Drew Patterson Interview - Jetsetter CEO talks to the BOOT

I have re-read the Tnooz predictions for 2010 to confirm but as best I can tell none of the online travel punderati mentioned online private sale companies in their predictions for 'what's hot 2010'. But if the buzz around Jetsetter, Voyage Prive, Kayak Private Sale and more is anything to go by then clearly we should have. After I wrote a post on Tnooz called "Non-transactional travel sites are chasing the online agents on unique product hunting" I decided to do some more investigating into this area. From that I had a chance to talk last week with Jetsetter CEO and ex-Kayaker Drew Patterson.

As a reminder, Jetsetter offers a selected list of limited time deals at high end travel product to a member only list. To get on the member list you have to be referred by another member.

My view on the business model is that it is interesting, exciting but niche. Has the potential to carve a luxury/targeted space in the online world (like Abercrombie & Kent have done offline). But it is not right to view this move as an "OTA killer". Much like boutique clothing stores have a place in the market but will never beat malls in terms of turnover and scale.

Priceline's Jeff Boyd seems to agree with me. He is quoted in a Dennis Schaal Tnooz post as saying that it believes it is "hard to see how they [private sale companies] will scale".

The clothing analogy is particularly apt case of Jetsetter as they are an offshoot of high end fashion private sale company Gilt. Jetsetter appears to be more than a division of Gilt but an independent but related company. Patterson put it this way "Gilt has capitalised Jetsetter". As well as money, Gilt has set up an "intercompany agreement regarding access to customers".

A number of benefits come from the Gilt relationship for Jetsetter. Firstly they get an insta-database of high end customers (Patterson says more than 1 million). Next they have insta-funding in that they (presumably) are getting their funding from Gilt via the $43mm raised from General Atlantic and Matrix Partners. Finally there would be some technology synergies in Gilt providing Jetsetter with insta-merchandising through a common content management architecture.

These point towards solving a lot of the distribution and establishment challenges that face a travel start-up. Leaving Patterson and team to focus on getting product/supply on the shelves.

Patterson has a clear cut vision for his supply strategy. He is not out to replicate the OTAs with the need to manage "10,000 partner, many with low volumes. We much prefer to focus on 8-9 live sales 0n the site." Hotel selection has to be very tight and controlled according to Patterson. They use a combination of "editorial judgement" from a "group of people from within the industry" and post- stay survey responses from members. Patterson says that the survey response result in partners being discarded and new ones selected.

He stuck to the consistent line that I saw in the TravelTrends post on Jetsetter of not disclosing the margins that are being charged to hotels. He confirms that it is not the standard 20-25% of the OTAs but is "more than healthy enough to run a business". It matches his Gilt customer base to target a limited number of high end products. With a focus as much on descriptions and content as rate.

The spot that Patterson and Jetsetter are targeting has parallels with some of my EveryYou posts and discussions on how to help consumers answer open ended questions in online travel search.

He sees editorial content as the key to helping consumers to discover and book high end product. Wants to be compared to publication and information sources Daily Candy and Urban Daddy rather than shopping sites. To be a "lifestyle publication as much as a travel company". He believes that "Consumers want an editor to help point them in the right direction." To be provided with "a sense of what is interesting in the world of travel. What places to go to . What is distinctive." Jetsetter what their role to be to tell "a very different story to 'here are deals in vegas'" that is market of the OTAs. He did not give much away on performance but did say that traffic in Feb 2010 was 40% up on Jan which was 40% up on Dec. With "revenue per member holding constant".

Patterson and Jetsetter have spent time and energy thinking through the business. They have money, a targeted niche and a customer base. All point towards potential success. To get to success I see two challenges for them to address.

Challenge 1 - turning retail customers into travel customers

The bad experiences of Amazon, eBay and Pricegrabber in travel have shown that that a retail database does not translate easily to travel sales. Patterson's view on this is that there is "enough congruence in the basic business model and customers" between Gilt and Jetsetter to provide Jetsetter with an advantage. That the high end product seeking customers of Gilt will transition from buying expensive clothes to expensive holidays.

Challenge 2 - generating scale (in sales and data)

The first of these (scale in sales) is not that big a deal. While targeted sales will never be as big as mass market, there is plenty of money to be made trying to be the Abercrombie and Kent of online travel. High per booking values make revenue per transaction healthy and customers can be very loyal. Keeping supply numbers tight means that per hotel volume should be high enough to keep suppliers interested. However scale in data could be more challenging. As I discuss in a number of my EveryYou posts the future of online travel is not just making targeted recommendations, it is adjusting those recommendations based on the different 'version' of the traveller that is making a request at a particular time. One person can be many different travellers depending on the trip (ie business travel vs leisure v VFR). To do that you need lots of data on a customer. More than I suspect you get in the tight supply context of Jetsetter. To move to a more powerful recommendation architecture will require Jetsetter to tap into other sources of data from Gilt and other places.

The biggest asset that Jetsetter has to overcome these challenges is the 1 million member Gilt database to start things off.

Ctrip makes very strong hints that looking for acquisitions

Day for a Ctrip double post. A few movements ago a link to a Tom Botts post from a presentation by Ctrip CFO Jane Jie Sun. Now I have just spotted a Reuters/Yahoo! Finance news story that Ctrip are planning to place 5.7mm American Depositary Shares (currently priced at around $36). In non-finance English this means they are looking to raise somewhere around $200mm in capital. What do they plan to do with it? The Reuters story says they plan to use the money to buy or invest in "complementary businesses and assets" and for general corporate purposes. In non-finance English "complementary businesses and assets"means buying some one. Ctrip plus $200mm equals consolidation. Speculation time....who do you think they are most likely to buy?

Ctrip CFO Jane Jie Sun presentation notes

BOOT recommended read of the week - Tom Botts of Hudson Crossing's summary of Ctrip CFO Jane Jie Sun presentation at the Goldman Sachs Technology and Internet Conference in San Francisco. Post is called "Ctrip and Home Inn: How Different China Really is". Includes notes like "Only 2% of travel in China is booked online today - and Ctrip has 50% of that market". Worth a read. Always worth remembering that online travel in China has a different meaning that elsewhere.

See you at No Vacancy March 18 in Sydney

Final speaker list is live for the No Vacancy conference in Sydney March 18. I will be there as an attendee and blogger. Will be tweeting under the hashtage #novacancy. Let me know if you'll be there and would like to meet up. Rego details here.

Some of the speakers I am looking forward to are:

• Simon McGrath, Vice President Australia, Accor Hospitality
• Robbie Cooke, CEO, Wotif.com
• Yury Shar, Managing Director, Hotels Combined
• Kirsty Shaw, General Manager, Stayz.com.au
• Luke Jamieson, General Manager Distribution, Mantra Group
• Peter Topping, Social Media Strategist

The BOOT is perfect for Qantas Affiliate Program....really??????

I received an email this morning from Affiliate Future. A company providing marketing services to help companies generate affiliate sales. They are pitching an affiliate relationship between the BOOT and Qantas. The offer is for $15 a sale. The email invite contained this sentence as the big hook to draw me in

"I’m reaching out [to you] as I think Qantas is highly relevant for your site and traffic"

Why is that people write to me (to anyone) to pitch a business without have spent a moment to read the source material. Here are some quote from the BOOT about Qantas.

re relationship with Amadeus
"Unlike the PR love-ins of the previous announcements, Qantas was very happy to very publicly blame the whole thing on Amadeus. Newly appointed Qantas spokesman David Epstein used all of the tact that his former Labour party bosses are famous for by being very polite in his finger pointing but stating clearly and cleanly" [full post]

re service on the A380
"More and more this [service] becomes Qantas' weak point. It is provided to their schedule not the passengers'." [full post]

re the outrageous prices on the AU-US route
"Right now Qantas is gouging me and every other customer on the Pacific Route (East Coast Australia to West coast USA). " [full post]

re changes to frequent flyer program
"I have been fuming about the recent changes to the Qantas Frequent Flyer program." [full post]

re a VOD system that did not work for two years
"Shame on you Mr Cox and shame on you Qantas. Your customers are telling you the system is busted, your staff are telling you the system is busted and the best solution you can come up with is moving seats. This is completely useless advice" [full post]

re Price fixing in air cargo
"Aaah Qantas - the "spirit of Australia". So long as you mean old fashioned pre-colonial convict spirit of Australia to steal as much as you can from anyone you can." [full post]

And this is just a sample. It is not all negative for Qantas here on the BOOT. There are some high praise/positive posts including these three:

• "Thank you Qantas";
• They remain in my top 5 airlines in the world; and
• "In defence of Qantas."

But this is not a site that (if I was Qantas) I would want to be sending to cheques to or having my booking engine on. Clearly Affiliate Future have just printed out a list of top ranked or trafficked sites in travel - especially those generating links for seat reviews - and not bothered to actually look at the site to see if the content would suit the partner.

Let this be my version of the warning post to PR companies and marketing people. Take a moment - just 5 mins will be enough- to look at my site before you write to me. How embarrassing.

Priceline talking Asia and growth but still quiet on Agoda results

Three articles/posts this week with information on Priceline's strategy for Asia. They are all good reads and I recommend them to you. Playing to my bias for comments on Asia/Australasia, I poured through the posts to look for details on Priceline's investment in Agoda and plans for Booking in the region. Unfortunately Priceline continue to closely guard the details on Agoda's performance.

The three posts are:

• Tnooz's Dennis Schaal "Priceline CEO on metasearch swan song, private sales, Expedia, Asia strategy";
• Reuters "Online travel bookings shift overseas"; and
• seeking alpha's "Priceline.com Inc. Q4 2009 Earnings Call Transcript"

Key extracts are:

• Priceline likes the dual strategy of brands in Asia - Agoda and Booking.com according to CEO Jeffery Boyd (Schaal's post)
• Two thirds of Priceline's bookings are non- US. "We expect to have higher growth in the international markets, from new markets like Asia that are less well-penetrated and are currently enjoying higher levels of economic growth," Boyd said. International bookings were up 81 percent in the fourth quarter compared to 20.6 percent in the US. (Reuter's story). In the same story Expedia's Khosrowshahi said that said he expects non-U.S. bookings to account for at least half of Expedia's business within five years, up from 37 percent currently. He went on "We're aggressively investing in China and Australia, India and Brazil,";

• There are lots of details on the quarter's numbers bu very slim pickings from Boyd in the earnings call on Agoda (seeking alpha) on Agoda. Boyd is very tight on the message of growth but will not be drawn on details.
  

1. "International gross bookings benefited from growth in new markets, growth in hotel supply and results from Agoda";
   

2. "Agoda also reported improving growth rates resulting in an improved merchant growth rates on a consolidated basis.";

3. "gross booking growth rates improved for Agoda"; and

4. "with respect to Agoda, we’ve consistently seen their business do well in Asian countries outside of China and India in particular, that’s been their focus. Thailand is a big market for Agoda."

First Class is dead. Long Live First Class.

10 years ago last month(January 2000) British Airways changed business class flying forever when they introduced the lie flat business class seat. I am sure that the revenue management team putting together the pricing and yielding plan for that launch did not realise that 10 years later they would be causing the death of first class. The launch itself completely changed the pricing for the standard 3 class airlines. In the early nineties (with the old Business Classes) the general rule for pricing between Economy, Business and First was "double double". Business was twice the cost of Economy. And First twice the cost of Business. But with flat beds stripping out seats, the pricing had to change. The rule went from "double double" to "by four by one point five". Sydney to Europe in economy was a $2,500, Business by 4 at $10,000 and First by 1.5 at $15,000. The gap between the price of Economy and the price of Business grew too great to withstand the Global F'n Crisis.

Today Qantas announced (during the publication of their results) that they would spend $400mm refitting most of the fleet to eliminate first class in all but 12 of its A380s.

On Jan 26 this year Air NZ announced their new plans for class configurations. They announced a revamped business, high end premium economy and the first efforts at beds in economy class. It does not include a first class (Upgrade:Travel Better blog post here on the announcement).

I therefore conclude that First Class is on its deathbed. My prediction is that within the next 3 years (by end 2013) all but the most luxurious of carriers that have flat or near flat Business Class seats (ie everyone bar Emirates, Qatar, Etihad and maybe Singapore) will follow suit and remove First Class from their configurations. That will leave Business as the new First with a huge gap to Premium Economy and smaller gap to Economy. In effect having moved from a 3 class airlines product to a 4 class airline product to a 2.5 class range of product.

But the change will continue. I predict that over the course of the following 7 years (starting in 2013 and ending in 2020) the seats in premium economy will start to lean a little more, then be spaced out a little further, then go a little flatter, then have their own lounges and check ins and finally an airline will announce Krug being served in "Business Class". We will realise that Airlines are back to the "natural order" of front of the plane with flat beds, middle of the plane with large, very comfortable seats and the back filled with grouchy people wondering why they signed up for the "enhanced transportation techniques" afforded by economy class.

In other words we are witnessing the end of First Class....until they rename Business, flatten out Premium and we go round again. Do you agree?

PS - if you like stories and analysis on the life, death and opulence of first class travel check out Shashank Nigam August 2009 post on SimplyFlying called " Singapore Airlines A380 Suites – A Class Beyond First or a First Class Branding Debacle?".

thanks to x-ray delta one via flickr for the photo of a 1959 707 first class on board lounge area

AsiaRooms: TUI A&D division generates no profits in Q4 of 2009 but AsiaRooms conversion on the improve

Here at BOOT central we try to collect and collate information on Asia's online travel companies. One of those we are tracking is AsiaRooms, the Pattaya based online hotel company owned by the European travel giant TUI. As reported last year AsiaRooms is incorporated into the LateRooms part of TUI.

In May 2009 I managed to collect some information about the performance and results for the TUI Online Destination Services group - which included AsiaRooms, LateRooms, Hotelopia, Hotelbeds and a dozen offline destination brands. The group was renamed the TUI Accomodation and Destination (A&D) division in the second quarter of 09. With the new name comes with a slight realignment of brands and sub-divisions into the following.

B2C Division: LateRooms and Asiarooms.
B2B Division: Hotelopia, Hotelbeds, Holidays Services and TUI Espania
A&D Specialist Division: Intercruises, Aeolos, Pacific World, TUI China

I read this as a greater separation of the operations of the combined LateRooms/AsiaRooms and the other "online" businesses of Hotelopia and Hotelbeds. While the focus of the BOOT is on the B2C group it is worth noting that the A&D section of TUI is big business generating more than £552mm per year in Revenue and more than 8,000 employees. (one page pdf factsheet on the A&D division here)

Last week TUI published their results for the quarter to 31 Dec 2009 (pdf here). From it we can collect another little piece of information on the online activities of TUI and AsiaRooms turnover. Here's what the announcement says

"The A&D sector reported an underlying operating result of £nil (Q1 09 profit £1m) due to foreign exchange translation losses. Profitability in our Online B2C business improved due to better conversion rates in Asiarooms following its switch from a merchant model to a commissionable model. This was offset, however, by reduced volumes in our Destination Services business in Spain."

In one paragraph it is only AsiaRooms out of some dozen or more brands that gets a mention. Nothing specific enough for us to tell whether or not AsiaRooms is profitable or not but they are celebrating conversion improvements. Any other information you have on AsiaRooms?

Tnooz: getaroom thoughts

New post from me live over at Tnooz. Titled "GetARoom: three question marks over the model but one reason the company will succeed". Getaroom is the new business from Hotels.com founders Dave Litman and Bob Diener. They had taken a twist on the opaque model with consumers not knowing the full price until after they have been charged. My thoughts on this model over at Tnooz.

BOOT eyefortravel interview: search, mobile, social networking, innovation, Asia and more part 2

Part 2 of pre-conference interview with with Ritesh Guptaof eyefortravel in the lead up to the TDS conference in Singapore April 28 & 29. Part 1 here.

Question - Can you provide an insight into how does search differ for mobile phones vis-a-vis PC? What according to you are the striking differences?

BOOT - The easy answer is location. A phone knows so much more about your current location than a PC. This gives mobile a huge advantage over PC search in servicing an immediate requirement. But there are challenges here too. A mobile can assume too much about a location. Just because I am travelling in Tokyo does not mean that I want the answer to the question to be in Japanese. The other challenge for mobile is that the platforms are still not uniform in display. Thankfully we are down to a much smaller list of mobile browsers/operating systems that previously but still there are differences between iphone, windows mobile, blackberry, palm and symbian which call challenges in display. This is where apps come in as content providers are trying to get around the browser and device compatibility by using apps to control display and information management to consumers.

Question - The progression of technology and innovation in the travel industry continues at a quickening pace and Asian countries are closing the gap on their western counterparts. What according to have been the major developments in this context in Asia?

BOOT - Innovation is always driven by local requirements and demand patterns. Therefore there are examples across Asia of markets driving product development well ahead of the US or Europe. India leads the world in online bus ticket sales and low cost carrier and traditional carrier display integration. Japan leads the world in online hotel bookings via mobile phones. China leads the world in call centre same day hotel bookings. The mistake many make in planning for innovation is to look to the technology first rather than the business need. As I discussed in this post the secret to innovation is as much about timing, social readiness and execution as it is about a great technology idea. Therefore the major development in Asia that is driving innovation is not a technology one it is a attitudinal shift and market maturity. A display of confidence within the Asian travel industry that dedicated market specific solutions can be put together to target customer needs rather than simply copying what the global OTAs are doing in Europe and America.

Question - What are you most looking forward to at TDS Asia? Who are you most looking forward to meeting at the event?

BOOT - Conferences are always about people watching and meeting. That is what I am looking forward to. The best person you meet at a good conference is the person you weren't expecting to meet. Someone you did not know that you needed to know - if you know what I mean :).

SEO rules - why have a top 7 or top 10 when you can have 59 things to do to improve your SEO

As a blogger I know that nothing drives retweets and inbound links like a good top x list of reasons why something is something. For example my post on the three lies that the travel industry keeps telling consumers was my top trafficked post for August 2009. Normally the list is kept at less than ten because the aim of the post is part informing the reader and part driving traffic. I came across a article last week that broke the rules on keeping the list at less than 10 - therefore hurting their chances at retweeting and inbound links but compensates by being a genuinely informative read and well worth being a recommended read of the week.

The post is "59 SEO Ranking Factors" from Joe's AdBlog. It contains what it says it contains - a list of the 59 factors that influence your site's organic search ratings. There is nothing flowery or engaging about the writing in this post but this lack of wordsmithyness (how's that for a made up word) does not detract from the value of this content. This is a great info source and worth you taking a look.

Thanks to Danard Vincente for the fantastic image (via flickr)

BOOT eyefortravel interview: search, mobile, social networking, innovation, Asia and more part 1

I have just completed an email interview with Ritesh Guptaof eyefortravel in the lead up to the TDS conference in Singapore April 28 & 29. Here is part 1 of our exchange (part 2 here).

Question - Do you think predicting user preferences is the biggest unsolved problem in online travel? How do you assess the integration of social search into online travel?

BOOT - I am a strong believer that all companies in online travel should be focusing on understanding users and working on predictive and recommendation engines. But it is a mistake to come at this from just a user preference angle. The trap that companies are falling into is thinking that consumers are still asking "closed" questions. Questions that can be answered with an easy or direct response. Questions like "how much for a flight to new york?, "which hotel should I stay in in Rome?". These are the questions consumers asked for the first 15 years of online travel. Now consumers are also asking open ended questions like "where should I go next?, "what is a good place to go this weekend?". Questions that require a more detailed answer and therefore a very detailed understanding of not only the preferences of the user but also the relationship between those preferences and the destinations available and the different versions of the individual that is searching (my concept of EveryYou). Social networking's role in this is the role that word of mouth has always played in marketing and travel purchases. A force that can be instrumental in a consumer's purchase decision which can be influenced, prodded, supported but never controlled. The difference between Social Networking marketing and word of mouth marketing is just speed. Social network is word of mouth at the speed of light.

Question - Today Google's algorithms are still quite a bit of a black box for professional search marketers. The semantic web should make it more efficient to create and manage online campaigns, because there will be less left to algorithmic interpretation. How do you assess this viewpoint?

BOOT - Google has won search - game over. There are countries were they are weaker (Japan, Korea, China for example) and products where they are weaker (local search and business listings for example) but let's not kid ourselves about who has won search. That said, "old search" is about providing a single destination as an answer to a question. Regardless of the search term, Google only presents a list of single answer destinations. If an answer to the search request is found through information from a combination of different websites then Google (or any search site for that matter) do not have the answer. The other constraint on Google and old search is the limited scope for incorporating and merging the latest up to date with results with older more trusted results. Google has been experimenting with incorporating real time search in their results (example here) but they have not yet figured out how to establish authority in real time search or change the display to be more than an never ending stream of updated information. The Semantic web should be part of the solution here but I still feel we are a while away from implementation because we have not figured out new rules for authority and new methods for display. Maybe Google have but there are just not saying yet!

Question - Google, which last year had introduced a new experiment on Google Labs called Google Social Search, has added a social element to Google Images. With Social Search, Google finds relevant public content from your friends and contacts and highlights it for you at the bottom of your search results. What is going to be the next big thing or trend in social search engine marketing?

BOOT - If you agree with my comments about that marketing of social networking is just like marketing through word of mouth but at the speed of light then the next big things in social network marketing are finding ways to adjust word of mouth marketing to a faster/instantaneous medium. The basics of word of mouth market are trust, interest and relevance. For a consumer to be prepared to share a product, idea, story, service etc with a friend they have to trust the source, be interested in the item/thing and think that it is relevant to others in their circle. Social network marketers need to have these three human elements at the centre of each campaign. The mistake that I see so often is jumping to a technological solution to marketing on social networking rather than the human elements. We can see this in the constant screw ups at Facebook with privacy as they launch new privacy crushing rules and products to give marketers access to customer data. My advice is to turn to the technology second and the human elements first. Establish trust then make something relevant and interesting. If you do, consumers will follow. The final thing to remember as a marketer in social networks - and the 21st century for that matter - is to accept that you have limited control over what your customers will say about your brand. The response to that lack of control is communication and discussion (ie engagement) not defamation, litigation and IP laws (ie stupidity).

Question - This year, we have already seen a couple of significant moves from Apple and Google towards mobile advertising. How do you foresee the impact on search and social media via mobile phones on the travel industry?

BOOT- Up until recently I have been a mobile denier. Mainly because every year since 2000 has been THE year that mobile would take over PC as the place for online action. Google's purchase of AdMob is the turning point. Not because when Google does something it means we have to take a trend seriously but because it means we know have non-transactional revenue streams for mobile activity. The problem for mobile has been that people stop at the credit card entry point. For a variety of reasons people that are completely comfortable putting their cc number into a PC or giving it to a bartender covered in tats and piercing in the off-line world have hesitated when asked to give it to a mobile phone. With Google betting on mobile advertising we have a biz model outline. A means for content and transactional companies to make money in mobile. That is the step that has been needed - more that the continued roll out of smart phone technology and more than the expansion of social networks.

more in part 2

ad:tech: BOOT pre-conference interview video on social networks, mobile, ecommerce and more

BOOT will be live at ad:tech in Sydney on March 17. As part of the lead up I did an interview with ad:tech chair Jenny Williams. Here is a link to a blog post by Jenny on the session I am speaking on and a three minute video interview of me.

Session and registration details are here.

Steve Sherlock of Oodles: the search for funding and the deal with Wotif that almost happened

Car rental search site Oodles is part meta-search, part travel agent and part loyal program deal search site. The classic meta-search part is the ability for consumers to search multiple sites in one go. The travel agent part is that Oodles collects commission on paid bookings (when customer pays car company) not on a per click meta-search basis. The interesting loyalty program part is that if you give your Airline or Car frequent flyer number to Oodles, then they will add to the search results specialist loyalty program deals. Means that a person who is both a Velocity frequent flyer (Virgin Blue), Qantas Frequent Flyer and Hertz Gold Club member will see an integrated display including special deals from Europcar (Virgin partner), Avis (Qantas) and Hertz as well as other deals from Thrifty. This is a great and - as far as I can tell - a unique offering in car rental and meta-search generally.

I was talking about Oodles today with Founder and MD Steve Sherlock. Steve and Oodles are in the middle of a search for a new round of funding. In a true web 2.0 fashion Steve is blogging his way through the experience in series of "diary of an entrepreneur raising capital" entries over at the anthill website. Included is a story about how Oodles was almost acquired by Australian online travel giant Wotif.com. It is an interesting series of diary notes and a recommended read.

I like the different angle that Oodles has taken from others. Allows consumers to see a display of a combination of inventory (loyalty program discounted and regular) that I have not seen on any other online travel site. Oodles already have the car rental traffic lead in Australia so appear to be executing well. The challenge for them is the constant start-up problem in Australia - finding the funding to continue to feed the growth.

Tnooz: The blurring lines between transactional and non-transactional sites

My latest post for Tnooz has is live. Title of the post is "Non-transactional travel sites are chasing the online agents on unique product hunting – but can it work?". I write about how content sites are starting to negotiate directly with suppliers for unique product offerings, trying to directly challenge the major online travel agents. Mentioned in the post are Kayak Private Sale, TripAdvisor Business Listings, Voyageprive, Jetsetter, Dealbase and Totaltravel.

You can read the full post here.

In a day when everyone is talking Apple have a look at Google

Today is the day a half laptop, half smart-phone, all PR blitz shoved the State of the Union off the front page and sent Apple fan boys and girls running for their credit cards. The iPad has dominated the twitointerblogsphere all day. Desperately looking for a different angle on the story I was interested to look at the Google.com.au search results for "ipad". Below is a screen shot. Three very interesting things you can see from it.

1. Look at who is bidding on the term ipad. Two competing news outlets have bid on the term and are paying Google to drive traffic to news stories about the ipad. This is interesting first because I have not heard of a news company buying keywords before. Secondly the speed in which they put together the campaign. Presumably it was planned ahead of time and executed very early Sydney time.

2. Look at what is dominating the search results. The middle area is not links to two or three static websites. Instead there is a scrolling twitter feed updating every part second without the site having to refresh. True real time search integration. I saw this a few weeks ago for the first time with the "latest result" feed matching those search terms trending high on twitter. I like it but missing is the authority element to help determine which tweets/real time updates should be read.

3. Look at who is number one for search results and loving the traffic they are getting. Some South Australian property developer and owner of the ipad apartment complex in Adelaide is having the traffic day of the life as owners of ipad.com.au.

Take a look - screenshot below. Another change in the search industry hot on the heals of a hardware revolution.

BOOT Blackout Jan 25-29

The Australia government is in the middle of pushing an outrageous piece of legislation to drive all internet traffic through a filter. If passed we will join Iran and China on the list of countries that filters the internet. It is sham act as the filter will not work. I am blacking out the BOOT for 5 days as part of a protest. Normal service to resume next week.

Lonely Planet CEO Interview on paidContent: iTunes is now our number distributor of city guides

An interesting interview of Lonely Planet CEO Matt Goldberg by Rafat Ali over at paidContent. Is about 5 mins long and worth a listen. Highlights include:

• Confirmation that Lonely Planet is profitable and growing. Digital business is growing at 40-50% year on year.
• Digital sales now $20mm per year covering paid content, services, transaction fees, advertising and digial apps
• One in five of LP's city guides are sold through iTunes. Easily largest single distributor
• On Acquisitions "not the first thing we are thinking about"...but..."always open in areas of technology, audience or talent"

Here is an embedded version from paidContent.

BOOT presenting at Eyefortavel Asia April 29

I will be at Eyefortravel Travel Distribution Summit Asia on April 29 in Singapore (conference runs through April 28 as well). Conference details here.

The sessions will be the day 2 Keynote called

"Future Trends and Technology in Travel – Planting the Seeds for Profit."

I will be on a panel with

• Rob Torres - Vertical Director Travel Worldwide Google
• Mark Inkster, General Manager, Microsoft Online Services Asia
• Morris Sim, Co Founder, Circos Brand Karma

The panel blurb is

The progression of technology and innovation in the travel industry continues at a frenetic speed and Asian countries are rapidly closing the gap on their western counterparts. This dizzying pace of change has the power to either undermine existing revenue models or create exciting and highly lucrative new opportunities for those in the know.

• Prepare your travel business for the future. Cut through the hype and identify the technologies that will add real value and reap the largest rewards.
• What will be “the next big thing”? Know where (and where not!) to invest to ensure ROI is real, abundant and measurable
• The way your customer interacts with the web is changing. How can you continue to reach and influence travelers in a dynamic, user led online environment?
• Travel 3.0?...How will developments in the semantic web enable more complex and sophisticated trip planning for online travelers?

Tnooz: New Zealand, Trade Me, BookIt, the big four and $1 billion

My latest post on Tnooz.com is live.

"Dateline New Zealand – BookIt acquisition by Trade Me is latest in huge war over very small turf"

Kayak Private Sale: Surely to mean increased cost and complexity for Kayak. A zero percenter no more

Dennis Schaal over at Tnooz broke the story that Kayak is launching a program called Kayak Private Sale. In a post titled "Kayak gets clubby with exclusive hotel deals" he revealed that Kayak is planning on launching exclusive deals. These deals will be negotiated directly with a property and made available for Kayak exclusively. A few days later Dennis had an update in his post "Kayak exclusives to include flights, hotels, vacation packages" including confirmation that these exclusives would extend to flight and packages as well as hotels. Bookings will be at the supplier site based on a click/referral from Kayak.

This is a very interesting step from Kayak - but not for the reasons you first think. In the words of PhoCusWright boss Phillip Wolf one of the hallmarks of Kayak's success was that it was a "zero percenter". That is a site where zero (or near zero) percent of the site content is controlled or produced by the owner. The main disadvantage of being a zero percenter is that you don't control inventory, price or the customer experience. The main benefit of being a zero percenter is the dramatic operational cost advantage you have over an online retailer. No need for a supplier contracting team as a small biz dev team is enough to secure content. No need for a fulfilment team as the supplier/advertiser takes the booking. No need for a customer care team as the supplier/advertiser talks to the customer. This saves millions in costs. This is how you can be one of the biggest travel sites on the planet but with less than a 100 staff (last time I heard).

But (as I said in my comment to Dennis' first post) signing and managing exclusive deals takes time and a team. Call it a revenue management team or a hotel market management/contracting team. Either way it is a group of sales and revenue professionals who need to talk weekly/daily to suppliers. In the OTA world this means local market people - lots of them. Plus if you are going to load exclusive deals you are going to need to talk to consumers when those deals are not what they are supposed to be. This means more people which means higher cost. All of this adds up to a significant operational and cost change for Kayak

I am looking forward to seeing how this plays out. Am I missing something?

Reading the BOOT - syndication options

In addition to being able to consume all the BOOT you need here at tims-boot.blogspot.com or thebusinessofonlinetravel.com, you may be interested to know the industry news aggregation sites that carry a BOOT syndication feed . Here are three sites that carry copies of BOOT content that might be of interest:

• Tips from The T-List: The original online travel blog aggregator;
  
• PhoCusWright Connect: Travel industry bloggers and PhoCusWright analysts together; and
  
• Travel Insight 100: A partnership between the T-List and review meta-search company Uptake.

Enjoy.

Thanks to Brit for the photo on Flickr

EveryYou and Customer Reward: When an upgrade is not the right response

My EveryYou concept is about developing specific and targeted recommendations (which can include rewards) of one based on the unique combination of desires, needs and interests of each individual at any moment in time. I had a chance this week to experience an example of the deficiency of customer profiling and standard practice and thus a place where a more individualised (EveryYou) approach would have been much better.

I have just bought a house – should be celebrating. But due to a twist of fate and timing I have to spend the next two months in a serviced apartment before I can move into the new house. It is nothing too dramatic but gave me a chance to sample the serviced apartment market. I won’t mention the provider but they very kindly offered me a complementary upgrade to a bigger apartment with a view. Of course I was pleased to accept. Just prior to check-in we settled all the details of the stay including the deposit payment and my confirmation that I would be brining by wife, seven year old and three year old.

On check-in we discovered that the upgraded apartment was much bigger than expected, had great views over the park and had the bonus of a separate study/office. But we had to move out immediately. As large as the apartment was, it was completely unsuitable for children under 12 let alone 7 and 3. Firstly the bedrooms were on two separate floors. Meaning that my wife and I would have to sleep on a different floor to the children – not acceptable when one of the bedrooms is right next to the front door that cannot be locked. Secondly the study/office (on the second floor) had two windows at child accessible height that could easily be opened and pushed outwards. Easily exposing a young curious mind to a ten floor drop and instant death. Either we put the children in a bedroom next a door where the three year old could leave the apartment without us knowing or in a bedroom near a study with easy access to a deadly drop.

When we spoke with the front desk, they could not understand why we wanted to move (clearly not parents) and especially could not understand that we wanted to turn down the upgrade and take a smaller (but safer) apartment. This exposed two things to me. Firstly how “the upgrade” is one of the few (if not the only) pre-check in reward that a hotel/serviced apartment has set for sharing with consumers. Secondly how in the serviced apartment market the staff are not as well prepared as hotel staff for non-standard request.

Under a generalised profiling system of customer rewards, it is clear that the vast majority of customers would love to receive an upgrade. But trusting generalisations and profiling can lead the hotel/apartment sales rep to use it as a reward when deeper analysis would show that other rewards would better impress and therefore make more loyal a customer. If my wife and I were on our own or with adult travelling companions (ie the "weekend holiday away with friends" version of me) then the upgrade would be perfect. But if the accommodation provider had spent the time analysing and using the data they had on me for this trip (ie the "parent" version of me) then they would have determined that the reward I would have been more interested in would be a twin room as the second bedroom or an apartment closer to the swimming pool or free car parking. On another occasion (ie the "business traveller" version of me) it would be free wifi rather than a bigger apartment that would be the perfect reward. Generalised profiling is no match for taking the time to use data provided by customers and technology available to suppliers to target rewards/recommendations suited to not just the individual but the version of the individual that happens to be travelling at the time (EveryYou). Using these techniques would prove to my landlords for the next two months that a upgrade is not always the reward it should be.

Thoughts?

Qantas to Amadeus – what the hell was that???!?

In 2007 Amadeus and Qantas were riding high. A joy filled press release heralded that their relationship would bloom for another ten years. The then CIO John Willett was full of praise saying

"The development of Altéa [Amadeus' airline customer management system], which has become the leading customer management solution for airlines, has been a milestone for the industry and we expect that the next 10 years will help us to innovate further,"

A year later there was a new CIO at Qantas (Jamila Gordon) and the good times continued. The companies announced that the Altéa system was fully implemented. Gordon was filled with the joy and expectation that can only be found in press releases

"Exceptional customer service is a key competitive weapon and you can only deliver this by understanding the needs of individuals which is what the integrated Altéa system provides." She added, "As the operating environment for airlines gets tougher, it is essential that technology is able to both deliver greater operational efficiency as well as support the implementation of policies that build customer loyalty and drive increased revenues."

Remember those words “deliver greater operational efficiency”.

Fast forward to Jan 3 2010 and the Amadeus and Qantas bromance took a blow (though it does not look fatal) when the Amadeus Altéa system appeared to suffer a world wide hour long blue screen of death crash-a-doodle-do. Automated check-in came crashing down. Customers were stuck and airline crews abused. Qantas firstly called it “intermittent” (SMH) . But later an ABC commentator found out that the system had crashed on three separate occasions during the outage period. Delays, angry customers and twitter rant–a-thons ensued.

Unlike the PR love-ins of the previous announcements, Qantas was very happy to very publicly blame the whole thing on Amadeus. Newly appointed Qantas spokesman David Epstein used all of the tact that his former Labour party bosses are famous for by being very polite in his finger pointing but stating clearly and cleanly

"We are seeking assurances this won't happen again,"

(according to a report from the ABC)

The Herald Sun very neatly summed up the response from Amadeus to the blame game “Amadeus could not be reached for comment”. I bet they couldn’t.

Thanks to Aaron Frutman over at Flickr for the phot of Kobe in flight

Agoda and Booking start to integrate inventory - first steps

Thanks to a reader who sent through a screen shot of the search results from a Booking.com page for a secondary destination in China. The page shows 15 Booking.com contracted hotels at the top of the sort order then a line/marker that says

Hotels below are offered by other companies in the Priceline Group

Below this line is a list of hotels in the same destination but provided by Agoda not Booking.com. A click on one of those pages sends you to the Agoda booking system (ie link relationship and white label not full inventory integration).

This is the first hint of integration between the Priceline owned Asian based Agoda and Euro based Booking.com. This is not a full back end integration like we have just seen for AsiaRooms and LateRooms. Mainly because it will be much harder with Agoda and Booking operating on different models (merchant vs commission) and I think that Agoda's owners are still in the earn out process part of the sale to Priceline. When the sale was announced in 2007 the earn out period was listed as three years. Integrations during earn outs are hard as the business working under the earn out is completely focused on achieving the earn out targets rather than internal integration needs. As the earn out period starts to close (ie end of this year), I expect to see even more integration between the two businesses.

Here is a screenshot of the search (Zhuhai China)

New Expedia.com Logo: its a 21st century thing - I think

It is a day for Expedia webite posts. Thanks to Ciprian Morar for alerting me to the new Expedia.com logo. Gone is the softly swooshing yellow aeroplane on a bright blue background evoking happy thoughts of travel and living in the noughties. Hello to the sharp pointed rocket ship that blasts forward into the second decade of the 21st century- a world of darker hues and serious companies. No more Mr Nice Guy and next stop the moon. What would Freud say about this change? What do you think? Here is the old one.

More Expedia display trials - defaulting to hotel search in Australia

Late last year I shared with you a screenshot showing that Expedia.com.au were trialling a Wotif list like display for hotel results. With the new year I can see that they are trialling a new home page with larger widget and hotels as the default for search. First sale of the year is a 50% off hotels. Is Expedia giving up on Air in Australia? Screenshot below.

2010 Predictions: The BOOT on what to expect for 2010 in the online travel industry

You think 2009 was full of surprises. Well fasten your safety belts, lock in the tray table and get ready for the turbulence, change and excitement that I expect 2010 to bring.

Here we go - I have five predictions for 2010 (two of them drawn from my contribution to the Tnooz post "Tnooz predictions for 2010"):

1. The non-refundable not enough: 2009 was the year of the deal. Lastminute specials returned and ADR/Ave ticket price fell through the floor, past the basement and almost reached magma. But the main (maybe the only) weapon in the 2009 deal war was the non-refundable. I predict that to win round two of the deal smackdown will require suppliers and intermediaries to come up with something more creative that just non-refundables The non-refundable is successful in driving demand while protecting "normal" pricing (ie BAR). But it is a crude weapon - targeting only those with no scope for a change in plans. Driving demand in 2010 will mean finding additional market segments. Which in turn will require more creativity and subtlety in pricing and deal structures than afforded by the non-refundable. Jeremy Philips in a review on WSJ.com of the book "Priceless" by William Poundstone ran an interesting quote that summarises the prediction here. As Robert Crandall, a former CEO of American Airlines, has said: "If I have 2,000 customers on a given route and 400 different prices, I'm obviously short 1,600.";
2. Year of the app: mobile may finally be here as a force in online travel but in 2010 the action will be in "apps" not phones. By app, I mean a piece of software designed to perform a function where the function is stand alone but can only exist as part of an operational eco-system. I am not thinking just iPhone here. Though the numbers are extraordinary. On March 27 2008 Apple launched its SDK to the public. Just eighteen months later (Nov 4) they announced more than 100,000 apps available for the iPhone and more than 2 billion downloads. But this is only part of the app story. On May 24 2007 Facebook opened up its platform for third party application development. On their stats page (checked 3 Jan 2010) they are claiming 500,000 apps. It does not stop at smart phones and social networks- HP have launched a printer with an interface and app store. The easy part of this prediction is to say that app numbers will grow again both in number (they will more than double in 2010) and in platform (more sites and more phones launching more of them). The real prediction is that I think the app trend equals a change in how web services are accessed. While not the death of the browser, the rise of the app is a sign that the browser is no longer an essential part of the Internet experience. Further proof that we have left the Web 1 era that defined web success through website stickiness and are well into the Web 2 world of syndication being the success measure. That confining your internet viewership plans to the computer and browser is a doomed strategy;
3. New marketing measurement metrics will emerge: The very mature online media and advertising world has settled into a comfortable metric duopoly of clicks and page views. Measuring audience reach and advertiser value by either the number of clicks generated or pages views. I predict for 2010 that we will see a new metric emerge. Not sure what it will be but it is clear to me that the market is looking for a measure of engagement rather than traffic. A way of showing marketers that consumers have taken in a brand message not just clicked on a link or maybe glanced at a flashing 468x60. The portals have had behavioural targeting technology for more than two years (Yahoo! has Blue Lithium, AOL has Tacoda) and Google is looking for the Next Big Thing to be video advertising (read more in interview with Rob Torres of Google reported on Tnooz). These are clear indicators of the need for a new metric;
   
4. Consolidation in the sector (surely!). This is a left over prediction from 2009. The conditions in the year of the GFC seemed perfect for consolidation. Stock prices were depressed, cost cutting acceptable and appetite for organically funded expansion low. But we saw virtually nothing that could be called a “big deal”. There was deal activity but at the lower end such as through regional tuck-ins (ie Travelocity buying Travelguru, and Ctrip buying EZtravel), small local deals (ie Wotif buying GoDo) and constant content site acquisition by TripAdvisor. With bankers chasing bonuses and companies chasing growth in 2010, I expect to see some consolidation in the big end of online travel town (from Tnooz post); and
   
5. Recommendations as the future of online travel: Search – as a means for customers finding what they want in online travel – is no longer as effective in 2009 as it was in 2005. Two causes – the explosion of content through the UGC revolution and consumers desire to seek answers to open ended questions (ie where should I go next) that are not easily answered by a search model based on taking you to one site. 2010 will see even more investment by start ups and established companies on different ways of searching and on methodologies for recommending. The long term future is the ability to generate a recommendation of one based on the individuals unique combination of desires, needs and interests of an individual at a particular point in time (EveryYou). The 2010 future is increased profiling, increased data collection and even more start up activity around search and discovery (from Tnooz post).

Close the door, buckle up, it is time to push back and take off. It is 2010 and the BOOT is back.

If you are interested - check out my 2009 predictions

thanks to pfala for the photo via flickr

Merry Everything and see you in 2010

Dear BOOT readers,

Merry Christmas, belated Happy Hanukkah, Seasons Greetings, Happy New Year and for our European friends

• Buon Natale e Felice Anno Nuovo 2010,
• Joyeux Noël et nouvelle année heureuse 2010!
• Fröhliches Weihnachten und glückliches neues Jahr 2010 !
• Feliz Navidad y Feliz Año Nuevo 2010 !
• Vrolijke Kerstmis en Gelukkig Nieuwjaar 2010!

I have a number of posts I plan to write this holiday but the pressure of finding time to relax might get in the way.

I am enjoying writing and hope you are enjoying reading. See you 2010.

Tim

Geckogo: start up surprise #2 from PhoCusWright 2009

The " "PhoCusWright surprise" occurs when I meet an online travel start up(s) at PhoCusWright that I have never heard of but is (are) number one in their category by some reasonable measure. Yesterday's surprise was Localyte.

Surprise number 2 - Geckogo

Geckogo - is a travel planning and inspiration site that want to solve the "too much information" problem by allowing travellers to aggregate content from social networks, friends recommendations and use that information to build trip plans. They claim to sit in between the travel aggregation sites like UpTake / NileGuide / TravelMuse and travel social network sites like WhereIveBeen and TravBuddy. Though I am not sure I yet see the gap. That said, I see the value of content company with social media interaction. The challenge for a business targeting that space is how to collect information and establish an index.

Geckogo founders Pokin Yeung and Eric Mackinnon are coming at the challenge through building a Facebook application called travel brain. It allows consumers to load cities and destinations visited (like TripAdvisor's Cities I've visited). The difference with TA's app is that Geckogo gives users a chance to increase their "score" by adding information about a destination. This rewards consumers for generating more content and engaging further with Geckogo. The result was that the Facebook app is the main content acquisition tool and consumer point of interaction for Geckgo. In addition partnership with Bradt Travel guides has helped populated editorial content on the site.

With Facebook as a driver, Geckogo claims to have attracted a network of 700,000 users - with 8% of those contributing content regularly. Results in 250,000 articles mainly collected from Facebook users - parsed and classified through their information architecture. Eric described part of the architecture as a "synonym database" that prompts contributors to help flesh-out areas that need more information. For example a casino in a destination means gambling but gambling as an activity in a destination will prompt a question on whether or not their is a casino.

This is where the surprise factor came in. I have talked before about what content companies need to do to succeed. My definition of success has always been SEO raking and traffic. Yet in Geckogo we have a online travel content company where early success has come from the using Facebook as a distribution and content acquisition mechanism. They made me feel a little old and outdated in continuing to believe that search is the number one battleground for traffic.

Being Facebook dependent is beneficial for Geckogo as their competitive set is lower. But in my interview with Pokin and Eric at PhoCusWright they admitted that Facebook dependence comes with risks. Just like a change in the Google search algorithm can send SEO dependent companies from the top of the world to the bottom of page 5, so too a Facebook change has dramatic impacts on Geckogo. When Facebook moved from a profile based page structure to the more twitter like newsfeed structure, Pokin admitted that usage dropped dramatically. Geckogo had to rebuild the way the app interacted to support the new approach.

Still in the angel funding stage Geckogo knows they have more money to raise and work to do. Eric admitted they are looking or about four times as much content before they will be able to answer the level of questions they are targeting. In addition to more content they should also work on the query architecture to help drive more responses and customer interaction. But the surprise factor success is there - Geckogo claim to be the number one content contributor on Facebook (but not the biggest app). Update - see below

For a bit more information on Geckogo check out their presentation from the Facebook app targeted fbFund. Also a story on the same presentation from UpTake industry blog written by Elliot Ng.

Update. Geckogo founder Pokin comments below. Here is an extract

"I should also clarify our claim of being the number one travel content source on Facebook. As a blanket statement that was absolutely true when we posted it, but I can’t validate that now since our friends at Where I’ve Been have also started collecting content as well. I believe we continue to be the number #1 source on Facebook for travellers to gain meaningful travel insight and help one another in their travel plans."

Localyte: start up surprise #1 from PhoCusWright 2009

A PhoCusWright side effect that I look forward to is meeting online travel companies that I have never heard of but are number one in their category by some reasonable measure.

This year two companies had me turn to the blogger next to me and in shared geek awe (with a hint of punditry arrogance) say "how come we never heard of these guys before".

[update May 13 2010 - Localyte has been bought by Nile Guide. Tnooz story here]

Surprise number 1 - Localyte

Localyte is a online content company that allows travellers to ask direct questions of and search content produced by "local experts". Classic UGC and social networking stuff. The surprise factor with Localyte is the staggering the amount of content they claim to have amassed. At the PCW Innovation Summit Localyte head of Biz Dev Doug Renert claimed 40,000 individual contributors – self appointed local experts – providing content and direct response answers to questions on what to do in a location. This has generated an SEO content well with a depth of 700,000 reviews and a mind boggling 20 million words per month. This is extraordinary for a company founded just over two years ago (Aug 2007) and drowns out any question of whether or not they have met my 3 rules for a content start up.

In his blow by blow summary of each of the Travel Innovation Summit presenters Phil Caines of Tourism Tide has a great summary of Localyte's business and product.

"Grabs recommendations from a 40k strong army of local experts to provide travel advice. Can be used by travel agents to advertise their location. Growing to 700k reviews in 2 years. Travelers can pose questions to locals and they will respond accordingly. The program can be used using the Global Sherpa iPhone app. the locals get a system of points and rewards to motivate the contributors. They throttle questions so people don’t get inundated. Open API so that anyone can integrate this technology into their sites."

Impressive. Surprising.Now to the challenges.

There is an viable business model for this level of content though not a guaranteed one. Traffic and content is a great foundation for an online media business but monetisation will still take effort - if Facebook cannot be certain of its revenue streams then niche social media content sites need to work even harder for monetary success. In Localyte's favour there are potential B2B revenue streams through destination marketing organisations as well as the typical ad sales and transaction referral commissions.

The main question for Localyte is - what constitutes a local expert and how to verify. In a Tnooz post of mine that included them I said

"I have concerns about the accreditation of the local and how to be sure they are not a rep of a particular travel product and therefore biased"

Sean Keener of Bootsnall via a tweet put it even more bluntly

"What constitutes a local expert? - local tour provider often times equals spammer in my experience. "

For my local region (Bondi in Sydney) the number one expert on Localyte is a travel agent living in Sydney. As a Sydney based travel agent it is true that this Localyte member is going to know what to do and where to go. But there is also a commercial angle here. The challenge for Localyte will be how to balance the commercial interest of the expert with the brand pitch for providing unbiased local advice.

My Localyte Summary - a very impressive level of content and worthy of our surprise. But challenges in executing on monetisation and ensuring the independence of the experts.

If you would like to read more on them then the tweets around the Localyte PhoCuswright presentation that were hashtagged #pclocalyte can be seen here.

Here is the Localyte demo from PhoCusWright

Tomorrow will post surprise number 2 - Geckogo

Google’s Next Big Thing – Killing off the TV media business. More from interview with Rob Torres at PhoCusWright

Google hangs over every online industry conference. Their ability to deliver and take away traffic is unmatched. I have even argued that being Google friendly has overtaken being consumer friendly as the product development test for website design team

At this year's PhoCusWright conference TripAdvisor's Steve Kaufer said in jest "darn it everyone starts at Google, I want them to start at TripAdvisor". Google’s traffic dominance is here for so long as the search box is the number one starting point.

It was with this background Google's MD of Travel Rob Torres and YouTube's CMO Suzie Reider took the Center Stage of PhoCusWright to pitch the "Next Big Idea".

In a recent Tnooz post I included my notes from a post presentation 1:1 with Torres. In this post I will share my thoughts on the presentation itself.

The core of the next big thing from Google is actually close to the old big thing. Google was appealing to the audience and online marketeers to take advantage of the video assets of Google, the power of video as an advertising medium and (as Torres put it) to "stop thinking about [Google for] internet demand capture and start thinking about [Google as] a driver of brand awareness”. Put another way - use Google and use online video as brand building marketing channels rather than just looking for the direct marketing response metrics that has made search so powerful. While new for Google, the online marketer and media channel mix planner this is a clear move against old media- namely the TV advertising market. It is like a declaration of war by Google against TV stations with an air of "anything you can do I can do better".

Torres and Reider went on to describe a number of the new advertising and content products that were available in this shift. Not only is this a big challenge that Google is issuing to the TV industry (especially free to air), it is a big shift in the Google advertising mindset. In our interview later Torres stressed his belief that the dramatically lower CPM rates for online video advertising as against TV made TV ad spend an “ego buy” rather than a rational marketing decision. That said, he admitted that number of views is still the best measurement metric for online video advertising.

I think this is the right move for Google but will be full of challenges. They have the world’s most powerful online video asset and with PPC costs escalating they need to change the marketer’s mindset to one of brand over direct response. They have the reach and they have the video. But success will depend on providing a more advance measure for audience engagement than ratings or views. For marketers to make the switch from viewing search and online video as direct channel to a brand building channel they are going to need a prove brand growth. The tradditional media apporach of ratings and demographics will not be enough for the sales and data hungry online marketing executive. Google will need to develop a new and more detailed mechanism for proving the value of a view.

As a coda to this post - here is an extract of the stats quoted during the presentation:

• Visits to travel sites up 12%
• On average people 9 research session before bookings. Visiting 20.3 sites
• 56% of frequent travellers visit video sites
• 77% of internet users consume video (not sure how this works with above)
• 13% of [online?] travellers have uploaded a video
• 20 hours of video uploaded every minute to YT
• 450mm – size of YT monthly audience
• YT has 5000+ premium content partners (Nat Geo). They only serve adds on premium content providers
• 40mm impressions per day on YT
• 1 in 4 Internet users visit YT each month

Did not say where or how generated statistics.

1:1 interview with Rob Torres is here

BusinessWeek on Augmented Reality - "GPS technology is not yet good enough for AR to be useful"

My first post for Tnooz was on Augmented reality and mobile. In it I have a couple of videos of some great looking AR travel apps. However since I am trapped in the Blackberry world (my company uses blackberry) I have not had a chance to try out any of these for myself. That has left open the question as to whether or not the hype of Augmented Reality matches...well.. the reality of Augmented Reality.

Steve Wildstorm (personal tech columnist at BusinessWeek) believes that AR is "Not that Real Yet". There is an interesting podcast interview with him here (part of his regularly weekly series) where he says that the GPS technology that is critical for AR to work is simply not accurate enough. At its best GPS provides accuracy to 20 meters. Wildstorm argues that a 20 meter radius error margin is not good enough to give the accuracy you need for AR to work. It is worth noting that "at its best" means all the satellites are in the right place and there are no buildings in the way. In other words it is likely that accuracy will be worse than 20 meters. Also thinks that the apps that are out there are "just modified browsers" and need to be better thought through - sometimes the apps are giving too much information or a level of GPS accuracy that is not available.

If you are interested in AR for online travel then I recommend listening to the podcast (here). BOOT recommended read/listen of the week.