Center Stage At The PhoCusWright Conference
THE PERFECT STORM: SEARCH, SHOP, BUY (PART 2)
By Philip C. Wolf, President and CEO, PhoCusWright Inc.
THE SEARCH, SHOP, BUY BLUR
Each element in the search-shop-buy triumvirate is undergoing, or poised to undergo, a period of intense innovation, making each increasingly significant, yet interdependent. In fact, searching, shopping and buying – once distinct terms describing different behaviors – are blurring at a furious pace.
Search: Search is the starting point for travel planning, in which travelers move from an undefined universe of possibilities to a well-defined universe of possibilities. General search engines wield enormous influence as the starting point for travel search, with travel companies battling it out over keywords and organic search. Vertical search, traveler review and metasearch sites are just three activities that incorporate both searching and shopping. New intermediaries attract eyeballs and offer an ever-growing collection of content via consumer tools that help travelers to connect with one another, share advice and learn from the experiences of others. There is still an enormous amount of unmonetized search, most notably via the online travel agencies (although that, too, is changing). Technology innovation will make it possible for travelers to start at some type of search engine and instantaneously arrive at the very specific travel content – and price – they seek.
Shop: Shopping takes place once a more defined set of possibilities has been identified. Travel 2.0 tools have made shopping for the perfect trip into a consumer sport; many travelers are inspired by the "thrill of the chase.” Travelers shop on myriad sites, many of which didn’t exist three years ago. Social, media, intermediary and supplier sites are all part of the mix, with referral and online advertising serving as a new type of booking fee. Pay-per-click and pay-per-action are the new commission and markup. Travel intermediary business models are under unprecedented scrutiny, while supplier confidence vis-à-vis sales, marketing and distribution strategy is renewed.
Buy: The implications are less obvious. Partners continue to vie for ownership of the customer – the itinerary – even as competitors have the potential to become suppliers and collaborators. Yet in this new marketplace, as the Perfect Storm redefines intermediaries, could the debate over who owns the customer ultimately grind to a halt? The rising impact of search and shopping can tip the transaction scales to either suppliers or intermediaries. At the same time, deep-linked referrals obscure the point of sale, so many travelers cannot distinguish among search, shopping and transactional sites. But does that even matter?
TRAVEL INDUSTRY REAL EXAMPLES
Taken together, the forces of searching, shopping and buying create a Perfect Storm that has the potential to transform travel, tourism and hospitality distribution in countless ways.
- In what may prove to be the leading edge of a front, IHG and Expedia have united around the economic principle that media and transaction value to suppliers should be separately monetized. This change could begin to revolutionize the relationship between suppliers and online travel agencies, as the latter finally begin to monetize the massive amounts of search traffic they receive.
- Airline and hotel sites are behaving more like online travel agencies. In North America, the major airlines are offering much more than air bookings, with cruises, lodging, activities, and even dynamic packages cropping in. British Airways just previewed its slick new vacation planning and booking suite. One previewer remarked, “It’s better than an OTA!”
- Kayak wound up with TravelPost after acquiring SideStep. CEO Steve Hafner now has TripAdvisor in his crosshairs.
- Just as traditional intermediaries are beginning to experiment with referral and ad revenue, many of the “nontransactional,” new intermediaries are in fact seamlessly integrating referral-based transactional capabilities.
- Another crop of newcomers, instead of directly connecting people with travel (or other kinds of) suppliers, are connecting people with other people, encouraging them to build profiles and social networks that could ultimately foster new types of sharing, social search and shopping.
- Microsoft’s acquisition of Farecast begs the question: Will Google follow suit with its own metasearch application? This possibility is feared by many.
And the list goes on…
EXPECTATIONS ARE ENORMOUS
Attendee numbers for last year’s PhoCusWright Conference in Orlando topped 1,000 for the first time in its 15 year history. This landmark is a testament to PhoCusWright’s commitment to creating the travel industry event of the year, where global travel executives gather to immerse themselves in the strategic center of the world’s largest industry.
We observe, we forecast and we stick our necks out for a living – that is PhoCusWright’s currency. Our team has traveled a long way since the early days when “travel technology” first became a recognizable term; we’ve scrutinized the travel distribution marketplace at every turn and braved many a metaphoric rotten tomato en route. By reflecting from this rare and experienced perspective, we understand why current marketplace activity is the most momentous since the first online travel wave hit. It’s pregnant with potential. New ideas, new rules and new entrants are busy challenging the status quo.
A new revolution is dawning. It is more imperative than ever to adjust strategy around trusting your instruments and intelligence. Center Stage at The PhoCusWright Conference is dedicated to unlocking potential by recognizing the interplay of new forces in the marketplace. This conference embodies how all types of travel, tourism and hospitality companies – young and old, large and small, east and west – can differentiate themselves.
See you in Hollywood!
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