This is the latest in a series of articles spun out of tnoozLIVE@ITB, recorded live over three days at ITB Berlin this March. More clips and interviews to come here, as well as on our YouTube channel.
HolidayPirates.com sees itself not as a classical OTA but as a social-media driven travel brand and one of the main benefits of building the business around social rather than search is that the business has a pretty strong control over its customer acquisition costs.
CEO David Armstrong has talked before about not spending a penny on Google Ads, but in an interview with tnooz at ITB Berlin he explained how managing the biggest travel brand presence on Facebook is not straightforward. When you have 9.7 million likes on Facebook the scale of the audience means "it's easier to gain reach with whatever you post" but these posts need to be relevant in order to satisfy the demands on the Facebook algorithms.
Armstrong is not averse to spending when it delivers, but he's only buying around 7% of the traffic.
As well as avoiding Google Ads, the business, so far, has also avoided outside funding. He was seriously considering interest from VCs and growth firms when HolidayPirates was thinking about expanding into the US, but instead he found a different way to enter that highly competitive way - by partnering with some big-name tech firms.
Enter stage left, Priceline Partner Network (PPN). By signing a white-label partnership with PPN it was able to enter the US market, up and running with a "search and book" feature giving US users access to the PPN inventory through HolidayPirates US point of sale.
And it also has a similar white label deal with Kayak. The flight comparison feature across all ten markets Holiday Pirates operates in is powered by Kayak.
No Google budget, no external funding, expansion through partnerships - Holiday Pirates proves that even as the travel industry appears to be coalescing around the global giants, it is still possible to come up with a differentiated business model that works.
Here's our interview, followed by an edited transcript.
Here's an edited version of the transcript
Martin Cowen: I'm here with David Armstrong, CEO of HolidayPirates.com which is an OTA, in the broadest sense of the term.
David Armstrong: Yes. So, we are not a classical OTA. We are an OTA but we're something more to that as well. We are a social media-driven travel brand, we go and search for travel deals that no one else is really looking for, we find them and then we publish them and that's how things work.
One of the questions that we always ask OTAs of various shapes and sizes is about customacquisition, and you said that you're a social media-driven online travel agency. Presumably, you've got quite a strong social media side to what you do. Is that your primary source of customers?
David: Yes. Absolutely. We actually do not spend any money on Google Ads.
Martin: None?
None. Zero. So far, we didn't need to. What we do is we find these great deals. They are wow deals, awesome deals, and what happens is when we publish them on social media, Facebook, and other channels, people like them, people share them, they go viral, and that's how we acquire our traffic, in a nutshell.
So how do you find the deals? Have you got a team manually searching other OTAs and tour operators or have you got tech partnerships to help you out with that?
So, it started as a manual business, yes, back in 2011 but we developed algorithms and software that goes and scans databases, interfaces, compares deals and then, suggests these to our editors. The editor decides if it's a deal or not. If it is, then they go and write an article to it and then publish it on social media.
Okay. So, it's almost like there's an editorial content side to highlighting the deals.
Absolutely. That's key to our success as well because it's just not technically publishing things and pushing things randomly to people. It's about being authentic and telling people a story on what to do and why it's a good deal to fly to Buenos Aires or to Thailand or even to Spain, and that's a great part of the work and the success in social media, that people see this authentic content.
OK, so the basic idea is that you find these big deals, you post them onto social media, and it gets shared and liked and it goes viral. Are you in this organic social media space rather than the paid social media space? One of the things that we've covered quite extensively on tnooz is Facebook Dynamic Ads for Travel. Is that something that you're looking at, or do you prefer the organic viral nature of social media?
Of course, we prefer the organic in nature. That's clear. In fact, right now or last year, we only spent on 7% of our traffic that we gained through social. Everything else was organic. So, it might increase but we won't pay for over 90% of our traffic. That's the key message actually.
I would imagine that as you're well-liked on Facebook, maybe give us an idea of your Facebook following.
Yes. So, globally we are at 9.5 million likes. That is actually the largest travel brand in social media globally. I think only Skyscanner is ahead of us but that's a different story. So, we do have a lot of followers and that's only Facebook. We also work with Instagram, with Pinterest, WhatsApp and so on.
Once you've reached a certain size, of course it's easier to gain reach with whatever you post, but it's a constant effort to really try to have relevant and good content because if you don't, you will not get likes, you will not get shares, and then, the Facebook algorithm will not see you as relevant content. So, that's where we have to keep being relevant, and as long as we manage to do that, we get this reach.
So, you say you haven't spent a single penny on Google Ads and only 7% of your social is paid. But presumably, you have a bunch of guys and girls looking at Facebook natural, whatever the organic Facebook algorithms require of you to show up.
Absolutely. So, we invest in our resources and experts, and social media experts and in our (6:00) editorial teams in the ten countries we operate in. Saying that, we live in social media. We, by DNA, are a social media company. So, if we weren't, we wouldn't be successful. Many other companies see social media as an alongside, nice to have thing, or having to deal with customer service on social media. We also have that but we see social media as our driver of the business.
I know I talked to you about where you source your inventory form earlier, but I've made a note to myself to ask you about your tech partnerships with Kayak and also with the Priceline Partner Network, two very, very big global tech-based brands. How do you work with them and what do they bring to Holiday Pirates?
So first of all, the global partnership with Kayak was a very vital one to us. It is a white-label partnership. What we wanted to provide our users was the possibility to search and compare flight deals. So, when we post something for a flight that we found, people might not be able to hop on to that deal but they are still interested in looking for something else perhaps, for another date, then they can use Kayak technology on this white-label solution, and look for something. It also helped us to have a product in every market we enter. So, every market we rolled up and entered since we partnered up in 2015, we were able to just hook up the Kayak solution in the first place, and drive our social media strategy to become a vital player in that market. But it helped us to monetize the traffic from the first day.
Looking at Priceline, we work with many others as well. Priceline helps us to have a package or dynamic package product in the U.S. market right now, where you hardly find other solutions. It's mainly dominated by Expedia click and mix, more or less. So yeah.
So, the Priceline Partner Network tech is giving you an in to the U.S.?
Absolutely.
I read a Q&A you did with Real Business around funding and your refusal, if that's not too strong a word, to embrace private equity and venture capital. That's quite a brave decision to have that approach. You started in 2011. You're in ten markets. You seem to be doing fairly well without having to take the private equity, venture capital money. So, what was your thinking behind going for organic from day one? What sort of conversations are you having with those people today?
So, the first thought was just to bootstrap as long as you can and to see how far you get. Once we saw that we were able earn enough money to really pay the first salaries and the rents and so on for the office in Berlin, it wasn't really necessary to take a venture capital.
Of course, about three years ago when we decided to look towards the US and then we entered the market two years ago in February 2016. Before doing that, we were talking to growth fund firms and so on, VC's, trying to figure out if we would need external funds to really conquer the huge US market. But we decided not to do so and I'm happy that we did so because we're very successful. It's growing like crazy over there
It's an investment case still. We don't earn money there yet. We invest a seven-digit funds year over year in the US but we see the potential that the US business will be as large as our European business in two years' time. So, it's worthwhile.
And if one of thebig guys came knocking with silly money? Are you absolutely determined to stay independent or would there be an offer you just couldn't say no to?
Never say never. Always be open to everything. That's one of our credos as well. We've been talking to large partners all over the world, figuring out how to look towards even further geographies like South America and Asia. Things are easier if you have a global partner in the back that helps you to enter markets. So, those are things that we would see as very beneficial, partnering up with large corporations like that. But in which form exactly? That's something to find out. Right now, we're not really looking for funds actually.
Okay. That's great. Thank you very much. I really enjoyed talking to you about HolidayPirates and I'm also very pleased I've managed to get through the interview without a single pirate pun!
Thank you. Thanks for inviting.