Thursday, November 20, 2008

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

Center Stage at The PhoCusWright Conference
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 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.

1 comment:

Jaime said...

Digital technology and addressable channels will (and have already started) to blur the lines between media and "non-media" businesses. The iPhone and other smartphones are becoming media themselves. It won't be long before we see an ExpediaTV channel on digital television where viewers will be able to interact with the image delivering device (be it a computer, HD television set or mobile) and book travel on the spot. US and Canadian broadcasters will be totally digital in the short term. All Digital channels will converge, the changes coming in the next little while will be massive and awesome (read DigiMarketing by Dr Ian Fenwick).

Cheers for the post Tim (when will u invite me to Australia, mate?)