Trivago, which is majority-owned by Expedia, along with 7 other companies wants Google to stop trying to collect on first quarter ad spending. These companies bought advertising, sold travel, but in many cases the trips didn’t happen – so they aren’t seeing revenue from those sales.
Skift‘s Dennis Schaal who my impression is always seems to write negative stories about Google and bolster Expedia, asks “If Google’s advertising partners had to hand out tons of refunds to consumers for coronavirus-tinged trips that never happened, shouldn’t Google, with its deep pockets, share in the pain?”
The answer here is simple: no. The company paid for the eyeballs, Google delivered the eyeballs.
- If Google was selling ads on an affiliate model where they shared in the sales from their ads, then their deal would likely include giving back commissions on trips that weren’t taken.
- But when travel companies bought ads on Google they were generally buying the ad and once the customer clicked Google had fulfilled its end of the bargain.
The eight companies would have generated about $80 million in advertising revenue for Google in the first quarter, Miele wrote.
However, since Google usually receives advertising payment monthly, it’s believed to be about $40 million in advertisement payments that are in question for March. That month would see the heaviest advertising of the first quarter as companies were poised to gear up for the suddenly disrupted summer travel season.
These companies are looking to the German government for bailouts, and want a bailout from Google as well because these companies would otherwise “be forced to use government loans to pay their debts.” German taxpayers would, in effect, be sending money to Google.
Oddly the argument seems to be Google should forego what it’s owed, rather than the German government should be skeptical of a bailout!
For its part, Google says they’re now offering a pay-per-stay advertising model where they take the risk that consumers complete bookings.
No doubt that the largest advertisers would be in a stronger position to negotiate on past-due receivables. With Expedia and Priceline spending over $5 billion a year combine with Google, you could imagine either of them being in a position, owing enough money to Google, that they might agree to settle the debt (or they might wind up in court). When you owe the bank $1 million you have a problem, but when you owe the bank $1 billion they have a problem.
By the way this isn’t the first time the Trivago Guy has found himself in trouble.