Google has a huge travel advertising business. If Google's advertising partners had to hand out tons of refunds to consumers for coronavirus-tinged trips that never happened, shouldn't Google, with its deep pockets, share in the pain?
Eight German travel startups, including GetYourGuide and Trivago, called on Google to cease its bill collection efforts for first quarter advertising services, and to share the burden of refunding consumers for trips and activities that never took place because of coronavirus lockdowns.
In other words, call off the bill collectors.
The demand took place in a letter sent Wednesday from German Startups Association President Christian Miele to Google Chief Business Officer Philipp Schindler, who’s based in California. [See the letter embedded below.]
The eight companies would have generated about $80 million in advertising revenue for Google in the first quarter, Miele wrote.
However, since Google usually receives advertising payment monthly, it’s believed to be about $40 million in advertisement payments that are in question for March. That month would see the heaviest advertising of the first quarter as companies were poised to gear up for the suddenly disrupted summer travel season.
These companies claimed in the letter to have handed out “no-questions-asked refunds” to customers for travel and tours that couldn’t be consumed because of coronavirus.
Bill Collection Just as Government Aid Pops In
The eight companies are all believed to be considering to apply for German government relief payments, which are geared to keep staff on the payroll and to assist in surviving until the pandemic is over.
So another demand in the letter is that Google pause payment collection efforts for companies that receive this taxpayer-funded assistance. The reasoning is that government aid might be received and would immediately be dedicated to paying Google instead of advancing the relief’s intended goals.
“Many businesses are now seeking government liquidity to remain solvent,” the German Startups Association letter stated. “Unless greater flexibility is exercised by Google, many of its advertising partners will be forced to use government loans to pay their debts. Badly-needed funding will flow into Google’s coffers on the backs of taxpayers in Germany and around the world.”
The group also wants to pressure Google to implement a uniform policy of giving refunds or credits to partners for advertising and other services provided in the first quarter instead of favoring this partner over another one, or disqualifying public companies or heavily funded startups from getting a break.
These German travel companies are undoubtably not the only travel companies in the world trying to renegotiate payment terms because of the coronavirus crisis. Behind the scenes, big partners are undoubtably discussing the matter with Google.
Google’s Advertising Biz Set for ‘Difficult’ Q2
In the first quarter, Google’s advertising revenue increased 10.38 percent year over year $33.76 billion, but it slowed considerably in March. Alphabet CEO CEO Sundar Pichai said Google’s advertising revenue would likely face a “difficult” second quarter.
Google’s travel advertising took a particularly hard hit in the first quarter, he said.
“With over $41 billion in Q1 2020 revenue, Google is the leading player in the global digital economy,” the letter stated. “As a consortium of businesses that contributes to the health and diversity of that economy, we call on Google to demonstrate the leadership and solidarity necessary to navigate us all through this challenging time.”
A Google spokesperson cited confidentiality as a reason not to discuss payment details concerning advertising partners.
“Our travel partners are facing unprecedented challenges and we’re working with partners to help protect their businesses, including helping them surface their cancellation policies in our travel search products and expanding our ‘pay per stay’ pilot earlier this month to all hotel ads partners globally to shift the cancellation risk from our partners to us,” a Google spokesperson said.
The pay per stay policy enables enables online travel agencies and hotels to bid in Google’s advertising auctions but only need to pay for the advertising when the hotel stay has occurred.
However, Google expanded that pilot in April. The eight startups are focused primarily on Google advertising bills for March before the pilot was expanded.
In a step to keep consumers more informed, in March Google expanded flight advisories to help consumers keep track of where they could fly as one means of reducing the need to cancel bookings.
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Photo Credit: A file photo of tourists gawking at the Karl Marx statue in Trier, Germany. German travel startups called on Google to cease trying to collect on first quarter advertising bills. Michael Probst / Associated Press