December 2010


I was just watching a good interview from CNN that Roopa Mathur sent me a link to (Google PR/Lobbyist Adam Kovacevich and Expedia attorney Tom Barnett) when by chance I came across another story on CNN.com called Personalizing the internet in 2011. Both stories are worth watching, but the only comment I’ll make on the first story is to point you to the comments of Amadeus CEO David Jones ( but then check out this video and spot the similarities with the CNN story). The second story on personalization gives me much more meat for a blog post here.

It was only yesterday when posting predictions for 2011 that I wrote “personalization will be the buzzword of the year” so interesting to hear Hunch co-founder Caterina Fake saying “I really think that 2011 is going to the year of personalization.”

The early emphasis in the story is on using local positioning as a means of driving personalization, but of all the forms of data and the associated privacy concens that may hinder adoption and having consumers embrace personalization, this is one that airlines need to be very careful with. The reporter Maggie Lake sums it up nicely when she replies that this “frankly, freaks me out a little.” Personalization is so much bigger than GPS, but this is the first point usually mentioned in any story like this.

When many people bring up privacy issues they often miss the mark, but Caterina Fake makes a very interesting observation when she says “the feverish connecting that we did in Web 2.0 is starting to decline.” Is unfriending / defriending coming back into vogue? What I think she is getting at is trying to draw us into thinking about the socialgraph versus tastegraph argument – this was the underlying point when I asked the following question back in July,

Does the search component of travel inspiration require more technological muscle and grunt, or is it social over science and personal contacts over proprietary cache?

I’m not sure we have a definitive answer to that question yet, but it really is at the heart of how an airline direct channel builds its personalization architecture.

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I previously made five predictions for both 2009 and 2010 on what I thought would be the key trends to redefine online travel, trying to keep the focus on airline direct as much as possible. I’ve also just wrapped up my critical review on the success of those 2010 predictions. But to date I’ve given only two official predictions 2011, (repeated as numbers 1 and 2 below), so I’ve come up with three more that I think every airline e-commerce manager needs to understand in order to keep on top of this rapidly evolving industry. Here are my top 5 predictions for 2011.

1. The booking path goes non linear
There are so many different and seemingly unrelated changes happening in the world of online travel, but many of these converge at the point of reinventing the way a person searches for, buys, and then consumes the travel experience. In future, this path moves from linear to seemingly haphazard – steps are skipped whilst others occur in an order that may appear incomprehensible today. Some of the individual impacts feeding into this tectonic trend are campaign management, content management, inspiration, mobile proliferation, personalization, intelligent caching and the merging of pre-shopping and shopping. This prediction will take a number of years to play out fully, but the first real signs will be visible during 2011.

2. Mobile apps and airport kiosks begin their decline
It is always difficult to predict exactly the high water mark during a flood, or the top of the stock market bull run prior to a correction; likewise it is difficult to say that a current hot technology will not get any hotter. This is not to say people won’t be making good money for years to come, but reverting to the old BCG Growth-Share Matrix, 2011 is the start of the cash cow period. App fatigue is rearing its head, ad spend is elsewhere, and HTML 5 is gaining momentum. Games via mobile and other certain segments may still favor native apps, but I remember 10 years ago when I had to download a web app to use online banking – today doing this outside the PC browser would be laughable. Travel will follow the same path, and one impact of everything becoming mobile is that airport kiosks will play a smaller and smaller role over time in the airport as space is freed up for more productive uses.

3. Personalization will be the buzz word of the year, but most airlines will fail to implement.
This is not the first time I’ve said it, but personalization really will be the hot topic for 2011 in online travel, especially for airline websites. And I’m not talking about personalization as solely negotiating ploy, as you just need to look at the really basic personalization I was pushing almost two years ago to see how little tangible change there has been in this area. No use promising the moon if you can’t even look up to see the stars.

By and large, most airlines are paying lip service to personalization, even when small tweaks can deliver such huge results. Now some airlines are claiming huge ideas for what is possible when today they are not even using simple steps like segmenting post booking ancillary sales using simple data already in the face of the PNR. The advent of next generation content management systems combined with smarter use of data from various sources will ensure the personalization topic gets discussed widely within airline e-commerce circles, and one or two airlines might actually genuinely embrace it and begin to obtain a significant lead over their rivals – but they will be the exception.

I’ll consider this prediction a success if by the end of 2011 at least one airline is getting recognition and influencing others into 2012 for the business benefits they have achieved by putting a real focus on personalization across both mobile and web. I live in hope. Any takers?

4. Social commerce becomes both a plus and a minus for airline direct sales
Before I’m accused of taking an each way bet, all the title really means is that there will be new forces to deal with in 2011, and they won’t be univerally good or bad. I’ve been a bit down on the unquestioning automatic praise for anything “social” by the social media lobby, but on the other hand parts of it will have a profound impact on how travel is purchased. It is all about social integration rather than the gimmicky stuff we have seen a lot of to date.

I was surprisingly impressed at Phocuswright with Tripalertz and their model of bringing a group buying dynamic to hotels. No-one can argue with the success of Groupon; how this trend finds its way into online travel will almost certainly be much clearer by the end of 2011 than it is today. Paypal have launched Shoptimist, Facebook have set up a commerce partnerships unit, the rise of sites like RueLaLa during 2010 brought many immitators, and even KLM got into the act with a flight for ravers filled in 5 hours using a social group buying dynamic. Social commerce is only going to get bigger, but this is not a tide that will lift all boats – some airline websites will really struggle, thereby losing power to individuals when those individuals act in a concerted and socially interconnected manner.

There is one impact of social that could have a very positive impact for airlines, but as yet no-one to my knowledge has really worked out how to implement it. At the Amadeus Horizons conference in San Francisco earlier this year Ian Wheeler was asked onstage his prediction for the future and his answer was something like this: social media will be incorporated into shopping results and this could move the basis of decision making away from pure low fare search and onto other features that the purchaser places a value on but which today are not easily incorporated.

From my point of view, this type of thinking is exactly what airlines (and their IT partners) need to be doing in trying to understand how they can really harness the power of social and obtain benefits way beyond all of the gimmicky stuff we have seen so far. It won’t be complete in 2011, but hopefully the gap between vision and reality has narrowed significantly. 

5. The rise of the website analytics guy
In the past I’ve used the great quote from Hal Varian of Google saying the sexy job of the future will be being a statisticion, and then recently I saw BlueKai CEO Omar Tawakol writing, 

The rise of the quants will only intensify in the coming year, as more and more agencies adopt media strategies that rely on in-depth data analysis and audience profiling.

Tie this into recent writing on my previous prediction about rise of data in travel and also tie it into my comments about the non linear booking path and increased personalization above, and you start to realize that just looking at a Google Analytics or Omniture funnel showing drop out rates at each step of the booking flow isn’t going to cut it anymore. Either the importance of you and your job increases, or the importance of the job increases as someone else comes in to do it properly. So before forwarding this post onto your boss asking for a raise, be aware that if you are the guy or girl responsible for website analytics then your job description should be modified and your objectives raised accordingly. 2011 should be a fun year!

Twelve months ago I made five predictions that I thought would be key travel industry trends applicable to airlines seeking profitable innovation in 2010. The time for self assessment has come. Were any of them on the money, or was I living in a land of self-delusion one year ago?

I’m following the same format I used when rating the success or failure of my 2009 predictions. I’ve rated the accuracy of each prediction in percentage terms – 100% means I was a visionary (at least in my own mind), whilst 0% means I had no idea what I was talking about.

1. Death of Twitter as a customer service model (Prediction accuracy 25%)

My track record here is not great, but no need to talk at length on this as regular readers are probably sick of me by now raising doubts about the scalability of Twitter in an airline direct channel servicing environment.  I’ve had some positive things to say as well, but the reason why I’ve been generous with a 25% rating is that Twitter growth has slowed and it is now very doubtful that Twitter will become anywhere near as popular as email – if this pattern holds then it will remain a niche servicing medium and the scalability issues will be much less of an issue for airlines who see servicing via Twitter as more as a marketing benefit than a serious competitor moving volume out of the call center.

2. In-flight entertainment will move beyond the cabin (Prediction accuracy 10%)

I was expecting this one to become reality much faster than is actually happening. In September I saw the following on Cranky Flier

Both providers are working on systems where you can create your own inflight entertainment experience before you even get to the airport. For Thales, they’ve created a system where you can go online and browse entertainment options. You’ll be able to create movie or music playlists and set a variety of custom settings, including meal choices, etc. The way they envision it, you’ll then be able to take your boarding pass on to the airplane and each screen will have a barcode scanner. This will then load your preferences.

And then in October on Flight Global

Virgin America is planning further upgrades to its ‘Red’ in-flight entertainment system (IFE) as part of a bid to continue growing its ancillary revenue stream. The US low-cost carrier this summer introduced a new upgrade to ‘Red” which included making SkyMall products available for the first time through the system. Virgin America vice president of marketing Porter Gale says the next step would to be individualise the shopping experience for its passengers using ‘Red,’ which is installed at every seat across the carrier’s Airbus A320 family fleet. “It’s hard to individualise to the guest at the seat,” … “As we further develop our software we think we think we’ll be able to better understand our guests.”

So the vendors say the product is ready (or very close to), but the airlines are implying it is not ready yet. All I know is that so long as IFE’s remain a part of the plane (assuming we don’t move to a model of bringing our own entertainment with us), and as long as airlines are looking for new ways to maximize ancillary revenue, then this prediction will come true – 2010 was just a bit optimistic on my part.

3. Semantic will fizzle, not sizzle (Prediction accuracy 75%)

This time last year the word semantic was a little like augmented reality – way, way over-hyped. You don’t hear it mentioned anywhere near as much these days, and when it is, it tends to be used sparingly. A the Phocuswright conference in Arizona there were a couple of start-ups at the Innovation Summit (eg. TrustYou) who emphasized semantic attributes and Adioso are doing some good stuff with natural language search, but overall I remain much more bullish on various innovations in travel search relevant to airline direct other than semantic.

4. Rebundling is the new A La Carte (Prediction accuracy 10%)

The GDS companies are investing a lot to make ancillary services a reality across all distribution channels, the airlines are for the most part saying they can’t wait to get it, everyone talks about improving merchandising and personalization, but at the end of the day as far as the airline website visitor buying a ticket, not that much has changed in the last 12 months insofar as this prediction is concerned. Some of the US carriers have done a decent job of selling ancillary packages as part of the booking flow, and branding these accordingly (eg. United, American), but globally, and also from a perspective of really using fare families effectively to increase differentiation and perceived value through strong brand association with groupings of product attributes, the leaders like Air Canada remain the leaders and the movement in this space is much less than I was expecting.

The solid gold quote related to this prediction comes from an unnamed executive at an unnamed US carrier when he said to me earlier this year something like “you know, everyone within this airline talks a lot about merchandising, but I don’t think any of us really know what we mean when we use the term.” I only wish there we more honest people in the world, as I suspect a good number of airline execs are thinking the same thing.

5. Data will transform travel (Prediction accuracy 25%)

This is the sleeper prediction of the lot. Things are happening behind the scenes at so many different companies within the travel and related IT space, and I’m sure there is much much more that I don’t know about. A lot of different people are talking about making better use of data and the money looks like it is starting to be spent. I wrote back in August how customer centricity and personalization are taking center stage, and making better use of data is a key pillar. By its nature this trend is more difficult for the casual observer to monitor, but I’m hearing of various airline website executives taking concrete steps in the right direction as they realize that even small percentage gains in conversion, lower drop out rates, or slightly higher upsell and cross-sell of high margin products will have a significant impact on the bottom line. Incorporating data in a more intelligent way is key to realizing this increased profitability, but often the airlines that are having success in this area don’t want to shout about it too loudly lest their competitors take notice. The seeds have been planted, and the early shoots are spouting, but this trend really has the potential to grow into something to rival that found in Styx Valley.

In summary, 2010 was not a great year for my predictions coming true, as in all honesty I couldn’t give myself 100% on any of the five, but one consolation is I didn’t score a zero either! Maybe you disagree?

Today is one of the rare days when I can’t even make a tenuous connection to the airline direct channel with a post, but it is Christmas Eve so silly season reporting probably means I can get away with it.

Since moving to live in the United States in August this year I’ve changed my spelling to American English (apart from enquiry and inquiry – just can’t bring myself to be that American yet), and when I read Tnooz I see there are some writers using the Queen’s English and others using the US version.

So the recently released NGram tool from Google labs proved useful for an interesting little exercise. Note that this tool has its critics, but it still proved useful for the purpose I am using it for today.

From the universe of millions of old books scanned by Google, the best comparison above is to look at the blue and red line. It shows the relative rise of American spelling of the word traveled versus the relative decline of the same word being spelt with a double ‘l’

So it looks like US spelling is winning, but this still won’t stop me reverting to the Queen’s English when I move back to Australia sometime in the coming years.

Merry Christmas, and thanks for your continued support – I am picking up new subscribers/readers every week, so this definitely helps keep me motivated to continue getting up early most mornings before work to try and post something relevant.

Tnooz have gatherered the predictions of 20 industry crystal ball gazers, myself included, so I will reflect here on what a few of the other nodes have forecast for the coming year. I have also repeated the two predictions that I submitted. In the Tnooz article the hyperlinks were omitted, so I’ve added them here as they give a lot more context to some of my phases, often explaining in more detail why I’ve come to the conclusion I have.  
 
 My 2011 Predictons as published on Tnooz

The booking path goes non linear
There are so many different and seemingly unrelated changes happening in the world of online travel, but many of these converge at the point of reinventing the way a person searches for, buys, and then consumes the travel experience. In future, this path moves from linear to seemingly haphazard – steps are skipped whilst others occur in an order that may appear incomprehensible today. Some of the individual impacts feeding into this tectonic trend are campaign management, content management, inspiration, mobile proliferation, personalization, intelligent caching and the merging of pre-shopping and shopping. This prediction will take a number of years to play out fully, but the first real signs will be visible during 2011.

Mobile apps and airport kiosks begin their decline
I
t is always difficult to predict exactly the high water mark during a flood, or the top of the stock market bull run prior to a correction; likewise it is difficult to say that a current hot technology will not get any hotter. This is not to say people won’t be making good money for years to come, but reverting to the old BCG Growth-Share Matrix, 2011 is the start of the cash cow period. App fatigue is rearing its head, ad spend is elsewhere, and HTML 5 is gaining momentum
. Games via mobile and other certain segments may still favor native apps, but I remember 10 years ago when I had to download a web app to use online banking – today doing this outside the PC browser would be laughable. Travel will follow the same path, and one impact of everything becoming mobile is that airport kiosks will play a smaller and smaller role over time in the airport as space is freed up for more productive uses.
 
And a quick review of the other forecasters
A few common themes that I tend to agree with are the rise of the supplier (Alex Bainbridge and Gene Quinn) and social influencing search results (Graham Robertson, Glenn Gruber, Sarah Kennedy Ellis, Tim Hughes, Troy Thompson and maybe even Timothy O’Neil-Dunne if you extend his Value Finding hypothesis).
 
There are some curious and conflicting predictions on mobile. Alex Gisbert is claiming mobile will be more about content than bookings and that monetization will be tough (not sure Mobiata would agree), Charlie Li is claims mobile still offers good opportunities for small companies to compete with global players (not sure I agree) and Norm Rose is predicting a big interest in native apps with booking functionality for tablets (I definitely don’t agree). My thinking is much more in line with Tim Hughes when he predicts The mobile/tablet/PC debate will change from building for devices to building for display preferences. 
  
But my favorite prediction has to go to the first one offered by Sarah Kennedy Ellis. Too many predictions in any list compiled by anyone in any publication really are just extentions of trends that are already well established today, but someone taking a contrarian viewpoint and swimming against the tide is to be commended. She writes:
 
From socially loud to anti-crowd

In 2011, travelers begin to shift from “always-on” travel experiences to “digitally-disconnected” preferences. Technology companies start to support this shift through integration of unique data in the shopping process. Check-ins, social shares and real-time supplier inventory will be used in aggregate to inform travelers of the most likely recommended destinations featuring short lines and low occupancy bliss. Today, we use this data to see where our network is now/who’s nearby, as well as where, when and with whom friends have future travel plans. But in 2011, this data will be used to optimize preferences and inform travelers of destinations people aren’t visiting and which beach or ski mountain the crowds won’t be occupying on specific dates.

After recently complimenting the Adobe research on consumer preference regarding mobile apps versus mobile browser, today I’m stepping it up a notch. Google Travel in the UK, in conjunction with Nielsen, have produced the best insight into the actual behavior of the online travel buyer in quite a while (thanks to regular reader Mario Santoyo for alerting me). After reading this post, I strongly recommend you download the report and really spend some time on each slide trying to understand how it impacts your business.

Before I get into the report, just to be super clear, this is praise solely for the quality of the report and the methodology used; I’m in no way going to touch broader issues related to Google’s strategy in travel – if you want comment on that point, then here is the official Amadeus position on Google ITA. There’s not much I steer clear of on this blog, but that is one topic I’ll happily leave to others.

Nielsen data is far from perfect, but I’d still trust it almost any day over data asking people after the event what they recall having done and in which order they did it. I’ve seen some research showing heavy users of social networks are also the biggest spenders online although I’m still looking for better data than the Morpace report on Facebook usage by age and ethnicity that I made a request for in my last post in order to round out some thinking I’m doing on understanding different aspects of passenger behavior during the online travel purchase process. The Google/Nielsen report below fills in many of the gaps in understanding how consumers buy online travel, but the point I’m making is that this is a quest where sometimes good new data just leaves you wanting even more.

The first chart here is pretty standard stuff showing the bigger spenders are the older consumers coming from households with higher income. But soon after, the insight really starts.

Slide 15

This study apparently monitored the internet usage of around 50,000 UK residents from January – March 2010. During that period approximately 31% visited one of the 490 sites classified as a travel related web site. Of that 31%, 85% requested a quote or price of some type, and a quarter of the 31% actually made a purchase with 10% of that 25% actually making 5 or more online travel purchases during the three month period.

The slide below is fascinating when you compare what other travel products the network (traditional) airline passengers purchased when compared to those that purchased an LCC ticket within the same 3 month window. I’d be interested to know if the 17% buying from an OTA after purchasing the air segment from a network carrier includes white label hotels sites where the airline earns some ancillary revenue. I was surprised to see for people buying a hotel first that 17% went on the purchase from an LCC – either my question about whether air could ever be ancillary to the hotel purchase is already a reality, or there are multiple trips to different destinations being planned and this study is not seeing that.

Slide 19

When I originally write about The Bow Tie Model some of the data came from 2007 Google research. It is very interesting to see that in the last 3 years, the number of searches prior to purchasing travel online has increased from 12 to 18. The diagram below seems more credible to the left of the gray vertical bar (same point as the knot in the Bow Tie) as unless Google/Nielsen are monitoring the actual date of travel from the online purchase (unlikely), the arrow to the right could just as easily be planning for a subsequent trip and unrelated to that first travel purchase represented by the gray bar. This entire research report is designed as a sales tool for Google, but it really drives home in so many ways how search is now so powerful over the travel brands, and is only going to get more powerful.

Slide 22

One of the reasons why I say search will become even more influential is because if you look at the next chart you can see how map sites have come from nowhere a few years ago to become an integral part of the search experience today. And this chart is just those booking air travel. Note that map sites in this study are only counted when they are visited in the same session as a travel site was visited – the influence is still probably overstated somewhat as it is entirely possible someone looks at an airline website without buying, and then in the same session checks directions online for how to get somewhere within their own city. Even so, no-one will argue that the map is becoming a crucial component within the integrated search experience.

Slide 26

Nielsen show that 30% of travel searches contain a brand name within the query. This is made up by 18% brand only, plus 12% using a brand combined with a generic term. At this point airline websites really need to focus and pay attention, as the chart below implies that airline brands are the most frequently typed in brand names during the search, or at least the brand names that correspond to the highest rate of click throughs. For an airline spending so much on branding the website URL, only to have consumers show a strong tendency to type the brand into the search engine must be a bitter pill to swallow. I see this is the biggest impact on the airline direct channel as it is saying to me that no matter how strong your brand, you still need to pay for clicks on that brand name to ensure that the people who intended coming to your airline website actually make it there.

Slide 36

The theme I started in the paragraph above is reinforced here, as when you look at the chart below, it shows that even consumers who start with a generic search terms end up veering more and more towards brand names on subsequent searches – and the more you search, the more days you are into the pre-shopping experience and the closer you are getting to the point where you are ready to pull out the credit card. If people are searching on brand names at the point they are ready to purchase, then it gives the search engine enormous power to sway that consumer at the critical moment and redirect them to another channel or supplier.

i

Slide 38

And here is the conclusion slide, for me at least. 31% of consumers (26% for Google plus 5% for other search) in the actual session where they go on to purchase travel, begin that session with a search engine. Very few are typing in airline.com, but as we saw above, a large number of airline travel buyers know the brand they want, search on that brand name, and then if you are lucky, somehow they end up buying from your airline website at the end of this process. This understanding should have profound implications for any e-commerce manager as either you embrace it or fight it, but make sure you understand it and do not ignore it.

Slide 46

One curious thing in the chart above is that I think Google/Nielsen have designed their methodology in this case to significantly understate Facebook who I assume are in the 6% of “Non-Travel Other.” As I understand it, they would only count Facebook in the above example if the user had clicked on a link in Facebook that then directed him to the actual airline website where he made the purchase. I saw the term f-commerce for the first time yesterday, and the one question this study leaves in my mind is where Facebook fits into this picture. Someone who understands advertising on Facebook very well told me recently that the click through rates on ads there are absolutely atrocious, but I’m still interested to better understand the who Facebook phenomenon and that piece of influencing travel consumers prior to purchase.

I am impressed with the way Google in particular, but also Bing, have made themselves such as key part of the online travel buying process in quite a short space of time. I used to think that search played a role mostly  at the extreme left of the Bow Tie, but as this research so clearly demonstrates, search is present during every session, and the power of search to move the purchase behavior of a passenger who may have originally intended to purchase from your airline website is nothing short of amazing.

To read the report in full, click here.

When it comes to market research, I am usually much more negative than postitive, but this is the first of two posts where I am going to turn around my attitude completely. Today’s example is good, but the one I will write on next is even better. Maybe I’m just getting too much into the Christmas spirit?

Tnooz have not yet put up their 2011 predictions (should be any day now), but the second of the two predictions that I gave them was Mobile apps and airport kiosks begin their decline.

With that in mind, take a look at the market research data below I just saw.

A big theme I will be talking about frequently in 2011 is how a pure mobile strategy really sounds “so 2009”  and the way forward for airlines is to think of a mobile enabled direct channel strategy – it may sound similar, but they really are quite different. The native apps / mobile web discussion is one of the central planks of that theme.

Whilst on the topic of market research, the data I am going to put up in the next post comes from the best research report I have seen in a long time, but I’m still missing something that maybe one of my readers has access to. Has anyone seen good research showing time spent on Facebook segmented by age? The  closest I have seen is a Morpace report on Facebook usage by age and ethnicity but I’d be much more comfortable if rather than just asking people, the data came from Nielsen, Comscore. Hitwise or some type of panel data where actual rather than stated usage was measured. If you have a report like this, I can be contacted via this page, so please don’t be shy. The report I will be referencing in my next post was sent to me by a regular reader of this blog (thanks Mario), and also today when you click on a link you should notice it opening in a new tab – another change based on reader feedback (thanks Andrew). 

To hear more about the Adobe study on mobile, and to find out more about the chart I have used above, you can listen to webcast here.

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