PhoCusWright: Model Blur - media and retail. Big deal for the industry but less for consumers

Philip Wolf is giving his opening monologue at the Centre Stage part of the PhoCusWright conference in LA. The second storm in the "Perfect Storm" is the merging of models in Travel between the media model and the retail model. The media model being eyeball focused, content companies that generate money from advertisers (think TripAdvisor and Away in the travel space, Yahoo!, MSN and online newspapers in the more general media space). The retail model is based on transactions direct with consumers (surely you don't need me to give you examples).

As part of the Philip's perfect storm analogy, these two models are coming together. Expedia has started doing Google Ad words, Partner Marketing is exploding on OTAs (TripAdvisor, Away, IgoUgo and the OTA sites themselves), companies like Hotel.de allow select/preferred hotels to bid for higher spots in the search results with increased margins (much like Google Ad words itself).

This is a big deal for the industry. Retailers embracing the media business is a signifcant and substantive business transformation (and one that I have said has to be executed cautiously and consciously). In a later session Jake Fuller of Thomas Weisel Partners said that while he expected much less consolidation in 2009 compared to 2008, if it does come it will come in OTAs/retailers expanding their media businesses.

But I think this shift is less of a big deal from the consumer point of view. The consumer is coming to online travel retailers and media companies with the same question and desire. Whether they come to a retailer or a media company they are still asking "where should I go and where can I get a good deal?".

My view - focus on answering the consumer question rather wondering which business model we are in or should be in. Answer the consumer need first and let that drive the product and business model needs.