Why Trivago’s IPO might be undervaluedNewsBy Viewpoints | December 18, 2016Share This article was originally published on Last week Trivago filed for IPO. Leading up to that, a lot of details on its performance was made public, and people in the financial and travel industries scrutinized that information to gauge the company's value.NB: This is a guest viewpoint by William Beckler, CTO of AllTheRooms.Some travel branding experts took public swipes at Trivago’s brand strength figures, which might have contributed to a lower-than-expected share price of $11 versus the $13-$15 target -- though the price of TRVG rose about 7 percent on Friday.The key figures in question, Trivago’s "aided awareness data", showed surprisingly high awareness of the Trivago brand in the U.S. (63%) and even higher in Europe (79%-92%), their home territory.As others have pointed out, these figures appeared to contradict publicly available Google Trends data that appear to show Trivago trailing well behind brands like Expedia, Kayak and TripAdvisor, despite Trivago’s brand awareness data that puts them all about even.One swipe against Trivago is that their aided awareness stats are not well defined.However, aided brand awareness is not a hard statistic to understand and it is widely used; it is determined by a written or telephone survey in which people are asked the question whether they have heard of a given travel brand. They are not being asked to name travel brands they have heard of.A company that is spending a hundred million dollars a year on TV advertising, is not going to monkey around with this kind of data; it’s most likely one of their key metrics.In fact, their data makes complete sense and agrees with the Google Trends data.Google Trends data is incredibly useful marketing data and we as marketers and travel experts use it all the time for a variety of strategic purposes. However, it is measuring something completely different.Google Trends measures brand navigation, which is only a small part of how people click around on the internet. A massive number of people find sites like Booking.com and Trivago by searching, or by seeing them, on other metasearch sites or on travel marketing sites.When you have a strong aided brand awareness, you see it in your click-through rates in every pay-per-click channel you’re working in.Those click-through rates often grant lower cost-per-clicks for the same amount of traffic that your competitors, who have less brand recognition, are paying.This is because most pay-per-click channels, especially Google, reward advertisers who have good aided brand awareness.This means that you can make money off of TV commercials even if people don’t recall your name when they sit down at a computer to start their travel research ... because they will recognize your name when they see it come up among a list of options later on in the travel research funnel.What about Trivago’s relatively weak brand navigation in the Google Trends stats versus Kayak and Expedia?Trivago might seem like a minor player; but in reality, it’s important to understand how much traffic Kayak and Expedia get for flights, even though they both make most of their money on hotels.People fly more frequently than they book hotel trips. The number of people who are typing in Expedia or Kayak for a hotel could be 20% or less of the people who navigate to those brands’ sites. This low-profitability flight-related traffic makes it impossible to compare Kayak with Trivago on an overall traffic level.Circling back to their pre-IPO and valuation: their unaided brand awareness is, in fact, already pretty massive, both in the U.S. and globally. On top of that, like Booking.com, Trivago could be killing it without ever showing up on Google Trends because of their savvy efforts in pay-per-click advertising.Imagine if Booking.com were judged entirely on brand recall and Google Trends data. If Trivago’s weak IPO showing was influenced by these misunderstood statistics, it’s a good buy.NB: This is a guest viewpoint by William Beckler, CTO of AllTheRooms.