|TRIVAGO N.V. filed this Form 20-F on 03/06/2018|
To grow brand awareness and increase the likelihood that users will visit our websites and apps, we invest in brand marketing globally across a broad range of media channels, including TV marketing, video marketing (such as YouTube) and out-of-home advertising.
The amount and nature of our marketing spend varies across our markets, depending on multiple factors, including cost efficiency, local media dynamics, the size of the market and our existing brand presence in that market.
We also generate hotel content as a means of engaging with travelers, which is distributed online including via social media. Mobile app marketing is becoming increasingly important with the continuous shift from desktop to mobile.
We market our services and directly acquire traffic to our websites by purchasing travel and hotel-related keywords from general search engines and through advertisements on other online marketing channels. These activities include advertisements through search engines, such as Baidu, Bing, Google and Yahoo! (commonly referred to as Search Engine Marketing or SEM), as well as through display advertising campaigns on advertising networks, affiliate websites and social networking sites (commonly referred to as Display, Email and Affiliate Advertising or DEA).
Allocation of marketing spend
We take a data-driven, testing-based approach to making decisions about allocating marketing spend, where we use tools, processes and algorithms, many of which are proprietary, to measure and optimize performance end-to-end, starting with the pretesting of the creative concept and ending with the optimization of media spend.
In 2017, we started the implementation of our new model for allocating our marketing spend, which we refer to as our attribution model, with the aim of optimizing our investment mix going forward by focusing less on revenue generated in each user session and more on the end-to-end booking value of the user that we generate through our platform. The new attribution model focuses on whether a user who comes to us from a performance marketing channel proceeds to book a hotel, and reflects changes in how we determine whether revenue originated from a given marketing channel (or how revenue is “attributed” to that channel in our internal metrics), and informs decisions we make about how much we spend on each marketing channel.
In the third quarter, we completed the roll-out of this new attribution model in our DEA channel, after which we started to implement the new attribution model in our SEM channel. Following the roll-out of the new attribution model in our DEA channel in the third quarter, we experienced higher volatility and a slowdown in Qualified Referral growth compared to prior periods. We expect similar effects in the near-term resulting from the implementation of the new model in our SEM channel, but we believe this change will improve traffic quality in terms of booking conversion, which will have a long-term positive impact on advertisers' CPC bids and Revenue per Qualified Referral, or RPQR. For more information on Qualified Referrals and RPQR, see "Item 5 Operating and financial review and prospects—Operating result—Key factors affecting our financial condition and results of operations."
Our advertiser relations team seeks to provide tailored advice to each of our existing and prospective OTA, hotel chain and independent hotel advertisers. We have dedicated sales teams that manage the process of onboarding advertisers, maintain ongoing relationships with advertisers, work with advertisers to ensure they are optimizing their outcomes from the trivago platform and provide guidance on additional tools and features that could further enhance advertisers’ experience.