearch sites such as Trivago see a strategic benefit in increasing their advertising in Google metasearch, it's not only enough to make your head spin, but it's ominous from a competitive standpoint, as well.
Anyone unconvinced about Google’s already huge but ever-increasing foothold in the travel industry should listen to Trivago executives talking about their Google strategy.
Officials from the Dusseldorf-headquartered lodging-metasearch site said in the first quarter Trivago greatly increased its participation in Google Hotels to 50 global markets, and they’re not done yet.
Buying Google Hotel Ads, which places an advertiser’s hotel rates in Google Search, Maps, and Google Assistant, gives Trivago higher visibility around the world, Chief Financial Officer Axel Hefer told analysts Wednesday during Trivago’s first quarter earnings call. Although Trivago’s rates are present in Google Hotels in 50 markets, Trivago has yet to put all of its properties in there, and the company intends to make its presence even higher-profile in Google throughout 2019.
CEO Rolf Schrömgens added that Trivago feels it is under-invested in Google Hotels and “will be able to have a catch-up over this year.”
Google Meta to Trivago Meta to Third Site to Book
To be clear, up until around two years ago, Google Hotels didn’t allow metasearch advertisers like Trivago to participate in Google’s own comparison shopping service unless the advertiser processed hotel bookings on its own site. You’d see an occasional advertisement from TripAdvisor or Kayak in Google Hotels at that time because those companies were taking hotel bookings on their own sites.
However, today Google Hotels permits metasearch advertisers such as Trivago to participate. What this means is that a consumer looking for a hotel in Dusseldorf in Google search or Google Maps might click on a Trivago $154 per-night rate for the Living Hotel De Medici by Derag, navigate to Trivago’s site or app, click on a rate there from Hotels.com or Booking.com, and then visit one of their sites to actually book the room.
And when Trivago advertises in Google Hotels, Trivago competes for clicks against its own largest advertisers, Booking Holdings and Trivago parent Expedia Group.
It’s enough to make your head spin, and it all doesn’t make for an optimal user experience, either.
Flexibility Because of Profitable 2019 Start
Trivago officials said the company has the flexibility to increase its advertising spend and test new channels in 2019 because the year started off so well. In the first quarter, Trivago notched net income of $8.76 million (7.8 million euros) compared with the largest loss in the company’s history, around $24.5 million (21.8 million euros) a year earlier.
First quarter revenue fell 20 percent to $234.4 million (208.8 million euros) as Trivago reduced its advertising spend to emphasize profitability.
Hefer said the company is having success testing two new types of TV ads in addition to its traditional Trivago Guy or Trivago Woman in a studio setting. One new type of spot has the actor in a “a real-world non-studio situation that people can relate to very easily that has some anchoring with our very known spokesperson,” he said.
A third TV ad concept has the Trivago actor-spokesperson narrating “a real-living situation,” Hefer said. In this latter concept, the spokesperson does not appear in the ad but merely narrates it.
The advantage to the narration, he said, is “that it can be translated into other markets much more quickly and much cheaper, which means that you can produce a lot more of these spots for the same budget. And we see positive results of all three.”
Making Nice With Advertisers
Trivago has had some testy relations with some of its largest advertisers, including Booking Holdings, in the past year when Trivago made site changes and Booking Holdings reduced its advertising commitment. In the first quarter, Booking Holdings reduced its advertising spend in Trivago as a percentage of overall revenue one percentage point to 37 percent compared to the first quarter of 2018.
Hefer said Trivago conducted a summit with its core advertisers during the first quarter in Dusseldorf, where they met with the executive team and market managers and could work on strategic programs.
“We truly believe that at the end, the maximum value is created if we create a perfect handover between our side and the advertiser side in the moment where we improve and where we optimize the funnel as a whole and not only one or the other side,” Schrömgens said. “That was always our philosophy. And nowadays, we invest even more to go into conversations with them and to create at a local optimum on each side, but a global optimum together.”
Schrömgens characterized Trivago’s advertiser market as “stable.”
One thing that could potentially give Trivago’s advertisers pause, however, is the company is trying to keep users more highly engaged and longer on Trivago.com for user retention and loyalty purposes to the detriment of clicks to advertisers’ sites, officials said. One way the company is doing that is by providing more information, such as the total cost of the stay versus merely the nightly rate on Trivago.com to increase such engagement.
Going Big in Alternative Accommodations
Trivago added 300,000 alternative accommodations to its platform in the first quarter, bringing the total to 1.8 million. It plans on increasing that roster, and to present these properties in a single display to consumers alongside traditional hotels.
Adding alternative accommodations — a process that will continue, officials said — will improve Trivago’s site because its offerings will be more comprehensive, providing more consumer choice, and will help expand its coverage in so-called “long-tail” destinations, where lodging choices are more limited than in popular tourism spots.
So if you didn’t believe the convergence of hotels and alternative accommodations was a thing, you should now have no doubt.
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Photo credit: Trivago is experimenting with new TV ad concepts, including having its actor spokespeople merely narrate spots instead of appearing in them. Trivago