The Long Tail and Travel, written by Philip C. Wolf, president and CEO, PhoCusWright Inc.
PhoCusWright's Five Predictions About The Long Tail in Travel, written by Bob Offutt, PhoCusWright's senior technology analyst
Travel's Long Tail: Follow the Momentum, written by Bob Offutt, PhoCusWright's senior technology analyst
The Long Tail, blog by Chris Anderson, Wired magazine editor-in-chief and coiner of the phrase "the Long Tail"
The Long Tail of Travel, Travolution's collection of Long Tail articles
The Long Tail on Wikipedia
Search's Long Tail, article written by Danny Sullivan, editor-in-chief of Search Engine Land, producers of PhoCusWright's SMX Travel@PhoCusWright event
THE LONG TAIL AND TRAVEL
By Philip C. Wolf, President and CEO, PhoCusWright Inc.
If you are responsible for setting strategy in the travel industry, your job is increasingly challenging. Why?
Lots of reasons.
OVERVIEW
At the last PhoCusWright Conference we cast a Hollywood-size spotlight on Travel 2.0 in the wake of Travel 1.0’s swan song. Since then, the Travel 2.0 floodgates have opened. We asserted a positive force was advancing, holding great promise for travel, tourism and hospitality. And that’s exactly what transpired.
Travel 2.0 - the travel industry's collective application of Web 2.0 - embodies how companies can differentiate themselves in a vast, dynamic travel distribution marketplace. It challenges status quo travel planning behavior. Travelers are now taking control and finding/creating the perfect trip, not just the cheapest trip.
Customers communicating with other customers has triggered an unprecedented social networking phenomenon and a resurgence in the Long Tail economy. The Long Tail debunks the old 80/20 rule or Pareto principle. Defending an 80/20 strategy is getting risky. So is automatically dismissing the value of low volume products, under-the-radar channels, small customer groups and obscure key words.
In the Long Tail, embracing niches wins because they cumulatively outnumber or outweigh higher frequency plays. Big companies are successfully harvesting lots of little things while “Davids” are beating “Goliaths” because the size of a reputation matters more than the size of a marketing budget. The alleged “leveling of the playing field” that was supposed to have occurred in the 1.0 world has finally come into its own. Little guys compete on the merits of the products and services, not the size of their marketing budgets. Big guys are all of a sudden at increased risk if they ignore too many little things.
Wired magazine editor-in-chief Chris Anderson, coiner of the term "the Long Tail," reset the stage when he said, “The Long Tail is about selling less of more.”
The PhoCusWright Conference is dedicated to unlocking potential by recognizing the interplay of new forces in the marketplace such as the Long Tail. This conference embodies how all types of travel, tourism and hospitality companies - young and old, large and small - can differentiate themselves in our vast, dynamic space.
In the Long Tail, the sum of your niches is as significant as or more significant than the sum of your dominant players.
Because travel, tourism and hospitality is the largest and one of the most dynamic industries of today's global economy, the Long Tail effect is of the utmost importance. By the end of this year, our industry is set to account for 10.3% of global GDP and more than 234 million jobs, according to the World Travel and Tourism Council (WTTC). Millions of inhabitants prepare to venture beyond their national borders for the first time.
According to PhoCusWright, we’ve reached a tipping point. Not the cable-satellite-video-Internet convergence kind, though that’s finally happening, but a different variety. A blend of 1.0, 1.5 and 2.0 is penetrating our marketplace, creating one global travel industry that is responsive to myriad customer demands and preferences. Over 50% of travel in the U.S. is now seamlessly transacted online. Several European markets are close behind with many Asia Pacific (APAC) markets entering their own explosive growth phases.
LONG TAIL GENESIS
The genesis of the Long Tail phenomenon is rooted in the rise of the Internet itself. Before e-commerce’s ubiquity, brick-and-mortar retailers rationalized (quite well!) that low volume products were not worth the shelf space, warehousing, distribution, marketing and labor cost. In other words, selling low volume products was not economical.
Enter e-commerce, and the likes of Amazon, eBay and Netflix. A retailing explosion occurred around out-of-print publications, one-of-a-kind things and documentaries. Embracing niches became a strategic imperative. “It’s more expensive to evaluate than to release: just do it,” wrote Chris Anderson.
In today’s e-commerce world, and with travel in particular, should you plan on 80% of your organization’s desired consequences stemming from 20% of your tactics?
No.
Web 2.0 technologies and applications have brought consumers and individuals to the forefront. Their influence is enormous and unprecedented. The Travel 2.0 wave has fueled the Long Tail fire, bringing the power of the little guy to new heights.
LONG TAIL KEY TENETS
a.k.a. (Finally) Realizing the Power of the Internet
- The little guy’s (product, channel, site, business) influence is significant
- The sum of the niches is embraced
- The 80/20 rule is debunked (“law of the vital few”)
- The size of your reputation matters more than the size of your marketing budget
- Distressed, “out of print” or discontinued product now has value
TRAVEL INDUSTRY REAL EXAMPLE
At a recent HSMAI meeting on the groups and meetings space, several experienced (over-experienced?) meeting planners “reminded” everyone that selling small meetings is time consuming, cumbersome and inefficient. Closing on the key big meetings, they contended, was still the holy grail.
Students of the Long Tail should have their antennae up in such a situation. Here the old guard is rigorously defending the 80/20 rule. They are the book store chain or video store chain arguing why Netflix, Amazon or eBay won’t enter the fray.
It’s safe to assume some new entrant from outside of the entrenched meeting professional space will develop an out-of-the-box approach with a suite of technology applications that figure out how thousands and thousands of small meetings can actually be organized, designed, produced and executed profitably. And when they do figure this out, the sum of these smaller meetings will dwarf the erstwhile defended biggies.
SUMMARY
This is what we observe and forecast. We stick our necks out for a living, that’s PhoCusWright’s currency.
Since its founding in 1994, PhoCusWright has tracked, analyzed and opined on the strategic center of the world's largest industry. I have traveled a long road since those early days, scrutinizing the travel distribution marketplace at every turn, braving many a metaphoric rotten tomato en route. So I often reflect from a rare and experienced perspective on how much has changed and how much will.
Current marketplace activity represents the most exciting time that I have witnessed since the first online travel wave hit. It's pregnant with potential. One reason is that travel distribution – unlike travel itself, which is largely a tangible experience – is inextricably linked with the fantastic advancements in technology.
My favorite thing underway is the challenge the many 2.0 and Long Tail new entrants are posing to the very 1.0 companies who themselves challenged the status quo a generation ago. Some courageous Travel 1.0 companies are already forging ahead with 2.0 and Long Tail strategies. Start-ups founded around 2.0 and Long Tail principles are advancing with vigor because they have no baggage. Yet some Travel 1.0 pioneers are ironically reticent toward 2.0 and the Long Tail. And plenty of 1.0 laggards are putting on the 2.0 brakes.
You can't miss the increased focus on community and niche strategies, with companies fast climbing aboard these bandwagons. It's no longer about getting visitors to your site to network with each other but about harnessing that power with search.
EXPECTATIONS ARE ENORMOUS
Fresh ideas and incredible energy are flooding our industry now. Travel 1.0 strategy doesn't work in a Travel 2.0 marketplace and Long Tail economy. There's no better time or place to seriously assess your spectrum of opportunity than right now.
At November's PhoCusWright Conference, Long Tail concepts will be explored in great detail and attendees will tap into the travel industry’s thought leaders, who will be focused on how to brave the Long Tail as they navigate the fast changing dynamics of the travel industry on a global scale.
We hope to see you in Orlando!
Philip C. Wolf is president and CEO of PhoCusWright Inc., the travel industry research authority on the evolving dynamics that influences how travelers, suppliers and intermediaries connect.
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