23 Musings

This image from eMarketer shows just how sewn up the online ad world is by the big four...

When Google drops the branded terms rules on 5th May I reckon their revenue and share will leap as the cost of those terms in PPC rises!

Nicholas Carr (former exec editor of the Harvard Business Review) has just posted a rumour on his blog that Microsoft may be planning to announce a move to push it's applications into the cloud. It's something that's been expected but there hasn't been any rumours that it's impending for ages. Moving to web access for apps is a natural thing for Microsoft to do soon and could be huge!

Nicholas is highly respected (I've been a fan of his FT and Guardian articles for ages) and even if the rumour isn't true it most likely does mean some kind of announcement is coming soon.

Amazing news today that Microsoft are set to provide software blueprints on their website and promise not to sue developers who make use of them (for non-commercial purposes).

Have Microsoft grown up and realised that a closed environment is not the best for fostering innovation, something which Microsoft used to have in heaps but seems lacking lately?

Really good news for those working on online office solutions as interoperability should be much easier to proved. And great news for users as this could open up many opportunities to make software more accessible and open to all.

News here from ZDNet that some of the largest online travel agencies in the U.S. may shift their focus abroad in order to keep growing their business. Chief execs at Priceline, Orbitz and Expedia all said at a summit this week that they would be focusing on emerging markets in an aim to capture as much of those markets as possible.

Asia-Pacific seems to be the particular focus but there is still work to be done in Europe by some of these large players. Orbitz, Priceline and others such as Travelocity do not have the profile in Europe that Expedia have built up. I'd expect to see some more aggressive tactics over here from companies like them.

This could make it an even tougher year from domestic players especially with the economic climate in the U.S If the Americans stop spending I'd expect them to put their efforts into regions which are not so economically challenged.

Reuters have been holding a Travel & Leisure Summit in Los Angeles and this was one of the topics of conversation. The main answer seemed to be that deals will be key!

While consumers may tighten their belts, hoteliers may give better rates to online travel agencies as they will be more eager to fill their rooms. This should really benefit the large online agents such as Priceline, Expedia, Orbitz etc.

While a recession could erode demand generally it can also have the opposite effect in the activity of bargain and deal hunters as more people hunt for something affordable. This could benefit not just the big players but also the price comparison websites as they have access to so many rates they are the obvious place for any bargain hunter to start their search.

Another factor of economic weakness could be airlines who cannot fill all their seats, this should push them to offload unsold stock to online travel agents and may mean that there are some better deals than usual available.

Of course this is all conjecture, at the moment we have no idea how bad an economic downturn could get (wait for the commercial property market to show it's weakness) or how long it could last.

My tip for this year is price comparison websites. They are positioned well as far as price goes for a year of weaker demand and this has to be the year that they finally improve their user experience to a point where they are so easy to find deals that they start to erode market share of slower moving websites (remember, a lot of price comparison sites are technology companies rather than travel). Looking forward to seeing how Kayak, Mobissimo, Travel Supermarket etc get on in this economic climate!

A study by ComScore, Tacoda (behavioural ad network) and Starcom has turned up some not wholly unexpected results regarding the profile of users who are frequent ad clickers in the U.S. online population.

It turns out that measuring your banner campaigns performance on click through rates may not actually signify brand engagement to the level that you've been expecting.

There is a small group of consumers out there who account for the vast majority of all banner click throughs. These heavy handed individuals make up just 6% of the online population in the U.S. and yet they account for 50% of all display ad clicks. Worse still, this small group is not fully representative of the public at large, rather it is made up on predominantly users between the ages 25-44 and with a household income of less than $40k. These people spend a lot more time online than the rest of the internet population but at the same time their spending online does not proportionately reflect this heavy usage.

What does this mean for marketers? Well, it could suggest that good click through rates do not correlate strongly with good brand awareness for the ads subject.

Time to diversify! Banners have their place, best used as a response mechanism to attempt to acquire or convert users, and that means best measured for effectiveness using other metrics than click throughs. Conversion rate and acquisition numbers are a far more accurate measure of success. A brand specific measure may prove to be engagement and their are now ways to measure engagement with banners and online adverts. Diversifying your online spend into other mediums is key, making sure you are represented well in search, more viral types of advertising and offline will have a better overall effect on your brand equity.

It's up to web people to educate your marketing departments, many of you will have understood or suspected this for a long time!

The IDC have announced that the market for U.S. internet advertising grew by a massive 27% in 2007.

Interestingly though, while Google grew by 40% year on year in Q4 that was down on their growth a year earlier. That made their market share slip by 0.5%, but they do still own over 23% of the market. Something to do with the coming saturation of search marketing perhaps?

IDC says a merged Microsoft-Yahoo would command 17% of the U.S. online ad market, so still not enough to topple Google from the top spot.

One wonders if the figures for Google include DoubleClick yet??

Ok, this isn't really a political post at all, rather it's about a new suite of online image editing tools called Aviary. They've put a great screen cast on YouTube showing just how cool their suite of tools is. This is impressive stuff for an online tool, how long till we can all ditch our bloatware and move to these online tools?

Looking through the rest of their product blog this is going to be very cool indeed!

And it's not just images; they have a whole suite of tools from images, to video and even audio related.

PhocusWright has released it's 2008 Travel Trends report which looks at some of the developments in the marketplace that it expects to dominate the year. There's a brief overview here.

In short they expect:

• Mobile to grow (no massive surprise there, it's been coming for years but travel has been very slow on the uptake)
  
  
• Consolidation in the industry to continue (again a safe bet, I don't think we've seen the last of the mergers, however this year I expect to see online only concerns looking at mergers to stimulate growth and increase market share)
  
  
• Social and e-commerce approaches to converge (strange one this, I know there's a lot of social experiments that are totally unconnected to a companies e-commerce facility but this will continue as players find their feet in the social waters. Any decent foray into social should always have an e-commerce edge anyway, even the most brand focused campaign should be aiming to drive bookers at the end of the day)
  
  
• Metasearch to come of age (this could be the biggy! I'm waiting for Kayak or someone like that to launch fully dynamic packaging through metasearch, that could be a clincher that sees off the competition. I also expect tour operators to move towards a more metasearch model online by supplementing their product through GDS')
  
  
• Media-based pricing (interesting move from Expedia earlier this year that has triggered this one, will certainly be interesting to see if others move this way, especially those with their own stock as price flexing to match their media spend will be more difficult)
  

I think they've missed one big thing that we will begin to see on travel websites and that's intelligent or guided search. My number one complaint is the lack of relevance in cross/upsell offerings that are pushed at you during an e-commerce process. The rise of tagging and meta data on products will help push this forwards (as well as the rise in technologies that provide this kind of functionality). Another interesting area to watch will be semantic web, expect to see a travel site of some sort try to get this right this year. Interesting year ahead!

ComScore have released figures for the biggest U.S. web properties for December. MarketingCharts have the detail here. Obviously, retail is the big show, and as usual Yahoo just pip Google, even though they have many more pages. Google should overtake them soon.

Travel shows with Expedia in 41st place. January should be a very different story as travel sites shoot up the rankings.

Full list of the top 50 below:

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.

Google's power and influence in the online world has been demonstrated again today with the news that IncrediMail has had it's Adsense deal with Google stopped abruptly.

IncrediMail received a large amount of its revenue from displaying Adsense adverts to its users. Now this has suddenly stopped and IncrediMail is feeling the ramifications reflected in its share price which dropped 40%.

No real news as to why the deal has ended but the Adsense account that was used has been suspended so it's looking like it could be less than amicable.

This really shows the power Google holds over many websites that are considered to have good revenue streams. Switch off the major source of that revenue and what is left for them to survive on. Perhaps some of these websites find they are making so much off Adsense that they neglect other revenue sources and leave their eggs in the one basket.

Hitwise have released some new figures (found via Marketing Charts) which show that Google managed to account for 66% of all U.S. searches during the four weeks up to the 29th December.

It seems we're set for another year of Google domination in the search engine market. I can't see anyone making a dent in their market share for quite a while (although the Microsoft/FAST deal may make things interesting eventually).

Another interesting stat from the report is that the travel sector has received 22% more traffic from Google from December '06 to December '07 and a 12% increase in traffic from search engines in general.

This shows that for those of us in online travel the search engine is still going to be the major source of qualified traffic. Time to shift that banner spend into something more lucrative like paid search!

For the firs time ever more travel in the U.S. was booked online than was booked offline in the last year. This is according to the PhocusWright Consumer Travel Trends Survey.

The study said that 51% of US travel was booked online in 2007, and it projected that percentage to increase to 56% in 2008 and 60% in 2009.

The survey also said that travel products with multiple components, such as packages, are being purchased less frequently online, while simple components - plane tickets, for example - are being purchased more frequently.

That last point is really interesting! I've always assumed that as online booking systems get more sophisticated users would become more comfortable with booking packages online. It would seem not! Something to be said for keeping it simple perhaps, maybe all the new technologies and booking processes being thrown at users are actually overkill and making it more confusing than it used to be? Or perhaps dynamic packaging is not proving the hit with consumers that it is with suppliers? An interesting point, and one I'll be keeping an eye on as I'm predominantly in the package industry.

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!

There's a really interesting story on Travel Mole today. It's a guest comment from Euromonitor taking a look at the potential impact of the current global credit crunch on sales in the travel industry.

I've been wondering how this is going to affect us in our January peak month. Will we see the growth predicted, or will we see little to no growth year on year as consumers tighten their belts after an expensive Christmas and with the thought of credit problems to come.

Euromonitor warn that any recession in 2008 could be a real wake up call to an industry who have seen significant growth over the last few years. They're right, a real recession would cut household spending significantly and obviously expensive purchases such as holidays are the first to be cut from the budget. Of course this could be further off than January, a recession takes time to bite and, if indeed we are heading for one, it would be middle of next year before it would really show it's teeth (I believe).

Euromonitor see a recession as unlikely and rather predict a drop in consumer expenditure growth. However they still expect to see consumer expenditure grow by 2.25% in 2008, compared to 2.5% in 2007. That sounds like too small a drop in expected growth to me. Having worked in financial services I have many friends in senior positions in financial institutions, all of whom agree with me and think there will be significantly less growth than that next year. Time will tell...

One thing in our favour though says Euromonitor is that if we do see a drop in the desire to spend then the travel industry areas that will still succeed are low cost carriers and internet operators. This makes perfect sense as the hunt for cheap deals happens online these days and therefore travel companies offering online discounts and incentives to book will do better. Price comparison websites would be my other tip for a year of lower consumer spending, they'll get more traffic (on a percentage of traffic available basis) as more users want to compare deals. Dynamic Packaging providers will also do alright as long as they have access to low cost carrier fares.

Anyway, the point of this post (I'll get there eventually) was to post a graph showing growth of online travel by year. It's using figures from Euromonitor taken from the article linked above and shows growth of online travel sales by industry segment.


So, the graph above shows that traditional package holidays are growing the quickest of any online industry segment! Great news for tour operators everywhere, I've always said there is still huge potential for packages if the user experience is right. At the end of the day, customers don't know the difference between a dynamic package, a traditional package and even component packaging. All industry jargon, ignore it and focus on delivering the best booking experience you can!

Also interesting is the jump in Dynamic Packaging as it took off, and then the massive slowdown in growth the following year. Looks like everyone jumped on the bandwagon in one year, or more likely the ability to distinguish between the two became blurred for Euromonitor as it has for consumers.

The upshot of this post is that we may not see the massive growth we have all been expecting in January if this credit crunch gets any worse. So in that case I hope you have all got your developments in place before the Christmas lock down so you can get as much value out of the visitors who have money to spend as you can!

I've been thinking about how useful services such as this could be and then I come across one that already exists, and it's made Time Magazines top 10 websites of 2007.

Dontforgetyourtoothbrush.com is an online holiday checklist tool. Not for planning and booking your holiday itself, but rather for allowing you to plan the run up to going away. All the useful stuff like getting the dog into kennels and booking a taxi to the airport.

It gives you a planning list to help you remember what you need to do when in advance of going away. A packing list, to help you remember what to pack. You can then choose the elements of both of these that you'd like to print or email to yourself (or others).

Very useful, and it works pretty well!

However, I'd like to export my planning list to a calendar. Outlook, iCal and hCalendar (Microformat) compatibility would be a real benefit with a service like this. I'd also like it to integrate with other services so if I put in that I require a taxi to get to the airport it would offer me local taxi firm numbers.

This strikes me as the kind of thing travel companies should be providing themselves. It's simple, will engage your customers and gives loads of upsell opportunities. Might get my thinking hat on...

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.

The concept of internet access on airplanes is gaining momentum fast. In the latest announcement, JetBlue Airways Corp. have announced they will be allowing basic email and messaging access through Yahoo Inc. from next week.

They'll allow two models of Blackberry to use WiFi as well so their owners can access work email and their own services.

It's a great step in the right direction. I can't wait to be able to go on a business trip and actually be productive on the flight.

The future could open up all sorts of possibilities for the online travel market. Any customer who's booked with you could get access to your content and services while on their way to a holiday they booked on your website. Lot's of opportunities for value added services and increasing customer engagement!