Internet Business Group – Watch, learn, then attack

The Internet Business Group is a major player in affiliate marketing, but is now targeting meta search as it looks to concentrate on travel. Kevin May meets its opinionated chief executive

The Internet Business Group does not exude the flamboyance associated with many of the trendy new media companies that call London’s Soho their home.

Fronted by chief executive Maziar Darvish, who created the company in 1996 with two pals Dan Chick and Nick Costa, IBG’s technical and creative directors, IBG is an assuming business that in recent years has created a capital value of about £25 million.

But despite the relatively low profile, IBG has become a modest and late influence on the web-based activities of the travel sector, primarily through its AffiliateFuture affiliate marketing business but, as Darvish hopes, increasingly more as a result of its nine-month-old meta search website

Indeed, counter to IBG’s quiet yet solid growth of the past two years – Darvish freely admits the first six were turbulent, to say the least – are some spirited opinions about how the industry operates. Darvish, for example, is critical of many online travel companies, except Expedia, in the area of dynamic packaging.

“The reason that Expedia has done this better than anyone is two-fold: firstly, it has been in the space of dynamic packaging longer than any other outfit and, secondly, it seems to understand the rules of website usability better than most,” he says.

Another is how Darvish laments the lack of apparent progress by leading travel technology companies to push the boundaries of what can be given to travel websites in terms of functionality and, in turn, providing value to consumers.

Many companies have a eureka moment. For IBG it came as late as November 2005, when Darvish and his team realised that they should begin to concentrate their efforts on travel.

“We knew travel was big online,” Darvish says, with the affiliate arm of the IBG business already running campaigns for a string of big-name travel companies such as MyTravel and Superbreak. “But our interest was awakened at World Travel Market in 2005 when all we saw were the usual suspects and realised that in the previous six years the market hadn’t changed.”

This apparent malaise in the industry to progress has manifested itself in a wide commoditisation of travel products, with technology and the commercial models behind the distribution process ensuring the status quo remains, he says.

“Fundamentally, nothing has changed, and it is not working because the travel suppliers are not communicating to consumers the differences in their products.”

Shortly after WTM 2005, IBG began looking closer at the relationship between consumers and travel websites and intermediaries, and just six months later Henoo was born, focusing initially on package deals.

IBG moved quickly to ensure travel clients using the AffiliateFuture network, such as the MyTravel, Going Places, Panorama Holidays, Cosmos, Aspro and Manos brands, automatically saw their travel deals published on the new meta search engine.

Central to the commercial structure behind Henoo was an extension of the affiliate system and its reliance in cost-per-acquisition, rather than seeing revenues brought in by a cost-per-click model. This isn’t new, but Darvish believes it is vital to his vision of the future for IBG and also where he suggests some commercial relationships in the industry are heading.

Darvish, like a number of his contemporaries, says the process of searching and booking created by online travel agents and others over the past 10 years has had a lasting and damaging impact. “Travel is being increasingly treated like a commodity,” he says. “People no longer differentiate or care and travel suppliers are also not differentiating what they are selling. This has been blamed, in part, on the low-cost carriers but ultimately the traditional parts of the industry have also not communicated the specifics of their products very well.”

However, the various tenets of Web 2.0 will lead to an overhaul of the business model between suppliers and intermediaries. A radically empowered generation of consumers, armed with reams of information about products from consumer reviews, will demand more robust information about travel products – a move, Darvish believes, will play into the hands of meta and travel search engines.

“ and Expedia are doing the best job of keeping up with changes in online consumer behaviour,” he says. “But many agents and suppliers need impartial and independent intermediaries like meta search engines.”

Darvish also believes that because the value – not the price – of a product will become the driving force behind transactions, travel companies will eventually rather pay for good-quality leads – similar to the affiliate marketing mode.

To build on the sold start for the Henoo engine, IBG will relaunch the website in January 2007. A portfolio of 15,000 to 20,000 independent hotels will be added to the site alongside the existing package holiday search functionality. A Handpicked Deals newsletter has been trialled for a few months, attracting about 150,000 subscribers.

Suppliers will include those using the AffiliateFuture network, such as existing Henoo partners as well as Thomas Cook and Virgin Holidays, and new clients including Kuoni and the bed bank.

IBG has moved quickly to bring Henoo up to speed with the increasing group of meta and travel search engines on the market. It will also launch a category for the most commoditised product in the sector, flights.

However, a key part of the relaunch of Henoo includes the mapping of every hotel property it carries, essentially to improve search functionality.

Consumers are often faced with confusing results on meta search engines because different suppliers and OTAs label each property in a different way.

Darvish believes about 50% of all properties put forward by suppliers are not accurately mapped in terms of their geographic data and facilities.

The process of remapping every individual piece of accommodation appears to have been a labour of love for IBG, but Darvish is confident the end result will give users are a far better experience and improve the quality of results.

But while there is a recognition that Henoo needs to keep up the Travelsupermarkets, Sidesteps, Kelkoos, Skyscanners and Kayaks of the travel search world, Darvish does not subscribe to the view that a myriad of fancy tools – created under the auspices of Web 2.0 – will create the value associated with products he feels is so desperately needed.

“A lot of the US Web 2.0 tools are fads and are the focus of a lot of the companies,” he says. “Some engines are focusing on the toys rather than the quality of the results.”

Nevertheless, Darvish is a fan of some products, such as fare performance graphs for airfares on the US sites FareCompare, but only because it enhances the value to the consumer.

Darvish admits 2007 will be a massively important period for Henoo and IBG. “We are not arrogant enough to think we can succeed.”

But after what Darvish confesses was an often turbulent early period for the company, when it dabbled in web design and other technology services during the dot-com boom and subsequent bust, IBG finally appears to have settled on an area of the online world where it feels most comfortable.

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