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In a Trivago strategy pivot, expect to see more Trivago actors on TV and video, but much less advertising in search engines such as Google.
These are among the strategy shifts that the hotel metasearch platform announced Monday in a shareholder letter while taking some $226 million (207 million euros) in impairment charges tied to the Covid-19 pandemic. Trivago notched a net loss in the first quarter of $233 million (214 million euros), compared with $8.5 million in net income in the year-earlier period.
Trivago felt the brunt of the adverse impact from coronavirus in late March; referral revenue from its advertising customers plummeted 95 percent in the last week of the month.
About half of Trivago’s impairments were tied to its operations in the Americas, nearly 40 percent for its Rest of World segment, including Australia, Japan, India, New Zealand, Russia and Turkey, and only a little more than 8 percent from Europe. Trivago is headquartered in Germany.
Trivago’s evolving strategy is to change its product to emphasize spontaneous getaways to nearby locations, rather than longer, meticulously planned vacations, and to “increase our retention and reduce our marketing intensity in the future.”
In some respects, Trivago’s new plan has parallels to a new strategy that rival Tripadvisor hinted at last week when CEO Steve Kaufer said his company would sacrifice unique visitors in exchange for more engaged, returning customers. He didn’t say how precisely that would be accomplished.
Trivago, which came onto the scene on the back of strong TV advertising with performance marketing playing a lesser role, but eased off on the overweight toward TV commercials, detailed Monday that it will now revert to “a strong focus on branded marketing communication, our major strength and a key differentiator of our brand.”
Other Big Changes
Without providing many specifics, Trivago said it is assessing ways to let business customers advertise on the platform in a less risky manner because of the threat of cancellations, and it also intends to add more sponsored listings and display advertisements.
Booking Holdings’ brands, such as Booking.com, Agoda and Priceline, accounted for 38 percent of Trivago’s revenue in the first quarter, which ended March 31. Brands tied to Expedia Group, which controls Trivago and will report earnings Wednesday, contributed 33 percent of Trivago’s revenue.