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Trivago Pulls Marketing Investments out of Latin America After Brand Campaign Letdown

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Skift Take

Less localization is the tradeoff that Trivago is seemingly willing to live with as it uses AI to avoid having to pay TV pitch people in each of its markets.

Trivago’s first AI-infused TV ad didn’t play well in Latin America so the Germany-based hotel price comparison site curtailed marketing investments in the region.

That’s the word from Trivago CEO Johannes Thomas, who told Skift Wednesday: “We are also well-known in Latin America but we decided to pull out investment in Latin America” to put more resources into “Developed Europe,” North America and its “Rest of the World” segments.

Trivago’s Latin America markets include Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru, and Uruguay. While users in those countries can still use Trivago to search for hotels, the company isn’t pouring advertising money into them — for now.

In a statement after the interview, Thomas said: “We have not exited the Latam markets, they remain important to us, and we have a very well known brand in all key markets. We run tests and adjust our efforts as we go. We have shifted brand budgets to markets with higher brand marketing elasticity, resulting in more growth with better efficiency. This shows the strength of our team and illustrates our ability to continuously optimize our investments.”

Brand Marketing Strategy Is Key Considering Google Headwinds

Trivago released its first-quarter earnings Tuesday afternoon and conducted an analyst call Wednesday.

As part of the announcement, Trivago stated it saw traffic from its branded marketing campaign, launched in December, grow significantly in Developed Europe, Rest of the World and North America, but Latin America didn’t keep pace.

The brand campaign is key because Trivago is getting subpar results using performance marketing in Google because of changes to ad formats Google has made since last year and because of reforms mandated by the European Union’s Digital Markets Act.

In the Skift interview, Thomas said Trivago traditionally got a lot of its traffic from text ads in Google, but Google has given this type of advertising less visibility.

Under Thomas’ leadership beginning last year, Trivago has returned to emphasizing TV commercials over advertising through Google.

“I think the most important things, we wanted to validate our brand hypothesis,” Thomas said. “We are on track. And we’re pretty excited. We are not excited about Google. And I think it’s an even bigger reason to double down on brand. And that’s what we will do in the next quarters.”

The Financials

In the first quarter, Trivago saw revenue decline 9% year over year to 101.4 million euros ($108.2 million) as performance marketing competition became more intense. The company recorded a net loss in the first quarter of 8.2 million euros ($8.74 million) compared with net income of 9.9 million euros ($10.56 million) a year earlier because of increased sales and marketing costs.

Trivago forecasts EBITDA break even for 2024 as it continues to develop brand marketing campaigns.

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