Six things Google could do next in travel

Two years ago I wrote a blog post outlining the developments I would make if I were responsible for Google's travel industry strategy.

With the speculation that Google is in negotiations to buy ITA Software (the system behind many leading flight meta search sites), I thought it was time to revisit that article and see whether I was right or not, and what I would advise now.

In May 2008, I speculated that Google should work around three key themes:

1. Owning the traveller profile
2. Increasing content that can have adverts served against them
3. Product metasearch

Owning the traveller profile

• In the last two years  TripIt, Traxo and TripCase et al have begun to dominate this sector. They provide tools to centralise, organise, manage and share travel plans over multiple suppliers and trips. Nothing like this announced by Google in last twoyears.

Increasing content (and advertising opportunities)

• Okay, a fairly obvious strategic prediction, but in September 2009 Google announced Place Pages - a page for each city/destination pulling together content from a variety of Google owned sources. Looks like I got that right.

A method to implement tour product metasearch with a standard data format

• I wanted Google to define a basic travel standard that could be used to build a tour/activity metasearch. They have a standard (travel packages in Google Base) but it is not widely adopted or known about.

So, I scored 1.5 out of three with my last strategic speculation.

But with Google taking much more interest in the travel industry, what would I suggest now? Indeed, what could be some of the options available to Google?

1. Owning the traveller profile

There is still an opportunity here for Google or at least a reason to be playing in this particular game. Imagine what would happen if Facebook (with their new penchant for sharing profile data) decided that high value travel data was useful to aggregate.

It would give them a massive advertiser opportunity. Google need to be in this sector if not for any other reason than to defend against potential Facebook evolutions.

2. Supplier centric models

The lens to look at strategic options should either be user centric (i.e. the traveller profile) or supplier centric. Travel ecommerce conferences are dominated by middle layer companies (metasearch/online travel agents) so if you only go to travel industry conferences you could easily begin to believe that this is what makes up the online leisure travel industry.

Consumers like to deal with suppliers directly (if multiple transactions can be pulled together into a single service using something like a centrally maintained traveller profile) and the new Google travel should support this supplier centric model. Suppliers include airlines, hotels, car hire companies and inbound tour operators. From a web perspective suppliers exclude meta-search, online travel agents and out bound tour operators without local operations.

Airline strategy:

• Yes - buy ITA. Use it to send customer traffic from the Google website to transact on the individual airline websites. Pull the transaction details back to the centre using a single traveller profile.
• Completely removes the online travel agent/flight metasearch layer.
• The product data source is ITA's existing sources.

Hotel strategy:

• Move the pay per click advertising model to an individual bidding market per hotel. i.e. rather than companies bidding on keywords they bid around a known (unique) hotel. (Google already has this hotel data).
• Firstly, this brings supplier direct transactions up the list (as the end point suppliers are most likely to be able to bid the highest on their own properties). Secondly by moving the market model to be based on hotels rather than on keywords this assists mobile transactions where users are not typing in keywords but searching by geography or location.
• Again, like airlines, use the centrally managed traveller profile system to bring all transactions together into an entire trip - replacing the need for an agent to do the packaging.
• In this case the product data source are hotel advertisers.

Tour/activity strategy:

Products such as tours and activities, for leisure travel at least, are often the driving reason to travel in the first place. Three key aspects Google could also adopt.

• Travel product data standard
• Bring in CPA alongside CPC advertising
• Permit tours/activities to be paid for using Google Checkout

4. Travel product data standard

The existing Google travel package data standard is sufficient. Let's get that data more widely used within the Google system. It is not trivial to create but it is possible for SME / SMB enterprises to create tour/activity data to this standard using basic data tools.

Tours/activities are the travel products that work the most like conventional ecommerce products (i.e. they have a single price and are available year round or at least within a season start/end date range). Hence product search can be much more about searching product attributes than about searching available dates (like for flights/hotels).

A few small developments on the existing Google shopping search would produce a tour/activity search quite easily and sit nicely alongside flight search functionality delivered by an ITA acquisition.

5. CPA advertising alongside CPC advertising

Google does have an affiliate marketing network, yet it is not well utilised within travel. CPA will really help day tour/activity companies work with Google as currently they compete selling their $150 half-day tours with companies selling a seven-day holiday to the same destination.

When two distinct product types battle on the same keywords then the one with the largest profit margin per click will win. Currently tour operators selling holidays (not necessarily the end supplier) ends up gaining from this and activity companies are unable to compete fairly.

To truly go supplier-centric, the CPA affiliate advertising will have to be more accessible for small travel companies.

6. Google Checkout

Google Checkout (the payment system that Google operate) excludes travel products. By permitting payments for travel products in Checkout, Google will be able to operate a CPA advertising model to much greater effect (as they will know that a transaction has taken place as they can see the money)

So what happens now?

I promise to write another post in two years with an update on whether Google has taken my advice. If the search giant follows this set of predictions by a degree of 50%, like it did last time, we are in for interesting times!

NB: If you are NOT Google (!) but want tips on running your travel ecommerce business, then read 55 Travel Ecommerce Tips, a free e-book published in April 2010.