Trivago Demands Higher Compensation From Smaller Advertisers

Destinia, a Spain-based online travel agency, recently announced it would no longer use Trivago to attract bookings because the German metasearch company was demanding higher compensation from advertisers.

In an interview Wednesday following a third-quarter earnings call with analysts, Trivago CEO Johannes Thomas told Skift it had not been diligent enough in not “giving business and bookings” to advertisers that generated very low monetization.

“Over the course of the years, we have not been watching close enough how much we are getting from an advertiser,” Thomas said. “We have corrected that. We are demanding minimum monetization expectations in our marketplace.”

The policy change occurred in the past couple of months.

Thomas wouldn’t comment on specific advertisers, but acknowledged that larger advertisers — such as Booking Holdings or Expedia Group — wouldn’t fall into this grouping.

Asked whether the changes would have a material impact on Trivago’s financials, Thomas said: “We are in the process of it, and we will figure out in the course of the quarter how much impact that will have.”

Destinia CEO Ricardo Fernández said Trivago was demanding an 8-9% commission per booking while previously Destinia was paying Trivago around 4%, according to a published report.

Larger advertisers like Booking and Expedia could benefit from the move if smaller players stop working with Trivago.

Trivago saw a revenue decline in the third quarter, down 7% to $156 million (146 million euros). That was the sixth consecutive quarter of revenue decreases as Trivago continues to grapple with Google advertising format changes and “OTAs tilting away from the meta channel,” according to BTIG research.

Trivago aims to break even in adjusted EBITDA and achieve top-line growth in 2024.

Turnaround More Difficult Than Expected?

Thomas left Trivago as managing director in 2020, and returned as CEO in May 2023 to attempt a company turnaround. Asked whether the task is more difficult than imagined, he said: “I think what made it much tougher were the headwinds from Google, the changes we experienced from the ad formats. These were headwinds we did not anticipate.”

On the other hand, Thomas said his team anticipated the challenges of a company that struggled during the pandemic. “From a cultural and momentum perspective, turning it into a company that had confidence to execute, to take risks, to try and learn. I think that was an anticipated challenge, and that turned out as expected.”

Brand Partnership With Jürgen Klopp

In other news, Trivago announced that former German football executive and player Jürgen Klopp would become Trivago’s brand ambassador. He will appear in spots in English starting in December.

Trivago will use AI to localize these spots into different languages. The ads will run first in the U.S. and UK, and then in European markets.

Adverse Impact From the News Cycle

Trivago, which does brand advertising on TV and other outlets, saw a dip in demand tied to the U.S. elections and sporting events in the third quarter, Thomas said. It reduced its brand marketing spend in the Americas because of these events.

Because of the elections “people watched news instead of the normal programming. At the same time, you had a lot of sports events like the Olympics, the Euro Cup, Copa Americana, and these events also shifted viewership from normal programs into sports program. And in that moment in the Americas, we have seen demand a bit softer.”