23 Musings

Now I've just been proved totally wrong. I wrote a while ago that paid search budgets may actually start decreasing (slightly) or stagnating by the end of 2007 in travel as marketers got their heads around affiliates, other new behavioral ways of marketing online and moved back to seeing the huge value in SEO. Also a backlash against paying per click has been expected for some time as marketers try to get everything measurable on a CPA basis.

Seems that's not the case though. Robin Goad of Hitwise has a post which talks about some paid and organic search trends in travel and shopping sites through 2007. One really interesting chart shows that the Hitwise Shopping & Classifieds categories paid search activity actually decreased in 2007 compared to 2006. Travel on the other hand grew by 15-20% during the final three months of the year.

Also, there a great chart showing the trend for paid search traffic to the two categories from late 2006 to the end of 2007.Interesting dip around July 2007 there. Anyone hazard a guess at what that may be? I know it's not the busiest month of the year but that's a hefty drop in paid search spend.

Every holiday season to date Ebay has had more eyeballs and more pages viewed than Amazon. Until this year that is.

Nielsen has confirmed that in the run up to Christmas Amazon.com has received 59,624,000 visitors compared to Ebays 59,374,000.

Not a massive difference I hear you cry. True; but Ebay has actually seen a 10% drop in December traffic year on year. That must be worrying for the senior management. Amazon has seen 18% growth year on year.

Ebay still has more pages viewed and time spent on it but in terms of users Amazon now leads the way.

IMRG the online retail analyst is to release a report stating that it is critical that retailers invest in online as more of the UK population shift to making their purchases through the web. They say that retailers who refuse to move online risk losing half their business over the next ten years as they estimate that 50% of all retail will be online by 2018.

Growth of the online retail channel outstripped all other channels in the run up to Christmas and the volume of shopping online in 2007 was up over 50% on the previous year. This kind of growth is expected to continue (although slowing gradually).

I believe this will apply to travel even more quickly than retail. The shift to online is happening much more quickly and it's possible that half of all travel bookings could be online within the next two years in the UK. The U.S. is already there according to the report here. Investing now will put you in a good position to capitalise on that growth. It's especially important for any travel companies who don't have a web presence yet (there really are some who don't still) as they really need to get their brand known online and get their online marketing processes in place asap.

ComScore has released it's final postmortem on the volumes of online retail sales in the run up to Christmas.

Monday December 10th was the biggest day for U.S. online shopping with a total of $881m spent. The fastest growing product category was video games, consoles and accessories which posted an amazing 129% growth year on year.

The week ending December 16th was the biggest weekly spend at somewhere around $4.7 billion in online sales. The year on year growth looks to have been great too looking at the graph below. Let's hope travel proves as good in the busy months we are now in!

As my first post back I thought I'd post some quick thoughts on how festive retail sales held up in the run up to Xmas.

Xmas online retail sales for the U.S. were looking like approx 30% up year on year in mid-December, now the figures are out for the whole festive period. Sales between 1st November and 27th December were 19% up year on year overall which is good growth and online retailers must be happy. Bricks and mortar stores who have websites must also be happy as the increase online will equal better profits for them as it is the cheapest cost of sale channel. However, this growth is down on last years 26%, possibly a sign of the credit crunch or just a natural tailing off of growth as the web becomes all pervasive?

Now, on to travel...

Things are looking good so far. We are up on target and experiencing traffic much higher than predicted. The traffic increase is natural as well, it's not coming from the hugely expensive advertising campaign that is being run... Search is proving our best converting source of traffic as well.

Today is predicted to be the busiest day in travel agencies, we're hoping it will be our highest day of traffic and sales of this peak period!

A Stifel Nicolaus & Co. analyst has downgraded three of the biggest online travel players from buy to hold warning of a possible slowing in the market place. Orbitz Worldwide Inc., Priceline.com Inc. and Expedia Inc. have all been downgraded saying that while 2007 is seeing strong performance, trends in U.S. travel have dipped in the fourth quarter and may mean that consumers have less cash to spend on discretionary purchases, such as vacations. This is sure to be the same in the UK market as the credit crunch makes consumers more nervous, higher interest rates mean bigger mortgage repayments and general economic uncertainty means less are willing to shell out on big purchases.

Is this an omen of the coming months for travel? Could we see a really noticeable slowdown in January as the expense of Christmas bites as well?

Travel is always one of the first industries to suffer when consumer confidence dips. It's a big expenditure and not essential so it can either make consumers hold off for a few months to make the purchase or change their thinking and perhaps make them book closer to home. Could bode for a good year ahead for UK tourism and short haul tour operators (and could mean no fun for long haul...)!

Nielsen has released a report which details the satisfaction of online shoppers during the last few weeks Christmas rush.

Apparently 82% of online shoppers said they either very satisfied or somewhat satisfied with their online purchase experience. The top ten destinations all scored over 80% so should be very pleased with themselves.
Highly commendable that a site with the volume of visitors that Amazon receives does so well, testament to the hard work they put into their user experience.

Let's hope the travel industry can do as well in January!

So, no sign of the credit crunch deterring shoppers in the run up to Christmas. E-commerce sales continue to break all the records with reports of struggling infrastructures and throttling on load balancers a plenty.

The latest figures from ComScore show that the 10th December was the biggest day of online shopping so far with a total of $881 million spent that day alone. That's a whopping 33% increase on last year. They're now estimating total spend to date (this season) of $20 billion.

Still looking good for those of us in online travel. The retail rush usually sets the scene for how keen shoppers are going to be to part with cash for a holiday in January. Let's just hope there's no more mortgage/credit horror stories before January!

I find it amazing that reports such as todays figures from the UK's GetSafeOnline campaign are still occurring in 2007.

GetSafeOnline have surveyed 2,000 British adults asking them about their online shopping thoughts and habits. 20% of respondents said they felt too scared to trust the internet as a platform for buying goods and worried about credit card fraud and identity theft.

I believe it's down to website owners to make their customers feel secure by making it clearly obvious that they can be trusted, displaying adequate signs of security, providing alternative contact details (real world ones) and holding the hands of any worried consumer through the transaction itself.

There's a lot to be said for going down this hand holding route. If you can turn the 20% who don't shop online into people who trust you enough to give it a go you could reap the rewards and raise your conversion rates.

Hitwise have released a new report on the market share of the major search engines today (based on U.S. data). Unsurprisingly, the report shows that Googles dominance continues to grow rapidly. Google is said to now account for 65.1% of the search traffic delivered online, up 5% from this time last year. Yahoo, MSN and Ask are said to be at 21%, 7% and 4%, all down slightly year on year.

Interestingly for those of us in the travel market 33% of travel traffic is said to be from search engines, thats 15% up year on year. That's a big jump, perhaps we're all finally nailing our SEO and PPC strategies.

Google shows its dominance in the online travel sector by donating 21% of travels traffic all by itself which really shows where the focus needs to be for search engine marketers in the travel industry. That's a 26% increase in the amount of travel traffic that Google contributes to since last year, again a huge leap.

All this bodes very well for the forthcoming January peak booking period!

It's the time of year when online retailers sweat at the thoughts of their servers breaking. Christmas shopping puts their systems and websites under the most pressure of the year, this year they seem to be doing pretty well!

The Guardian reports that online spending hit a high yesterday at 1.09pm (GMT). In that single minute online shoppers spent £767,500 online! This surge in spending is expected to make yesterday the biggest online shopping day for Britain ever. In total, it's been predicted that shoppers may have spent approximately £370M online yesterday. That's an astounding figure and shows just how pervasive and accepted online shopping is.

Another report out yesterday from Aegis Group has found that price is the most important factor for online shoppers. This is something known all to well by those of us in the online travel industry and something we constantly have to keep an eye on to be competitive. In the UK, online prices are thought to be roughly 13% cheaper than normal bricks and mortar stores. Here's the graph of what users think is important to make them shop online:

In the U.S. December 6th has proved to be the biggest online shopping day so far with a total of $803M spent. That's 28% up year-on-year. I'd expect that to be eclipsed as we get nearer to Christmas. More than $18B has been spent so far this season.

Great news for everyone in e-commerce and online retail especially. The profits generated from this online buying spree will ensure that corporations continue their investment in their online offerings and ensure that the skill sets required will continue to be in demand.

According to the latest J D Power survey anyway...

The industry as a whole has slipped in their rankings from a score of 810 out of 1000 down to 802. Not a massive slip but in these days of advanced internet applications we should be trying to raise that figure significantly.

Hotwire, Travelocity and Expedia have all done very well. Other findings include:

• The accuracy of reservations made on independent travel websites has improved slightly since 2006. In 2007, 95% of reservations were reported as error-free, compared with 94% in the previous year.
• The study also finds that nearly one-half (49%) of all travel-related reservations in 2007 were booked on the web, an increase from 46% in 2005.
• Across the industry, independent travel websites overall receive their lowest marks for appearance/design of website.
• Generation X and Y travelers are more likely to book a reservation on price-focused websites, such as Priceline.com and Hotwire.com, compared with Baby Boomers and Pre-Boomers.
  

Here's the list of results:

What this says to me is that:

1. Consumers expect a much better experience than travel sites can provide currently. Their expectations are advancing quicker than we can develop new online experiences for them.
2. OTA's are spending so much on advertising and product that they are not advancing technically at the rates they used to be. OTA's used to be some of the most advanced websites around, no more I'm afraid.
3. Usability is not being embraced by the travel industry. This needs to happen and fast!

I would love to see if satisfaction has improved with other types of online travel players such as hotel brands and tour operators. My gut feel is that this result is another sign of the consumer shift to doing it themselves and away from online travel agents. Also a sign of the increasing sophistication of the historically lacking tour operators.

Yesterday I blogged about the peak online travel booking period and what people can expect to see in the coming peak trading window of January and February. I said travel websites were showing year-on-year web traffic increases of 15-20%.

Nielsen have just released data on the increases seen by the retail industry on Black Friday (one of the busiest days of the retail calendar). They're reporting increases in traffic of 10% year-on-year. They're also talking about the increasing influence of the crowd and say consumers are discussing tactics and swapping tips on where to shop online. The other big story of this year is the increasing influence of incentives and discounts.

So what does this mean for travel? Well, I still stand by my 15%-20% up prediction. Travel has seen more growth throughout this year than retail and I strongly believe this January will be the busiest yet by quite a margin (for us if not for the market as a whole). All the data I have supports this. For retail, who have been operating at a much more mature level than travel online, to be 10% up it bodes well for the traffic increases travel websites can expect. The influence of the crowd and incentives will also play a big role this January, with many travel providers planning sales and discounts through the peak season.

Again, I urge all travel webmasters to get their sites in order quickly or risk watching your brands web experience become a sticky, slow experience for the consumer.

One of the things I found really strange when I started in the travel industry a few years ago was where in the year the peak booking periods occur. I'd been used to working on e-commerce projects in industries which either had steady purchase patterns, peaks prior to christmas in retails or really pronounced peaks in B2B markets (renewals periods etc). Travel however peaks at two times of the year (as far as I can tell anyway) and is fairly steady the rest of the time.

It's not the the fact that it peaks twice that I found strange, rather it's when those peaks occur.

The first peak travel booking period I encountered was in July and August. This was mainly late bookings for the autumn and winter period and consisted of a lot of people looking for bargains and breaks to the sun. This struck me as an odd time to have a peak in bookings. It's perfectly understandable for people to be booking such holidays at that time of year, a lot had just come back from holiday and were looking forward to the next and others are in the midst of the school holidays and wondering what to do with the kids during autumn half-term. I just didn't expect the volumes that occured.

The second peak I encountered is the more pronounced one in January and February. Now this seemed really odd to me. Christmad just out the way, major expenditure has happened in nearly every household and yet here were consumers planning and purchasing holidays for next summer with price tags in the thousands. I can understand the winter blues effect but it still seems alien to me that this is the period which can see an online travel company make it through the year if bookings are succesful at this time.

So what to expect this year?

Economically it's not looking so good this year. Consumer confidence has been dented by the current market instability and disposable cash is not going to be as readily available to some. This could result in some companies seeing less growth year-on-year than in previous peak seasons. This could work in the favour of tour operators who take deposit payments to secure bookings and allow consumers to pay the rest off in installments. The online travel agents will be the ones who feel the pinch (if indeed there is one) as they expect full payment up front for all bookings.

Traffic is well up though. Currently, traffic to online travel websites is up 15-20% year-on-year, that trend should continue into the peak months and could be more evidence of the continued shift to online booking channels in the travel marketplace. It's also testament to the maturing of the online marketing activities of travel companies. I hope you've got your infrastructure sorted out or the rush of visitors to your sites could make them grind to a halt unless you're prepared!

Bookings so far this year are also up with the industry as a whole seeing far more bookings going through on their websites. Again, this should continue into the peak months.

So all in all we should see a decent peak period again this year. It's at this time of the year that e-commerce teams in the travel industry are optimising their websites, performing last minute usability, launching new functionality and expanding their hosting capacity in order to be in peak condition for January. It's a really busy time for us but the effort will be well worth it when January comes and you can reap the benefits.

A succesful January can make or break a travel company and preparing your online channel for this could be the activity with the single highest ROI that you undertake this year!

July's online retail sales have soared 80% to a record amount last month as people in the UK sheltered from the rain. Internet sales rose to 4.2 billion pounds ($8.3 billion) from 2.34 billion pounds a year earlier, figures released today by Interactive Media in Retail Group show.

This will continue to grow as well! There's some serious money being invested in e-commerce systems at the moment and I know of a number of major retailers who are ditching legacy systems in order to take full advantage of the online medium, that should see significant increases in volume and value of sales in the UK. Some of our biggest retailers are still struggling with legacy systems and trying to integrate them with e-commerce systems can be fraught with difficulty (and cost), throw in a call centre and fulfillment house and the system mix gets even more tricky.

Now everyone in e-commerce knows that Tesco.com is one of the biggest UK internet retailers and therefore one of the biggest e-commerce sites in the land. Tesco have been hugely successful in their ventures online and it's easy to see why if you have ever used their home shopping website (great usability).

News has come out however that the DVLA (Driver Vehicle Licensing Agency) is actually a bigger online player now! They recently put the ability to renew your tax disc online and it's getting huge usage.

On the DVLA site 273,500 motorists buy their tax discs electronically every week with £4.2m generated every day, compared with 250,000 weekly online orders to Tesco generating £3.6m per day. On the busiest day in March 2007, £9.9m was generated in tax paid online, and to date, 12.5 million of 33 million UK vehicles have been taxed online.

Of course the main reason for this is convenience, not having to queue at the Post Office is the reason I use it and to have it delivered to your door is so easy.

Kudos to the DVLA for being a government department who've built a service that gets used and people understand!

The volume of retail business taking place online is growing at an amazing rate! A survey just out from Verdict Research places the figure for online sales in 2006 at £10.9bn and they predict that number will have grown to approx £28.1bn in 2011!

That's astounding! What makes the growth rate even more astounding is if you see the historical growth as well:

1997 £100m
1998 £400m
1999 £1bn
2000 £1.8bn
2001 £3.2bn
2002 £3.8bn
2003 £5bn
2004 £6.4bn
2005 £8.2bn
2006 £10.9bn

No wonder the web is booming! I can remember the cheers when e-retail hit £1bn back in 1999 (not long before the bust), let's hope breaking the next digit won't be the precursor to another slump!