ago’s profit drops after it opts-out of new Google Ad product

Trivago’s decision not to participate in Google’s new ads for property promotion has reportedly taken a significant toll on the company’s profits.

The revenue was down 14% on an annual basis to $137 millions in the second quarter 2023 due to a decline in organic traffic.

Expedia reported record revenue in the second quarter, with a 6% increase.

A data-driven decision. Trivago Chief Financial Officer Matthias Tillmann said that Trivago didn’t advertise with Google’s ad products because they are part of Google Hotel Ads, which have historically not performed well for the company. Skift. . This was a mistake the team soon regretted. He said:

• Tilman said that “we did not participate in the ad format before this roll-out and we lost traffic volume when it got more visibility at the expense of] conventional advert placements.”

Why we care. Brands should pay close attention to new advertising products, especially those launched by industry giants such as Google. They shouldn’t dismiss them so quickly. It may be better to test a product in a small scale if financial risk is an issue. Marketers should also monitor the performance of websites and campaigns. You should act quickly if you notice a decline in traffic.

Fall in advertising spend. Trivago announced in its Q2 results that the ad spending in the US was down by 10%, to $32.9 millions. Advertising in Europe was also 4% lower than the same period of 2022. A spokesperson for the company commented on the results:

• Our reliance on search engine, especially Google, that promotes their own products and services, directly competing with our accommodation search, may negatively impact us.
  
  “Business, financial performance and future prospects.”

What else has Trivago said about its Q2 results? Trivago published a statement on its website addressing its Q2 result. A spokesperson stated:

• We observed an increase in volatility of the results from our performance marketing campaigns. We experienced significant decreases in traffic volume and profit contribution as we continued to adhere to our Return on Advertising Spend (ROAS).
• Despite these headwinds we increased our brand marketing investment as planned. These expenditures may have had a negative effect on our profits in the second quarter 2023 but we think they will have long-term benefits on the direct traffic to our platform as well as our financial performance.

Deep dive. For more information, read the full Trivago Q2 Earnings Statement for 2023.

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