|TRIVAGO N.V. filed this Form 6-K on 02/06/2019|
reduced brand marketing expenditure and increased return on investment targets for our performance marketing campaigns. Our returns on brand marketing spend and performance marketing spend improved substantially following the optimization of our Advertising Spend.
In the twelve months ended December 31, 2018, ROAS improved across all segments by 4.9 ppts, 12.5 ppts and 7.9 ppts in Americas, Developed Europe and RoW, respectively, compared to the same period in 2017. The increase was mainly driven by a substantial improvement in our return on brand marketing spend in the second half of 2018, and was partly offset by lower ROAS in the first quarter of 2018 when we lowered profitability targets on our Advertising Spend to support revenue levels.
Expenses (€ millions)
Note: Some figures may not add due to rounding.
Cost of revenue
Cost of revenue decreased by €0.6 million to €1.0 million, or 38% period-over-period in the fourth quarter of 2018, and by €0.5 million to €5.4 million, or 8% year-over-year for the twelve months ended December 31, 2018, compared to the same periods in 2017. The decrease in the fourth quarter of 2018 was primarily driven by an adjustment to the estimated useful life of some of our servers, and the decrease for the twelve months ended December 31, 2018 was primarily driven by lower data center and server depreciation expenses, compared to the same periods in 2017.
Selling and marketing
Selling and marketing expense was 70% and 88% of Total Revenue in the fourth quarter of 2018 and in the twelve months ended December 31, 2018, respectively, compared to 91% and 91% in the same periods in 2017.
In the fourth quarter of 2018, selling and marketing expense decreased by €49.1 million, or by 30%, period-over-period to €116.7 million, of which €99.9 million, or 86%, was Advertising Spend. The decrease was