Wednesday, July 22, 2009

Brave New World of Google Travel 3.0

With Google’s recent introduction of City Tours and Favorite Places, speculation is rife that Google will 1) enter the travel market, 2) launch an online agency and become another Expedia, or 3) develop or acquire a metasearch engine to compete with Microsoft’s Bing Travel.

Of course, travel and advertising insiders know that Google already is a huge travel industry player, having become a king-maker ever since it debuted Google AdWords in 2000 and acquired Applied Semantics and its AdSense product in 2003.

Jonathan Rosenberg, Google’s senior vice president of product management, spoke publicly last week about how Google intends to make its travel advertising, and advertising in other verticals, more effective.

“I think it is the case on the vertical side that there is a lot of opportunity to get incremental monetization gains where you can further qualify the leads better for the advertisers,” Rosenberg told analysts. “So for example, the finance area and the travel area are areas where there’s a lot of opportunity to do that, so that you end up putting more information in the ad and then incrementally getting more information from the customer so that you can further qualify whether or not the customer in the finance area is interested in a particular type of mortgage, and then you send them to an advertiser with whom they are more likely to consummate a specific transaction that that advertiser is willing to pay for. So there’s a lot of opportunity there.”

But, clearly the early, but too-soon-to-call success of Bing and Bing Travel, may have caught the Googlers in Mountain View a tad off guard.

However, any Google further foray into travel is not just about Bing Travel, the metasearch and fare-prediction engine formerly known as Farecast.

After all, Google quietly unveiled Flight Links, a BookingBuddy-like flight-search engine, in October 2005 and at the time Google officials were adamant that Google would not enter the travel metasearch arena.

The prevailing thinking among Kremlin -- I mean -- Google-watchers at the time was that Google would not expand its presence in the travel industry because it would then be competing with its largest advertisers and that would crimp its AdWords program. Expedia, Marriott and American Airlines would be very angry.

But, as one industry wag reminded me yesterday, that was then and this is now.

The world has changed -- as it has a tendency to do.

Consider that in addition to Microsoft’s integration of Farecast into Bing Travel:

• Orbitz has relaunched for air, hotels, cars, packages and cruises, featuring booking engines from Expedia, Hotwire,, Priceline, Travelocity, Kayak,, Holiday Inn, Orbitz, CheapTickets and many more.

• Expedia’s TripAdvisor introduced flight metasearch.

• Travelzoo, which long has published deals and operated SuperSearch, entered the metasearch fray with (A comparison of SuperSearch and is a good illustration of the differences between multi-booking-engine search and classic metasearch.)

• And, travel firms like TripIt, Kayak’s TravelPost, TripAdvisor and FareCompare, with its more than 170 Twitter accounts, are getting their social-media game-faces on.

The days when Google had to be overly concerned that entering the travel sphere in a deeper way would alienate its advertisers are long gone. Just look at, BookingBuddy, igoUgo, BingTravel, TripAdvisor -- the list is endless -- to see incestuous travel industry advertisers participating in their competitors’ products and playing click arbitrage.

So, with a huge proportion of vacation planning and booking beginning with Google search, what will Google do next in travel?

I don’t think it will launch an online agency and become another Expedia. After all, the online agency business model is under pressure and that’s why we now call them online travel companies.

They are edging away from over-reliance on the needle-in-a-haystack endeavor of trying to convert hordes of travel lookers into bookers and are ratcheting up their media/advertising businesses. See as the most recent effort.

Google could buy a Kayak or another metasearch company to bring Google's travel offering up to speed to compete against Microsoft’s Bing and Bing Travel.

But, with all of that brain power in Google Labs, it might not need to buy anything. After all, Google has operated Flight Links for years, and certainly has the know-how to do something special on its own in travel or travel metasearch.

A third path for Google would be to accelerate the development of its travel apps like Flight Links, City Tours and Favorite Places, monetize the hell out of them and roll them up into something new, as-yet-undefined and very Web 3.0-ish.

Whatever path Google takes to further develop its travel offering, one thing is certain: With apologies to Kayak and Bing Travel, there will be no debate that Google's offering indeed will have its own "look and feel."


Jeff said...

I more than agree with this: "travel and advertising insiders know that Google already is a huge travel industry player."

Google isn't just a huge player in this space, they are *the* player. 80% of people start planning their trip with a search engine, and Google has something like 75% of the search market. That means 60% of all trips start with Google.

Not bad for a company that isn't even "in" the travel industry :)

Yen said...

Google is on an annual revenue run rate of $25B (for relative comparison, Expedia is at $3B). With that scale, when Google thinks about their financial growth, technology evolution, strategic competition and their vision to organize everything short of our kitchen drawers (although I'd be darn grateful if they would do that for me), the initiatives they do prioritize are BIG bold ones like: Google apps to take on Microsoft office, Chrome to take on IE, Android to challenge iPhone and Blackberry and dominate the generation shift from feature phones to smart phones, dominating China and India, free best-in-breed maps embedded everywhere etc. - i.e. stuff that moves the dial to the tune of hundreds of millions of users and billions of dollars. The online travel sector, despite being the top ecommerce category and number two ad category, just isn't big 'nuff for Google to justify spending specific attention. Google's size, growth trajectory, vision and culture demands bigger problems to be solved.

Google does has a few initiatives you didn't mention that aren't aimed at travel but that will likely have a much bigger impact on travel then will all the initiatives you have mentioned. But that's a discussion for another day...

Valyn Perini said...

As a Google rep once told me, Google's main objective is to return the most relevant search results possible to the user. Because a 'travel' search could be for anything from opening hours at the Washington Monument to the availability of rooms overlooking the harbor at a high-end resort in Pago Pago, I found his statement to be vaguely insightful.

Services like Google Base and apps like Flight Link and City Tours very much support the (admittedly broad) objective he defined, providing contextual opportunities biased by word buys and commercial agreements while returning not only those old-school organic search results links but also pretty graphics and interactive options.

If Google's main objective remains as the Google rep stated, venturing into the meta search market to provide more relevant results makes a lot more sense than the online travel agency market. Why buy the cow...

Dennis Schaal said...

Yen: I can see what you are saying about Google having much bigger fish to fry than dabbling in travel search. Google Chrome addresses Internet Explorer and China and India are much bigger issues than hotel bookings:)

But, certainly Bing is on Google's radar and a Bing-Yahoo partnership might get Google's attention. After all, now we are talking about Google's core business proposition. Wouldn't Google look at Bing, however small it is today, and see the good things that Bing is doing with Farecast,how its fare-prediction technology surpasses what Google has done in travel.

Wouldn't that merit some of the Google behemoth's attention? Why did it start show-casing some of its travel apps on its home page for awhile right after Bing launched?

And, yes Valyn, you and I are in agreement that Google won't buy the cow. (How did we come up with that analogy?) The pastures are full and already need fertilization so I'm sure Google will abstain from the online agency business.

Madeline said...
This comment has been removed by a blog administrator.
Daniel said...

i don't know how fair is for company such expedia, google has advantage from all the data from searches and from adwords campaigns, if sites like this go down, then will be no competition, and the price will be paid by the users.

hauteroute said...

I expect Google's product-focused (as opposed to ad-focused) travel inititives to focus on enhancing the utility and integration of Google Maps and local merchant data to enable much better trip planning than City Tours is currently capable of.

Yen said...

@Dennis They are in some form – but I don’t think Google fears Bing per se because their market share is so small @ 8%. Yes, the Yahoo deal changes the landscape, but the Yahoo deal is 9 months away from closing and it’s likely another 9 months from Bing actually going live on Yahoo – and all the while Bing is distracted by the Yahoo deal and integration while Google just keeps on marching ahead.

I think Google covets market share (and in some cases, fears and covets MSFT’s share) on other “channels” like the browser (chrome vs. IE), the desktop (google applications), mobile (android), voicemail (grandcentral/voice), mail (gmail), maps (earth and maps), personalized portals (iGoogle) etc.

Imagine Bing does the unthinkable and doubles market share to 16%. That would suck for Google, but meanwhile, Google will have moved ahead with their multi-front war and taken other key consumer interaction points with Chrome, Gmail, Android, Voice… 73% of travelers use web search before they book each of their 4-6 trips/year, but everybody needs a browser many more then 4-6 times/year… ditto with mail, mobile and voicemail…

Bing (especially with Qi Lu running the search show) certainly does merit attention and Google will react to what works on Bing, but Google is sooooo very much in the driver’s seat…

Placebreak said...

Hi Dennis, glad to get to know your blog. Google has of course the capacity to develop almost anything we can imagine and what is already out there. Maybe Google is thinking how to really provide a service that can be as useful as possible for users, with really relevant information and that can clearly differentiate from current OTAS services and applications, and provide a real added value.