There will be many struggling companies that will be watching this Trivago experiment to go really big in brand advertising. Is a second time the charm?
Trivago built a global brand as a place to find hotel deals in the years leading up to its 2016 IPO based on a blitz of TV advertising. You couldn’t avoid the Trivago Guy on U.S. TV, and his male and female counterparts were equally ubiquitous in markets from Germany to Australia.
In fact, from 2015-2019, the Germany-based hotel price comparison company, majority owned by Expedia Group, spent an average of 82% — that’s not a typo — of its annual revenue on advertising, according to BTIG.
In the years since, Trivago has struggled. First, Booking.com, one of its two largest partners, dipped in and out of its levels of advertising spend on Trivago. Then Google’s own hotel metasearch product gained more prominence. And lately, some would argue, online travel agency advertisers lost some of their passion for metasearch.
As of this writing, Trivago’s shares were trading for barely more than $1 per share.
Earlier this week, Trivago announced a strategy change. While it downplayed TV advertising under former CEO Axel Hefer, who left the company in May, the new leadership plans on intensifying its brand advertising, including on TV, in a big way.
After a summer of testing, Trivago is planning a new brand advertising campaign by the end of the year. For now, it has said it won’t meet its previous profit targets. And it said changes would contribute to a return to double-digit revenue growth “in the medium term.”
Although Trivago would not characterize it in this way, the strategy seems like a Hail Mary pass. In other words, nothing else has worked in terms of leaning into performance marketing like Google AdWords or buying a company to emphasize weekend getaways. So the thinking might be: Let’s go big on TV again, what do we have to lose at this point?
“The Mr. Trivago spots, being presenter spots where somebody conveys a message very clearly, work for us very well,” CEO Johannes Thomas told Skift. “And it’s really an art to transmit our meta proposition. It’s not like buying a shoe, it’s about explaining what meta delivers you in terms of comparing prices, finding price disparities.”
Among other key points that Thomas made in the interview:
- Despite moves by parent company Expedia Group and big hotel chains like Marriott and IHG to push for a uniformity in hotel pricing online, otherwise known as rate parity, Thomas argued that there are more price discrepancies today than ever.
- He argued that metasearch, or price comparison shopping, is as relevant as ever because most travelers are price conscious.
- Thomas declined to comment on whether the new strategy amounts to a repudiation of his predecessor’s strategy, adding “I think we can be very strong in conveying the power we have and executing that very well over the next couple of years.”
- Asked about a potential merger with Tripadvisor, which likewise offers hotel price comparisons and has struggled, Thomas said, “There’s no active consideration of going down that route.”
- Google’s role in travel hasn’t fundamentally changed, and Trivago has an advantage in that Google doesn’t do brand advertising or talk directly to travelers in the way that Trivago plans to do, Thomas said.
In addition to the so-called “Mr. Trivago” spots, another concept that works well, Thomas said, is “split-screen” advertising at a hotel reception desk showing the cheaper price that someone paid for a room using Trivago versus the more expensive room rate that a guest sourced elsewhere.
Thomas said the new strategy would take a multiyear effort.
But does Trivago have that luxury?