Low Cost is Killing Bus Traffic In Brazil

Gol which is the largest Low Cost airline in Brazil and together with TAM carries the vast majority of the Country's domestic traffic came from humble beginnings. It was the idea of the son of one of the largest coach providers in the country.

As you can see from the diagram - the airline traffic overtook bus in mid 2008.


For the actual detailed chart please look here for the Portuguese language based version.

This is a classic example of how the world can benefit from air transport. However in my view the growth of the airline space will not come necessarily at the expense of the bus traffic. Our estimates are that the bus traffic will smooth out after a while and that will form the bedrock of the long distance coach traffic. Already we see the market evolving. However the achaic reservations systems and the complexity of booking online and fulfilling is significantly adding to the woes of the long haul operators. They need to rapidly change with new reservations systems and modern distribution attributes.

Without them - this chart will look a lot worse in just a few years.

Cheers

OTAs Could Suffer Further. With Ancillaries Airlines Start Rethink of OTA Partnerships

The key assumption that most consumers have is that the OTA of choice has full content. But we are beginning to see that this is not the case.

The much publicized battle between Orbitz and American Airlines and then Expedia and American Airlines has seen more examples join them.

We have Delta pulling out of several OTAs.

In the USA and other international markets the reach of the OTA is actually not as broad as most people think.

Let's take into consideration Southwest that doesn't participate in any OTAs. Then we have RyanAir who doesn't participate in anything.

So the actual reach of say Expedia and Orbitz in terms of product for Air is now less than 70% of available flights.

Subtly too not every airline participates fully in either the GDS nor the OTA. As we can see there have been a number of situations where the GDS provided content is not the complete content available to the GDS. Hidden Classes and restricted content further erodes the element of choice for a consumer in an OTA;s product line.

Most of this has been blind to the user with these product issues somewhat hidden both by the brand might of say an Expedia. But now there is a further impact as we see other vendors applying their muscle and rolling back participation in the OTA. The latest to do this is Enterprise Rentacar and their brands such as Alamo and National. Note that Enterprise is the world's largest car rental company.

In the past there have been some very public battles that were short lived. EG British Airways was not in Expedia when the OTA launched. That was eventually rectified. Holiday Inns was out of Expedia for quite some time - till it too joined in the fun.

It is interesting to note that both Orbitz for Business and Egencia can still access American Airlines product. The same is also true of OWW's CheapTickets brand.

However now the fall out of the lack of full participation is sending those who have signed white label contracts with the big OTAs scurrying to their lawyers to examine the contracts.

Case in point. Alaska Airlines who outsourced its Car, Hotel to a joint arrangement between iSeatz and Orbitz. As can be seen in this screen shot below. The image is a little small but click on it to see the full size and notice the Orbitz statement.

This comes from EasyBiz - Alaska Airlines business product.



Alaska must be wondering what it can do next. And many other white label customers who thought that outsourcing their product content to companies such as OWW (Orbitz) and Expedia was the easy answer.

Interestingly this started as a battle of convenience. The tech companies would give you a software solution and full service provision came from a partner such as a travel agent. OR you chose an OTA who did all the heavy lifting plus had better commissions (in theory) and it was a linked connection. With Ancillary Revenues now a high priority for the airlines, and indeed other vendors this is a hot topic.

Over time those commissions have lowered. Now with product coverage falling - this is a new order. Hmmm time to rethink that strategy.

Cheers

Congress Votes Down Baggage Amendment

Last night March 31st, Congress voted on the various amendments to the FAA Re authorization Bill. Formally HR 658. This was the final vestige of what the GDSs and the Open Allies had tried to get into the current round of legislation.

You can actually watch the whole event on Streaming video or just the summary.

Charlie Leocha who has a good pedigree of consumer advocacy was "incensed" Here is what he wrote today.

Consumer Traveler
Airline misrepresentation on Capitol Hill — for airlines telling the truth hurts
by Charlie Leocha on April 1, 2011
This is an email that I sent to staffers of members of the House of Representatives with whom I have met over the past months regarding the FAA bill and airline price transparency. I received a copy of the airline talking points for their House lobbying offensive. Needless to say, I was incensed. Then again, it is said that advocacy in DC is a full-contact sport.

You can find the full link here.

From the Congressional Record here is the formal results: (Hint - you have to read it from the bottom upwards). Here is the formal record

7:06 P.M. -
On agreeing to the Capuano amendment Failed by recorded vote: 187 - 235 (Roll no. 211).
6:26 P.M. -
UNFINIHSED BUSINESS - The Chair announced that the unfinished business was the question on adoption of amendments which had been debated earlier and on which further proceedings had been postponed.
6:17 P.M. -
POSTPONED PROCEEDINGS - At the conclusion of debate on the Capuano amendment, the Chair put the question on adoption of the amendment and by voice vote, announced that the noes had prevailed. Mr. Capuano demanded a recorded vote and the Chair postponed further proceedings on the question of adoption of the amendment until a time to be announced.
6:12 P.M. -
DEBATE - Pursuant to the provisions of H.Res. 189, the Committee of the Whole proceeded with 10 minutes of debate on the Capuano amendment no. 17.
6:11 P.M. -
Amendment offered by Mr. Capuano.
An amendment numbered 17 printed in House Report 112-46 to require greater disclosure of a passenger's baggage fees when a fare is quoted to an airline passenger and require refunds for baggage that is lost, damaged, or delayed. The Secretary of Transportation would prescribe any requirements necessary to implement the baggage fee disclosures by ensuring that necessary information is shared between carriers and ticket agents that have an already existing agency appointment or contract.

The bill is still in Congress and has to go to several places.

For my view of the proposition - go look at what I posted a few days ago.


Cheers

PS - the GWB image is nothing except a subtle dig at the previous Administration because they ducked this issue effectively.

Microsoft vs. Google: Valid Points Or Bitchiness

The noise against Google is starting to rise. The Professor has been pointing out some of the inequities inside the Googleplex that we who are outside it have been subjected to. That is disturbing.

Now it would appear that there is much more substance to these issues. We already have several US States - and probably the Feds too who are looking at Google's behaviour. But in my view one of the most succinct statements to come out has come from that darling of Governments - Microsoft.

The electrodes are out but I understand the strictures of what can and cannot be done inside a company that is under official investigation. For companies the sizes of Google and Microsoft this is a tough job to ensure compliance for everyone concerned.

Microsoft's arguments however are logical and specific.

I highly recommend that you read Brad Smith (admittedly not a tech head but a legal guy) on this blog entry.

It should give you cause to pause. There is no possible way that in pursuing the big mission: “Google’s mission is to organize the world‘s information and make it universally accessible and useful.” that you are not going to step on some toes. However coupled with "do no evil" this to me is just another one of a long list of failed promises.

Put into context the way Google is behaving has become - Organizing the World's information our way so we can make a boat load of money and screw everyone else. And Do no evil? well that translates to - we will avoid doing evil unless it gets in the way of our commercial goals in which case this is more important.

When I worked in Redmond - some people used to pillory the MS corporate credo about putting a PC on every desktop, itself a hark back to a chicken in every pot. Now we seem to have "a Google hand in every pocket."

What options do we have? Regulatory oversight is clearly one but not terribly effective. There is a better answer. Split the company up. Something that Microsoft should have done also a long time ago.

Cheers

Privacy and the Military

There is an andecotal story told about the Israeli Army. The State Telephone monopoly in Israel used to be so bad that the adoption of mobile phones was fast and almost universal.

The story goes like this. On a routine Army patrol when a soldier was doing his military service in Israel - his mother called said soldier. Which gave away their location due to the loud ringing noise. A firefight ensued.

Fast forward to today and mobile phones are ubiquitous. But the military cannot control who has a phone and who doesn't. Further they cannot control the configuration of a smart phone.

But who knew... the US military has a Social Media group. Actually several. The Army has one. The Online and Social Media Division.

Regular readers know I have this thing about privacy. I think it must be taken seriously and privacy must be protected.

Well here is the OFFICIAL US Army slide show on the subject. There is also a handbook you might be interested in.


Interesting.

Cheers

Are Marketers Stupid Or Slow?

As some of you know I used to be an Ad Man. I spent more than 10 years working in Advertising Agencies including owning my own agency in Los Angeles in the early 1980s. I always thought that Advertising was ahead of the curve. It was an exciting time to work in the biz. But it became a bit too process oriented for my liking. Instead I followed my avocation for the Travel space and the rest as they say is History.

I have to say I was surprised to see that the world is a little different. Ad men (Shame Mad Men will stay on hiatus now until 2012 because of a contract dispute), seem to have fallen behind the times. My evidence?

Check out this story from eMarketer.



This shows that Advertising is lagging the promotion of products via channels that today's consumers are using.

This further (sadly in my boo) shows how the 3 major traditional medias are really toast.

Cheers

Woe Woe Thrice Times Woe - RI(P)M Playbook

For Brits and Anglophiles from the 1970s who remember the great Frankie Howerd, this line will mean something.

Here is one of my favorite quotes:

"Very clever, all those boys are, very clever boys. I think they should turn professional. They tell me now they’ve learned to put on make-up. Soon they’re going to use it on the stage!"

However for RIM and Blackberry this is no comedy. I originally thought that the RIM purchase of QNX was a masterly stroke. I was really looking forward to a brilliant Blackberry Playbook.

Looks like I will have to be waiting for a long time or not at all. The Playbook will release on April 19th without (drum roll please) A NATIVE EMAIL APPLICATION.

What are they smoking up there north of the border. I think you about about to lose me as a Crackberry addict. I may just have to go to the darkside. (Not for handheld device though - just yet). I already bought 2 Macs for the general use on my team and well looks like an iPad if I can get my hands on one will be in order.

This is bad bad bad..... RIM - delay release and fix this so that your baby is not still born.

Do You Know The Impact of IATA Resolution 302?

Well you had better because it comes into force in less than 24 hours.

Here is what it says:

RESOLVED that,

Unless otherwise agreed the following baggage provisions selection process should apply for interline journeys

1) Baggage provisions are defined as free baggage allowance rules and baggage charges
2) For the purposes of baggage provisions selection, the following 4 step process should
apply for interline journeys:
a) Step 1: If the published baggage provisions among all participating carriers are the same; these provisions will apply.
b) Step 2: Where the one or more published baggage provisions differ between participating carriers, apply any common provisions are where provisions differ the published baggage provisions of the Most Significant Carrier (MSC).
(In case of code share flights this will be the Operating Carrier, unless that carrier publishes a rule stipulating that it will be the Marketing Carrier).
c) Step 3: If the MSC does not publish baggage provisions for the journey concerned apply the published baggage provisions of the carrier accepting the baggage at check-in.
d) Step 4: If the carrier accepting the baggage at check-in does not publish baggage provisions for the interline journey concerned apply the published baggage provisions of each operating airline sector-by-sector.
MOST SIGNIFICAN CARRIER (MSC)
3) the MSC is.
a) For travel between two or more IATA areas, the carrier performing carriage on the first sector that crosses from one area to another.
Esception: IATA area 123 only, the carrier providing carriage on the first sector that crosses between IATA area 1 and IATA area 2.
b) For travel between IATA Tariff sub-areas, the carrier performing carriage on the first sector that crosses from one sub-area to another.
c) For travel within a IATA Tariff sub-areas, the carrier performing carriage on the first international sector.

【For your reference】IATA area/IATA Tariff sub-area

IATA defines the world into 3 areas (IATA area 1/2/3), and define the IATA area into small areas. (IATA Tariff sub-area)
IATA Area1・・・

North America/South America/Hawaii etc.
“IATA Tariff sub-area” of “IATA Area1”

North America (USA, Canada and Mexico)

Caribbean Islands

Central America

South America (Brazil, Chile, Peru etc.)
IATA Area2・・・

Europe/Middle East etc.
“IATA Tariff sub-area” of “IATA Area2”

Europe

Middle East

Africa
IATA Area3・・・

Japan/Korea/Thai/Singapore/Philippines/India/Guam etc.
“IATA Tariff sub-area” of “IATA Area3”

Japan/Korea (Japan and Korea)

South East Asia (China, Singapore, Thai, Vietnam, Guam etc.)

South India (India etc.)

South East Pacific (Australia, New Zealand etc.)

February 9th, 2011

This version is from ANA.

Now you had better pay attention to this because we are going to be inundated with a lot of misled folks who wont know how to deal with the bags. Remember that bags are now the new Fuel Surcharge. So enforcement is important to ensure that (your) airlines makes the money it needs to.

Just bear that in mind before you head out the door tomorrow....

Cheers

US Sales 2010 Interesting Perspectives

I love to look at the way numbers can tell stories.

So here are some interesting numbers to look at. I am looking at deep underlying trends. One of the things that worries me is that I believe the US market is stagnating and badly. The days of 3-4% growth rates are over. The US in my view will be below the global average growth for some considerable time to come replaced by several players.

The US FAA has painted a rosy picture of a doubling of traffic in 15 years. However - US official figures show that passenger traffic actually grew last year by a scant a 2.1 percent increase from 2009. US DOT reports 786.7 million scheduled passengers traveled on all airlines serving United States in 2010.

I am going to use some conventional numbers to estimate what that translates into... lets say 2.3 segments per ticket.
So gross transactions look like this (For a larger picture click on the image).



So these numbers look good as there is an increase Y/Y in most months when comparing 2010 with the horrid 2009.

This still looks pretty good when comparing the monthly variances... all green 2010 vs 2009. Remember these are ACTUAL transactions as reported by ARC not Dollars.



However there is a small issue. These are Transactions not tickets. So they include ARC processed transactions including refunds. So the number needs to be discounted by a factor of about 10%.



This means that if we take ARC's numbers of 165 Million transactions less 5% means that the Travel Agent portion of the US passengers has dropped below 50%. We are talking now about a 45% Travel Agent Share for the USA market.

Anyone care to challenge my numbers?

I would be happy to publish new numbers from credible sources. 2011 is also starting to show a further decline in agency share. Does this foretell of the perspective of the battle of the GDS vs the Airlines?

Enquiring minds want to know

Cheers

Southwest to Boeing - Get your Finger Out

Southwest Airlines - Boeing's largest 737 customer is getting pretty tired of waiting for Boeing to get its finger out and do something on the Replacement 737.

Despite Boeing's public protestations that the current 737NG iteration will actually be more economical than A320NEO come 2016 - Southwest and other 737 customers are losing patience with Boeing.

Boeing has been acting much like a chicken without its head. Chicago is the original Ivory Tower and the connection back to Seattle is becoming more tenuous as each day passes.

So WN CEO Gary Kelly is upping the rhetoric

Southwest (US) chief executive Gary Kelly open to talks with Boeing regarding potential new twin-aisle aircraft and is anxious for answers in 2011. Carrier also open to operating different types of aircraft.

Let me translate... (See above headline)

Cheers

Is Linked In Relevant vs Other Social Media Vehicles?

In my view yes.

From a view of B2B the recent 100 Million Milestone is not the indication that matters. Linked In is relative as a tool for Business People. I further believe that there are some who have become comfortable enough with Linked in to move to Facebook. Unfortunately I cannot find any data that confirms that. Still its an educated guess.

Read the article on eMarketer

Cheers

Punishment: Google - Hold Out Your Hand ... This IS Going to Hurt Me More Than It Hurts You

The US Government has FINALLY woken up to some abuses in privacy by Google. According to the Wall Street Journal Google has been handed a slap on the wrist for Google Buzz's privacy issues.

You just HAVE to be kidding me. Google is not going to change it's policy of collecting information on us.

You may now go about your automatronic tasks. The Government has spoken.


Thanks to Stephen Poff for the photo

Use Groupon And Get Delta Miles... but just how many?

A mail today from Delta was telling me how I could earn 10 miles, normally its 5 - for every purchase I make with Groupon.

http://www.smartysaver.com/tag/groupon-and-delta-skymiles/

However there are different amounts out there.

If you go to DL Skymiles Shopping its 7.

Either way - clearly Groupon is trying to encourage repeat traffic. Seems in conflict with their fiction of encouraging trial.

Oh well -

Cheers

BTC's Call to Action For... Additional Government Expenditure and Taxpayer Burden ... But For Why?

When pressure groups call for additional Government oversight - it is usually to right a wrong and prevent a hurt inflicted on a group or individual.

So you have to ask why is BTC asking for additional US Federal Government intervention into what is already one of the most heavily regulated industries in the world. So what are they asking for?

Here is the relevant section from a recent press release from BTC:

However, current legislation will not require the airlines to share the information with TMCs. If amended properly, however, the law would make price information about these services clear and easy to find and purchase through TMCs servicing managed travel accounts.

For all the rhetoric that has come from the Open Allies for Transparency in Airfares - this is the salient sentence that BTC wants you to petition your Congressman....

ASK EACH CONGRESSMAN TO:
Include language in the Conference Report instructing the U.S. Department of Transportation to adopt a rule, already being considered, under which all airlines will be obligated to disclose airfares and all ancillary fees to consumers and to TMCs through which they choose to sell airline tickets.


So I ask you to examine this request and consider it VERY carefully.

There are two contradictory words in this statement.

They are OBLIGED and CHOOSE. That to me just doesn't make sense.

Further - why are we (oh yes the Professor is a law abiding and tax paying individual in the USA) - the US public being asked to pay for the additional big government at the very time when the US Government like many around the world are trying to pay off such huge debts.

Especially when you consider that there is already a vast amount of existing legislation that ensures that all pricing is indeed transparent.

So who actually benefits from this legislation? Actually it benefits 3 companies of which 2 are based in the USA - the third in Spain. These 2 US companies are owned by Private Equity firms. All three of which operate in a monopoly manner controlling volumes of business larger than any airline on the planet.

The proposed legislation is unnecessary, expensive and anti-competitive. It will set a dangerous precedent for any commercial enterprise in the USA who will be forced along with their intermediaries to disclose all pricing options.

This will add huge overhead to all and cause a nightmare of compliance. Can you imagine a travel agent who has to read to his customer the full pricing and fee information for every option he provides to his customer?

As I have said before - be careful what you wish for.

Now before another round of pork gets added to the VERY necessary legislation that this country needs - which is a next gen Air Traffic Control System - make sure you tell your legislative representative that you don't want him wasting our money.

Thanks for reading.

Now Will You Take Privacy Seriously?

Like many people I was appalled at the amount of personal data that companies like RapLeaf and Google has on me. But they keep doing it... and so to expose to perhaps a new audience that this is an issue - here is some interesting data.

Google Employees Drink More Mountain Dew then Microsoft Employees.

Innocuous enough. I live in Seattle and I am a former Microsoftie. Don't worry the electrodes are largely out by now. So I can understand this anecdotally.

This remarkable piece of information comes from the Rapleaf Blog. To save you the bother you can download the article here.

I have lots of friends who are MSFT and GOOG employees. I am sure most of them think this is funny... but I take this as an example of misuse of data.

You may not agree with me...

But I bet it will make some of you even in the Googleplex wince.

Cheers

Expedia/Air Asia JV - Impact for AK/DJ/QF/JK Relationship.

There is a lot of HooT and Hollerin' going on In Singapore right now. The wraps have come off a deal in the making for a while. Expedia and Air Asia have announced a far embracing global alliance that covers three separate JVs.

But while this is all going on - you have to wonder about what is going on back in Sydney and Melbourne. There is probably a little consternation.

There have been several mutual relationship deals between Qantas Group line - Jetstar and Air Asia. The most visible of these is a wide ranging arrangement on procurement. In addition there have been a number of possible arrangements mooted between Air Asia and both Virgin Group and Qantas. Have a listen to some of the discussion on the prospects for Qantas/Jetstar and Air Asia on CNBC Oz.


However you have to think that there is a little consternation. Jetstar has jumped into the long haul market by positioning some A330s in Singapore and providing traffic between a number of cities. The traffic race between Singapore/Malaysia and Australia is hotting up.

This announcement must surely put paid to any thought of passenger cooperation between Qantas Group and Air Asia. Will this drive Tony Fernandez into the arms of Virgin Blue. John Borghetti is a savvy operator and he is likely to be thinking about this - especially today. He already has protected his flank with a deal with southern neighbour Air New Zealand. A long haul partnership to rival Emirates has been formed with Etihad. That leaves a strong need for an Asian partner. Air Asia just might be the right player for this.

Cheers

Air4Casts Sounds Warning Bells On Global Air Slowdown

In the depths of the recession in 2008/9 us pundits were trying to predict the likely shape of the recovery. Those were very scary times and we are all scarred by the impact.

I went back to look at some of my prognostications. I see a progression that indicated that the recovery would be muted in 2010 and hopefully would rise like a Phoenix in 2011 or possibly into 2012.

Well here we are ending the first quarter of 2011 and things are not quite as rosy as we would like.

We have seen some good numbers and the impact of things like a boost in premium traffic. We are definitely seeing good revenues and yields. This quarter should see some of the highest revenue numbers the airline industry has ever seen. But we need to look underneath these figures to see some alarming trends.

If we look at selective markets world wide - we can see that the US market is at best stagnating. Capacity constraint is still the order of the day and the top carriers by pax are cutting back traffic again. This will lead to higher yields and yes make some people not take that discretionary trip because its too expensive.


Air4casts has done some evaluation of aircraft movements and they are seeing a decline in Asia. The study is based on a review of 35 Asian Airports representing about a third of all Asian Traffic.



In Europe the figures are more robust but we are seeing some of the impact from the trouble in the MENA region. The only standout country is Turkey. Absent the traffic surge from that country growth is not looking overly healthy.The European Air4Casts study here is missing Spain but we already know that traffic is stagnant.



This leaves us with only a few growth areas - Latam where the numbers are looking healthy. And of course also from a small base the GCC carriers. Stats can be found on the ALTA website.

This is beginning to make me feel a little less bullish. On the one hand its good for the airlines. On the other - I worry about the overall economic impact.

I have this theory that as air travel becomes more and more unpleasant the options such as teleconferencing become more and more relevant. If we believe Michio Kaku then things like time travel will make our industry obsolete in a few decades. I am of mixed opinion whether that is a good thing. I am passionate about travel. I think its the best business on the planet. It has been my life and I intend hanging on in it for a while.

Cheers

Hello Earth to Avis.......... Anyone Home? The Crass Promotion

They say the pen is mightier than the sword. Does that apply to blogging?

Case in point Avis is trying to reward me for my loyalty by offering a new program called "Get Away". It should be called "Go Away".

They unleash this product before it was ready. Shame on the IT team and the product team for letting it out the door before it was ready. But wait it gets better.

I have to register for the promotion. OK I get that you don't want to make it TOO easy. But that is not the issue. The issue is that it makes me do a number of unnatural acts.

Here are a few from the selection:

1. I have to choose a new password.
2. This password has a completely different convention from the main site password even though I will be using the same ID (My Wizard number) as the identification.
3. Oh yes - it must have a maximum of 6 characters.
4. No you cant use all numbers and all letters
5. Nor even less than 6 characters. (NOTE items 3-5 are only found by trial and error.)
6. The error tells you to contact a specific Avis number. Right about now my blood is boiling... 2 voice menus later I get through to a human. (See below for the rest of the story).

So my dear friends at Avis... please don't subject your customers to this kind of crass stupidity. You only piss us off.

And the rest of the story...

Yes the system is down. Can't think why....

To the nice people at Avis's call centre I spoke to - thank you. To Avis Corporate... shame on you. Next time - before you unleash it on the public... make your VP of Ecommerce actually try it out.

Cheers

ATI Alliances - Good or Bad?

Here is an interesting perspective from Mike Platt the former CEO of Hoggs UK.

He argues that there will be some challenges for users who are seeing their choices dry up

So have a read... then decide if competition has improved as a result of ATI - Anti Trust Immunity.

In my view the US Dept of Transportation was off its head when it pronounced that competition would be improved as a result of ATI.

I might have even said so.

The trick now will be to see if they are right in actuality with the yields on these routes climbing through the roof.

Good for the airlines... not so good for the consumer. But then Governments always know better

Cheers

Bad Things Happen to Good Products

As a bleeding edge technology adopter - I have seen some really great ideas screwed up due to a wide variety of reasons.

Some of them are the result of evil others coveting the idea. Some as a result of unfortunate happenstance. Some by bad decision making and hubris. But there is a hard core of products that never quite seem to survive the take over by another company.

I think we can point to MySpace as a good example of this. Did NewsCorp screw up or was this as a result of poor timing?

The most recent carcass to cross my desk is Cardscan. This was a killer tool. Feed business cards into it and they automatically get to your desktop.They were taken over by Dymo - itself a former great label maker. Now owned by Rubbermaid. Read the service end here.

Today the announcement was that they were discontinuing the address update service. This is a segment now so well handled by Plaxo and Linked in. Not to mention Facebook.

And look at their valuations. Could Cardscan have become one of these? In my view yes. Too bad they missed the opportunity.

Cheers

As Big Search Screws SMEs - They Turn To Social

More evidence that Search is becoming uneven when dealing with small and large enterprises. As SEO and other techniques mature - the poor little guy keeps getting beaten up by the antics of Big Brands and Google's relentless mission to control the web. So what does he do? He turns to the tried and tested/true methods he has always deployed. Search is a losers game for the small local guys. And as I have written - such grouped buying or coupon businesses such as Groupon don't do it either.



Sadly - the small player has little chance against the might of the big guys. Thus they have to find other words to promote their businesses. Travel is often about the little guy. He/She doesn't have the benefit of local. So this makes for a tough choice for long tail Travel players. However the Social Media platform is spawning solid Social Commerce. Let's hope that the Googleplex doesn't assimilate that also.

Check out this piece from eMarketer on the subject.

Cheers

So You Think Your Search Engine Advertising Is Worth it?

Hmmm you might JUST want to think again about that after you read this story.

Lately I have been looking at the effectiveness of search. I think you may have read some of my pieces about the way search is handled and underpinning much of this is my view that Search has been gamed so badly as to have lost its effectiveness. So here is some data to support that theory.

User Experience research company User Centric did a controlled study to evaluate the effectiveness of the Organic vs Advertising Results in Search Engines. You can find a version of this from eMarketer here


In this study the eyeball movement was monitored. The results showed that ads were largely ignored. The organic results being much more effective and garnering the attention of the user. Interestingly in my view – there is more data to show that things are not going so well for search not just in this area.

eMarketer search results study shows a decline in results and effectiveness of search since 2004 vs 2010.

Compounding this fact is that the effectiveness of Google starts to come under scrutiny with its results – despite being far more voluminous – not being as effective as Bing and Yahoo.

In the case of Travel with only 15% of all searches starting at the Googleplex – this shows there is some disruption to the model. Maybe ITA should up the price to Big GOOG.

Cheers

So who is best at understanding the market – Advertising Agencies or Their clients

Oh boy… way back when I was in advertising working for some of the leading agencies of the day – I would say (now openly with the benefit of hindsight) that in general we thought our clients were less capable of understanding the process and effectiveness of advertising. After all that is why they hired us right? As I have been out of the Ad business for a very long time – I don’t have any vestiges to protect. I was thus very interested to read a piece in eMarketer about the difference in perceptions of the Advertisers and the Agencies with regard to digital media.

According to a report on 2011 marketing budgets from Econsultancy and SAS, agencies worldwide published by eMarketer http://www.emarketer.com/Article.aspx?R=1008275 are looking to move more aggressively into Digital Media than their clients. Advertisers prefer the tried tested and true more traditional outlets of email and search as well as sticking with display advertising. Their agencies are more focused on the newer digital media services of Social and Mobile. While this is good for the traditional media. The advent of the iPad and greater adoption of mobile and social media makes it only a matter of time before the change makes the existing economic model for many forms of traditional media unsustainable. In my view as I have written many times before this is actually very sad because we are probably witnessing the last generation who will ever hold a newspaper in their hands.

Sad but true.

Cheers

Form Over Function? At Your Peril

Thee battle of form over function has probably been raging for aeons. Ever since Man invented the wheel - and probably even before that. In the world of Travel we too often have used Form as a solution to solve one of many issues - not least of which is homogenized product delivery. This applies to search. In search today we argue that Price is the leading driver. As our result it has become a form of self fulfilling prophecy. We search for product based on price because we can. We dont bother thinking about value because we dont have a way to determine value easily in search.

Many moons ago when my team built a hotel shopping engine - we took the opportunity to provide a form that suited a function that people wanted. The result was that consumers invariably traded up. The suppliers in the shopping engine who provided the lowest priced products and had built their shopping functions around lowest price were a tad ticked off about that.

On the web we have explored almost every version of the 1.0 of price based search - we now need to drive to a different tune. We need to find a way to differentiate and show value. Of course value is a very subjective term. One woman's value is another man's poison.

I think there are a wide number of possible ways to address this. Not least of which is to comprehend what the consumers actually want rather than forcing them down a particular path.

I urge you to read the attached piece from Gerry McGovern this week which addresses this very topic.

Then I want you to and take a LONG HARD LOOK at your product offering and the way you communicate it. Apply the best standards of User Experience (UX) but start from the perspective of looking at what you are doing vs what you hope to achieve.

I think this will start a move to a more appropriate form of dialogue with the customer. In today's Social Media fueled world - failing to do this will cause lots of tears. Even wailing and gnashing of teeth.

Many thanks for reading. I hope that this and my other contributions have been able to improve your product offering and create a better market for Travel Products and Services

Cheers

Should Have Taken The Cash Groupon!

I always try to let you know where I stand on a topic. So here is another one. While I think Groupon is fun - I don't see it as being anything different or ultimately sustainable over the long term. I listened to Groupon COO Rob Solomon at the PhocusWright Conference last year and struggled then to understand what the long term value proposition would be. After all Coupons have been around for a very long time.

Last week Andrew Mason announced to the world that Rob was moving back to God's Country (California). Here is the announcement from the WSJ All-Things-Digital including the email from Mr Mason.

I have a Groupon for Flying Lessons that needs to get used up, it was a Xmas present. Very nice idea. Good way to trial. But in my view that is a niche and it was sustainable only for a short period of time. And now there is more than anecdotal evidence that Groupon is beginning to fade. Indeed there is a lot of chatter deriding Groupon for not taking Google's $1billion. Though judging by the tortuous process that ITA has gone through - the ability to close that deal would be stuck in limbo too.

As reported in Webpronews - Yipit a deal aggregator site has shown that Groupon's revenue for the top 20 US metros has fallen for the second month in a row. With Living Social now in a dead heat with the Chicago based company.

Checking out Google Trends and Alexa - I cant see this trend yet. But I believe we are seeing the turning point of Groupon when its growth curve will max out. I have compared Groupon to 2nd Life in the past as a fad. I think we are seeing that fad peak. We will have coupons forever. They will come in a wide and ever evolving form and some of these will do a cycle and become important again while others decline.

I think that Groupon's model particularly hurts the smaller companies. There is more than a little evidence to support this but you dont need evidence from statistics to know that a 75% reduction in gross revenue for your product is not sustainable.

Thanks and goodnight...