Google is said to be considering integrating Twitter-like micro-blogging into Google search. Twitter is the poster child for disruptive technology and the Google behemoth is grappling with how to deal with pesky Twitter, with its social-media game-changing ways and potential for changing the search dynamic, too. Likewise, the leaders of US travel start-ups discussed the…
Disruption keeps online agencies on their toes
Google is said to be considering integrating Twitter-like micro-blogging into Google search. Twitter is the poster child for disruptive technology and the Google behemoth is grappling with how to deal with pesky Twitter, with its social-media game-changing ways and potential for changing the search dynamic, too.
Likewise, the leaders of US travel start-ups discussed the state of the industry, and disruption, innovation and inspiration in the travel planning and booking processes, after Expedia referred to itself as a legacy online travel company and aired concerns about the difficulties that OTAs face in differentiating themselves.
Gregg Brockway has worked both inside and outside the Expedia tent. He co-founded discount travel site Hotwire, later acquired by Expedia, and now serves as president and chief executive of TripIt, one of a bevy of companies, including TravelMuse, UpTake, DealBase and NileGuide, that are labouring to break the OTAs’ grip on the online travel consumer.
Brockway defines the trip lifecycle as inspiration > planning > booking > pre-trip > trip > post-trip, and points out the OTAs and suppliers own the booking phase, which is where the most money has been historically.
That leaves openings for disruptive companies to nibble at the OTAs’ business during the inspiration, planning and post-trip phases. As many travel executives point out, it’s not that the OTAs’ lack of innovation and differentiation occurs because they are dummies. Instead, they play it safe so as not to lose their grip on their consumer base.
Protecting ones own turf to the detriment of innovation is a factor that impacts all manner of tech companies, according to Rick Seaney, CEO of FareCompare. Seaney recalls presenting a new way to process air fares to Sabre Labs six years ago and I watched as their not-invented-here gene slowly glazed them over.
While TripAdvisor, acquired by Expedia, disrupted the travel landscape with its user-generated content and advertising and media model, and Ruba.com and others pioneer visual search, the OTAs have the upper-hand as they spar with interlopers.
Jeff DeKorte, the former general manager of AOL Travel, says the OTAs have little incentive to innovate beyond price because they have the traffic.
Pricelines’ market share has jumped over the past few years not because consumers were flocking to their site for the booking experience, DeKorte says. It was driven by a $300 million marketing campaign.
Elliott Ng, vice-president of marketing at UpTake, says there is opportunity for disruptive travel companies because the OTAs focus on distribution and neglect providing superlative content to people who are not decided on their destination.
Ng argues that the OTAs’ preoccupation with the customer that is furthest through the purchase-decision funnel and closest to buying, and the OTAs difficulties in targeting other consumers, opens opportunities for all players in the marketplace without these constraints.
But, Ng concedes that the dirty little secret is that inspiration (and content) are just much more difficult to monetise, in part because the decision-making process is longer and sites need to be stickier.
And, even if the smaller travel-tech companies succeed in driving traffic and making money, they face the prospect of getting absorbed into the OTAs, where they may flourish like TripAdvisor is doing within Expedia, or they may fade into anonymity.
As Ng concludes: “If I were an OTA, I would try to imitate Expedia’s strategy – buy up a bunch of content businesses, run them separately, and use them as a strategic asset to drive traffic.”
All agree, however, that the online travel marketplace is not even close to reaching maturity, and this means it will benefit from disruptive and inspirational influences.?
