732: A Walk on the Creative Side | Matthias Tillmann, CFO, Trivago

Published: Sept. 8, 2021, 11 a.m.

It was little more than 6 months after Matthias Tillmann first joined Trivago\u2014and shortly after the travel booking company\u2019s December 2016 IPO\u2014when the company\u2019s future CFO decided to step away from his senior IR role in order to head up Trivago\u2019s creative production function.

However, the jump to the creative side was not triggered by a sudden creative itch on Tillmann\u2019s part. Instead, he was determined to extract new ROI insights from Trivago\u2019s television advertising dollars, the very allocation that the online travel platform is credited with having converted into a groundbreaking strategic advantage.

\u201cI started to develop my own hypotheses but was unable to test them,\u201d reports Tillmann, recalling his frustration when it came to extracting greater ROI from Trivago\u2019s annual TV budget, which by 2019 had grown to more than $600 million, or roughly 70 percent of the company\u2019s annual revenue.

\u201cIn finance, you see numbers, but if you really understand the decision-making processes behind them, this changes how you identify opportunities and look at risk,\u201d explains Tillmann, who today credits his tour of duty on the creative side with having bestowed upon him detailed knowledge about marketing decision-making.

When COVID arrived, Tillmann notes, this knowledge allowed him to confidently respond to the crisis and take steps that would quickly modify the company\u2019s brand marketing strategy, thereby saving the firm millions of dollars.

Still, the lingering pandemic has continued to stress test a number of Trivago\u2019s market assumptions.\xa0\xa0\xa0

Says Tillmann: \u201cPre-COVID, we had a very good idea with regard to how many people were out there and how many were willing to travel, and we knew how much to spend on TV\u2014but this has now all changed.\u201d

In certain markets, Tillmann observes, roughly 50 percent of the traveling public may still not be willing to travel just yet.

\u201cFor a mass channel like TV, this means that the channel is only half as efficient as it used to be,\u201d comments Tillmann, who adds that the current environment has led Trivago to keep a steady eye on the size of each market and its accompanying pool of potential travelers.\xa0

\u201cWe began looking at what ratio we needed to hit in order to make our economics work on TV,\u201d continues Tillmann, who says that the travel platform has recently turned to alternative channels such as online video when the economics for TV haven\u2019t panned out.\xa0

Tillmann explains: \u201cOn YouTube, you can target certain audiences. For example, 25- to 30-year-olds may be more willing to travel at the moment, and that channel allows you to target certain groups much more specifically.\u201d\xa0

As for whether the TV-driven brand is opening a new brand marketing chapter, Trivago\u2019s CFO says, \u201cThe way we do brand marketing now is much more granular. This is the way that it has to be, as we pay more attention to how the markets develop.\u201d \xad\u2013Jack Sweeney

CFOTL:\xa0Tell us about Trivago. What sets this company apart today?

Tillmann:\xa0Yes, sure. This is a topic that I love to talk about. I love travel. We started as kind of a Wikipedia for travel 16 years ago and then only focused on hotel price comparison. The core value proposition is still our hotel metasearch, which is based on a cost-per-click model. We have over 5 million properties through more than 200 booking sites on our platform. It\u2019s a classic marketplace, where travel agencies, hotel chains, and independent hotels bid in our auction and essentially buy refers from us. This is how we make most of our revenue. I would say that we were very early in the game and one of the first focusing on hotels only.

In 2008, the founders made the decision to diversify their acquisition channels by building their brand through TV advertisements at a time when most bookings were still happening offline. With this strategy, we became an...