Superfly, the meta search company, has fronted as a consumer play, but its first deal with an online travel agency (OTA) suggests its most solid revenue stream will be from business-to-business (B2B) transactions in market share shifting -- or moving high-value customers from one brand to another.
Jonathan Meiri, the CEO of the Israel-based startup, tells Tnooz that his company has signed paper with an online travel agency for its share shifting data-analysis and promotion tool.
The startup wouldn't reveal the name of the OTA it signed with, saying it is in negotiations with other OTAs and airlines. But the deal, if true and lucrative, would be significant.
The business model would one of the rare ones from a recent consumer travel startup to birth a plausibly reliable revenue stream. It could also be a rare one that takes advantage of the disruption that mobile poses to traditional customer acquisition.
On the other hand, it's a model that might be easily copied by another larger player with a larger database, such as TripIt or a legacy OTA.
In September, Superfly showed its hand, when it publicized a frequent-flier promotion it created on behalf of British Airways (BA). In Meiri's account, BA said to Superfly, essentially, "If you can pinpoint (without sharing their names) travelers who spend more than, say, $15,000 a year on the route between London and New York City on other airlines, we'll construct an offer to tempt them to fly with us instead."
Hence, share-shifting as a B2B model.
Not a status match
Earlier this week, Superfly used FlyerTalk, a message board for frequent fliers, to promote the availability of a second, similar type of promotion for frequent fliers, this time with bait from El Al (aimed at North American travelers only).
How the "first-of-its-kind frequent flier promotion works
Users sign up to Superfly and either book travel through the site or allow the site to suck up their past history of bookings, either by giving it access to their online travel accounts or by giving it access to search their Gmail account via OAuth to search for frequent flier account balances and record information (so customers don’t have to hand over their Web mail passwords or their airline mileage account passwords).
The OAuth process is especially popular with mobile users, says Meiri, claiming that about 20% of its mobile users use it to supply their loyalty history data.
Superfly extracts structured data and compiles a purchase history profile for each flier, noting details such as itineraries, mileage balances, typical class of tickets purchased, and an estimate of total spend on specific routes.
It calculates an estimate of what you might be worth to any individual airline, presenting the information in an anonymized fashion.
It then says to airlines like El Al and British Airways, more or less: "Hey, this passenger, whose name and identifying details we're leaving anonymous, has X monetary value to you as a potential new passenger on this specific route we can prove they frequently fly, but whom is spending all of that money on rival airlines. What might you offer him or her as a sweetener to lure them over to your airline?"
A similar calculation can be made regarding hotel spend for hotel proprietors, too, though Superfly says it has focused on airlines first.
About a year-and-a-half ago, when they brought the former CFO of Kayak Bill Smith on board, he reportedly said, "The really interesting stuff you have is the data." Today Smith told Tnooz by email:
"With their latest offering of targeted elite status matching, Superfly is bringing more rigor and data analysis to marketing spend for their airline customers. Superfly is also creating tremendous word of mouth excitement among their consumer customers by offering valuable elite status awards only available at Superfly.
The startup -- whose other disclosed investors include Aryeh Kushner, Gigi Levi, and ex-Orbitz chairman Jeff Clarke -- says it is "highly focused on working closely with its suppliers to develop these big data offerings in order to maximize supplier marketing spend made possible with its database."
Mobile-first approach to producing search results
On handheld devices, it's vital to present results that are relevant, rather than comprehensive. Unlike with desktop search, the limited screen space and limited attention spans of mobile users mean that returning 10,000 results isn't viable. (For more, see HotelTonight, which claims to be the fastest booking engine on any platform.)
Meiri feels that Superfly is taking advantage of the disruption to online marketing caused by travelers' rapid adoption of mobile. He told Tnooz by phone:
If an airline, say BA, wants to shift passengers flying New York City to London from a rival airline to its own planes, one of their key marketing efforts is to go to Google and buy keywords via AdWords and other efforts.
But their rivals at other airlines are doing the same thing, and the efforts cancel each other out -- assuming all the airlines have roughly the same talent at digital marketing.
What's worse, mobile users tend to prefer apps for searches. Keyword acquisition won't let you reach an app user."
Our app has the potential to become the middleman here, between customers wanting relevant results and airlines who don't otherwise know how else to efficiently target those customers.
Even if all the airlines adopted this model today, the efforts wouldn't cancel each other out. The model would allow each airline to reduce their cost of marketing per passenger acquired, and let them efficiently spend money where they're hurting the most. Billions currently going to Google could be deployed otherwise.
It's an intriguing scenario, and one that larger rivals will likely be mulling over. It's an open question, too, whether airlines may try to stop revealing balances in their emails to customers, requiring log-ins to a website to see the numbers instead, as a way of thwarting such OAuth trawling.
For context, see Tnooz's previous coverage: "Superfly’s guerilla marketing on Facebook is luring travelers to its flight search."