Wednesday, November 28, 2007

Backlash from the Facebook Beacon advertising program

Facebook's attempt to exploit its social network for advertising purposes has raised some major concerns from their users. The Beacon advertising platform is designed to broadcast purchases made by users to their social network. The issue has been taken up by the progressive political organization, claiming the program violates privacy. Over 50,000 Facebook users have signed the petition complaining about the privacy issue. The primary problem seems to be in the opt-out strategy taken by Facebook. There is no question that social networks are here to stay and they do influence purchases, especially for travel. The "Where I've Been" application (now owned by Trip Advisor) has been one of the most successful applications on Facebook. Behavioural targeting is also becoming a mainstream advertising strategy that is designed to deliver specific content based on the implicit and explicit behavior of the user. Earlier this year one of the largest players in the behavioral targeting space, Tacoda, was purchased by AOL demonstrating the importance of this emerging advertising trend. Mobile advertising is beginning to become major force as well. Whether planning a complex vacation or buying a HDTV, the opinions of my friends and colleagues do make a difference. The key lesson here is that no matter what the platform (social networks, behavioural targeting or mobile advertising) the user must be in control. Opt-in is the key, not opt-out.

Verizon tears down their walled garden

The announcement this week by Verizon that they are opening up their wireless network has significant importance for the development of new mobile travel applications here in the US. Unlike the rest of the word that operates using GSM technology, Verizon's network is based on CDMA technology developed by Qualcomm. This makes cross networks application development problematic. Despite this limitation, the fact that Verizon has recognized that consumers want to be in control of the applications on their phone is a tremendous step towards a more Internet based model for mobile applications. Details of Verizon's plan are still a bit sketchy but the basic thrust of the announcement is to allow third party developers to create applications that work with the Verizon network without the need to work through the Verizon deck (the deck refers to the allowed mobile applications controlled by the Verizon). Frequent travelers are often the first to embrace next generation wireless technology. In an open environment where 3rd party development is no longer tightly controlled by Verizon, travel specific mobile applications can be created that drive personalized, location based services to the mobile traveler.

Wednesday, November 21, 2007

Mobile Technology

In his classic book, Smart Mobs, Howard Rheingold described two possible futures for mobile technology. The first is a highly personalized smartphone that filters content based on personal preferences. In this vision the smartphone becomes an electronic personal assist that provides specific content that matches the user's situation, preferences and location. The other vision is an advertising platform that delivers unsolicited offers to the user based on behavioral information collected both explicitly and implicitly. The iPhone certainly represents the first real handheld computer with strong emphasis on browser based search. In a way the iPhone is delivering on the Knowledge Navigator video vision first presented at Mac World in 1988 by then Apple CEO John Scully. Google's Android mobile platform is an effort to both open up the traditional walled-garden created by telecommunication companies as well as an obvious mobile advertising play. I am beginning to believe that both the visions outlined by Howard back in 2002 are being driven by these two tech giants. I am hopeful that privacy concerns (such as the recent backlash regarding the Facebook Beacon advertising platform) will help reign in the trend towards unsolicited advertising. For 2008 I will be working with PhoCusWright on a new special report on mobile technology. As I dive into the mobile research for this project, I hope to identify how the travel industry can profit by implementing mobile apps for the leisure and business traveler. If you are interested in becoming a sponsor for the mobile special report please contact me at

Thursday, November 15, 2007

PhoCusWright - Expedia CEO part II

During his closing speech at PhoCusWright, Dara mentioned briefly an effort at Expedia to re-platform their technology infrastructure. So what does re-platform mean? Often the plumbing aspects of travel technology are not a common topic at any show including PhoCusWright, but here the re-platform initiative has a direct bearing on how Expedia works with suppliers. It concerns re-engineering their middleware to better match customer needs with supplier content. In today's online world, OTAs need to provide more flexibility to all their suppliers to manage the delivery of dynamic pricing based on different customer segments. Dara talked about this in relationship to hotels, but airlines are also are demanding a better way to showcase and target their services to specific travelers. This includes selling premium seat assignment or other amenities that can help differentiate their products. A great example is Virgin Atlantic's upper class which provides unique seating and amenities at a lower price point. Traditionally Expedia will show Virgin Atlantic the same as other airlines. Expedia's re-platforming initiative will help suppliers better target customers and use differentiated services to influence the sale at the time of booking.

PhoCusWright - Expedia CEO

Dara began with a nod to the new media based deal with IHG. He said Expedia's focus is to change the traditional impersonal relationship with consumers to be more individualized. Three areas of focus: (1) email (2) Segmentation (3) Search experience - lodging search experience to the next level.
(1) Email - described Amazon's email follow-up after search. Booking window, length of stay, impacting next visit at Expedia. Email as upsell opportunity. Purchase behavior impacts the type of email message generated. Occasion or event triggers for emails are more effect - 20X as effective. Air search with permission send email - 30X conversion rates
(2) Segmentation - demographic mailings. Unique content based on segmentation - Expedia Elite Group - premium service levels - no cancellation or change fees and other services
(3) Personalization - Optimization of lodging sort. Previously anyone would get the same sort. Built an algorithm sorting hotels with goal sending hotel partners more likely to convert and enjoy that hotel. Personalized predictions based on conversion - 30 attributes - kids, which site, length of stay, adding factors for partners inventory levels. Customer reviews

Summary - Long Tail - world is flat. One to one relationship with every traveler.

My comments - All this is not new, but does show a new level of maturity for Expedia in order to better target customer segments verses a vanilla approach traditionally followed by Expedia.

Second Life Discussion-PhoCusWright Day 2

Cathy Schetzina led a discussion of Second Life with STA, Carnival Cruises and Starwood. The primary benefits of launching a Second Life site was described by the panel are PR and gaining experience in a virtual world. The panel agreed that the initial buzz regarding Second Life has faded somewhat lessening the value of free PR that was prevalent earlier this year. Starwood created a new hotel brand in Second Life. The company gained valuable feedback on design and received lots of press. Starwood was prominently featured in Business Week and other general press outlets providing good PR. Starwood has since shut down their Second Life initiative showing that the value was not sustainable. STA emphasized the importance of sponsoring activities such as concerts or dance parties. With STA's primary market being students the fit with Second Life was a natural as a way to each their core campus audience. When Cathy asked whether Second Life is a passing trend or the sign of something in the future, the panel felt that this was only the beginning of trend toward marketing in the virtual world. The bottom line is that Second Life should be viewed as a game and the true impact of online gaming in a virtual world is just beginning.

Wednesday, November 14, 2007

Live from PhoCuswright - Michelle Peluso CEO Travelocity

Michelle talked about general travel industry themes such as the need for better customer service, air schedule reform and economic indicators pointing to a downturn in the economy. She admitted that OTA interfaces have been stale for some time. She pointed to Travelocity's Experience Finder as a different way to approach travel verses the traditional linear method. She emphasized the data gained from transactions as a valuable tools for suppliers. Talk backers including Randy Peterson from WebFlyer. Randy asked about fare filing problems such as the $59 Tahiti fare mistake asked. Steve Kafner asked about the role of travel search and touted the new relationship with Travelocity. One theme discussed was relevance verses personalization Michelle emphasized that at each stage of the travel process relevance is the key. Travelocity's experience finder works on this model of relevance. Travelocity research conflicts with PCWI research staying that people stay with an OTA despite the desire to shop multiple sites.

Live from PhoCusWright Private Equity - Karl Peterson TPG

The PhoCuswright conference kicked off with discussion of private equity investment in the travel industry with Karl Peterson. Karl emphasized that PE is in for the long run. He disputed the theme of the recent Business Week article which used the term of "strip and flip" referring to the process where PE buys public company, extract profits and then splits up the company into pieces. Philip's questioned Karl's assertion that they are in it for the long haul, as no doubt many in the audience agreed, as a spin rather than a fact. The Business Week article went on to say that the recent credit crunch due to the collapse of the sub prime market has tightened available financing for PE. I believe we have not yet seen the true impact of PE on our industry. Blackstone now owns two GDS brands and three mainframe reservation systems (Apollo, Galileo, and now Worldspan). Sabre is owned by PE. Though all the GDS have offloaded a lot of their content to more inexpensive server based technology, the primary customer information is still tightly bound to the transaction residing on the mainframe. With PE owners now controlling Travelport and Sabre, the true impact of cutbacks and technology overhaul is still not known.