Barney Pell's Weblog

Niki: A lot of people claiming the lowest price, with guarantees. Is that consumer confusion a good or back thing for consumer search?

Jafri: Never go to sleep at night thinking you've got the best deal. How comprehensive, how many sources, how deep can you drill, how relevant content can you bring back. 30% of the market is just in the wholesale market, which consumers can't get access to. Is there a search engine that can deliver that content? Otherwise it's not providing full value. If the supplier says I'm willing to lower my price, but only if you give me real-time market info -- I'll lower my price by $10 to get a sale of $1000. Those are the new business methods that search engines will bring to the market.

Niki: Issues with crawling expedia's listings, etc, and where that will play out?

Scott: Our policy is not to crawl anyone without explicit permission. We spend a lot of time building relationships. You see online travel agencies moving slowly into travel search as it's up to us to provide and demonstrate value for partners. Companies that make it possible for travelers to find the best trip for them, not just the lowest price, will add the most values. We're in early discussions with a lot of partners. There are concerns on both sides. Within FareChase we want to main unbiased and accurate results. We don't charge for free clicks. We believe travelers need to know that rankings aren't based on inventory, but what's most relevant to search.

Jafri: United did a study and found a consumer would switch carriers for a $5 price difference. Success of low cost carriers is all driven by price. The medium carriers need to lower their price. For the consumer it's important to get best value for their dollar. In our research we look at price-driven consumers if it's apples to apples. People are looking for experience and relevant, richer content and go to sites with more comprehensive experience.

Beatrice: Bring some suppliers that were reluctant to work with meta search engines. American Airlines went so far as to sue a meta search engine. Mobissimo now has America Airlines in our search engine. The market evolves, and suppliers come to recognize the value to them. The suppliers, and travel sites are in a review period. In the past, Expedia, Travelocity, and Orbitz touted themselves as search engines. Now we're saying we are the search engines, you're just representing some of the inventory.

Phil: We see some holdouts, but many more players are turning to travel and meta search and embracing it. Intercontinental hotels pulled out of expedia and are working with travel search. Orbitz and Hotels.com are working with sidestep, but not other players in travel search. Partners are selective, looking for (1) partners that are partner centric, and (2) big enough audience to be interesting. I'm confidence the holdouts will come to join us.

Niki: Who are your direct competitors, the general search engines or online travel agencies?

Phil: The easy money is shifting transactions away from traditional online agencies. Hoteliers don't view travelocity fondly, it's an expensive way for them to sell. When we approach them with a different model, driving transactions direclty totheir website, bulding direct relationships with their consumers and building their own brand, not just the online agencies' brand, that's attractive to them. Hoteliers are having better luck driving transactions through google and yahoo, but should play with travel search engines as well.

Beatrice: Marketing money is still mostly offline. So the first shift is to move that money online. Travel suppliers can directly track ROI from online spend.

Niki: What kind of cost difference is there for cost offline, through search engines, travelocity, etc? How much cheaper, how compelling?

Beatrice: Certain travel keywords on general search engines run from $2-5. The meta search engines are moving to CPA, so no risk, or when there's a referral. CPC levels range from .50 to 1.60. Definitely below the prices on the general search engines. So there's a big opportunity there, and for a more targeted opportunity to get a user who is shopping, not just to research information.

Scott: For Farechase, we built product with search monetization. We surround free results with paid/branded results on a more traditional advertising basis. That's how Yahoo is positioning different for vertical search. It does a lot for consumer confidence and trust, hard to come by in the travel industry. And extremely good value proposition for advertisers. We've seen that with suppliers.

Jafri: Airlines pay $30 per customer acquisition through traditional channels (sabre, travel agents online or brick and mortar). From search engines, they're paying $5 per customer acquisition. So they can cut the cost by a big amount, enough to restore profitability to the airlines.

Niki: Advertising pricing in search world is typically per click. But in travel it's per acquisition / transaction. Is that a sign of an immature market or a permanent phenomenon?

Beatrice: Depends on suppliers needs. Some are driven by ROI, who will opt for CPA. Others will be interested by CPC as they also have advertising on their sites so they can monetize each visit. Others are driven by brand. It's difficult to convey a brand message about one hotel on a google text ad, but an image can do this better. So the media will likely shift.

Phil: We think it's important to be flexible aboutg models. Who are we, as emerging companies, to tell them how they must do business. They have different groups, with different methods for success. So we have to listen to them and price accordingly.

q: Mike Gibson. You're doing a lot of crawling. Need for real-time data sounds important. As airlines might be thinking how to price their seat inventory, web crawling seems to run contrary to real-time data.

Beatrice: Web crawling is one of the methods to get real-time availability. We don't have the luxury of feeds. Airline has limited inventory per class of bookings, which may disappear each minute. If you want to find a ticket in the summertime to Europe that can be incredibly frustrating. Sometimes the partners do cache part of the inventory and you don't get the most up to date image of the latest inventory. Don't see a way ultimately other than XML feeds crawled in real-time.

Niki: Are those conversations about XML feeds starting to happen?

Jafri: We're in discussions about getting XML feeds. But we're dealing with 30 year old store and forward technology. They aren't where they can provide real-time XML feeds. Some companies are taking that forward data feed, converting to XML feeds.

q: Ofer from Raw Sugar. How to discover information within destinations, rather than just pricing to get there?

Scott: Travel planning is a multi stage multi decision maker process. We look at it as a funnel: Inspiration, research and comparison, booking, on trip, and post trip experience. There are products and services to provide at all those stages. Yahoo Travel is being integrated into the farechase experience. Like a mapping tool to show you attractions around a particular hotel. It's very important for travel search engines to get beyond just providing info about the product and prices, but helping people to plan and book travel.

Niki: WIth local search panel, IYP 20% of the quries are related to travel. So travel is a big factor around local search as well.

q: What incentive do suppliers have to work with one or few of you, vs. getting to as many channels as possible? E.g. What got American to sign up with Mobissimo?

Beatrice: We are the most comprehensive travel aggregator. Half of our queries are coming from international search. We aren't spending money buying keywords, so we don't compete with hotels. We educate users on benefit of using a search engine. The product has an international component. And query management system. Travel suppliers are based on very old structure that doesn't permit tracking, they have to pay for every query to those systems. Sending a query that will convert is the issue. As you aggregate more searches you also need a system to manage the queries.

Jafri: Value to suppliers is critical, they have to buy into it. First distribution was through online travel sites. They made it clear that that model is broken, they're spending too much money on this. They have 3 problems: They spend $10B on distributing their products, they have $30B in unsold inventory, and these travel sites are owning the customers. Any travel search engine that addresses these issues will get the support of the suppliers.

Phil: You not only provide qualified queries, but also volume. If any of you manage search engine marketing campaigns yourselves, you think about range of search engines on which you advertise. Are you going to advertise on Canoodle or to more and deeper with an engine that can provide volume? It's the combination of quality and quantity of leads.

q: Growing distribution through affiliate programs?

Jafri: That's important. There is no real leader in travel search yet. To get traction in marketplace we must team up with sites that can generate a lot of traffic.