:: Travel Weekly - The National Newspaper of the Travel Industry :::
Much of the future of travel search, observers agree, depends on how search engines like Google and portals like Yahoo and AOL play their hands.
Google is downplaying its test of a flight links feature, which offers one-at-a-time searches of online agency booking engines, saying it is merely trying to improve consumers? search experiences. Google says it is not receiving money from the agencies displayed in the test and doesn?t plan to delve into meta-search.
Still, the entire travel industry keenly observes Google?s every move, and some observers wonder if flight links might become a revenue generator in the future, especially as some online agencies talk of exploring more off-line advertising in 2006.
"American and FareChase resolved their legal scrape over screen-scraping, also known as ?spidering,? in 2004, and several weeks ago FareChase began pulling fare data from American via a now-sanctioned XML feed directly from the back-end database of AA.com.
XML, an abbreviation for Extensible Markup Language, is a far more sophisticated and flexible technology than the Web?s traditional HyperText Markup Language (HTML). XML facilitates more efficient data exchanges, not only among Web sites but among the databases that feed those sites -- in this case, the data sets that make up airlines? complicated schedule and fare information.
The XML tunnel, Sanez says, eliminates the burden for American, which now has similar Web-based connections in place with the other major meta-search engines, including SideStep, Kayak and Mobissimo"...
As the two kinds of online travel search companies notch distribution and advertising deals and roll out new features, they are slugging it out for consumer eyeballs and for ways to generate revenue.
Who?s making money?
At this point, the big question is whether anyone other than search giants Google, Yahoo and MSN is actually making money on travel search roughly five or six years after those the first crude ?screen-scrapers? appeared. ...
But Travelzoo and most of the other search companies are playing a dicey and complex game -- what Lawson of Travel Ad Network terms ?click arbitrage? -- as they battle for consumer audiences and seek to prove their value proposition to suppliers and agencies.
Click arbitrage means that Travelzoo buys consumers? clicks on Yahoo, MSN and Google and absorbs the risk, hoping that consumers linking to Travelzoo.com will generate higher revenue when they click on one, or hopefully several, of Travelzoo?s advertisers, which include anyone -- and almost everyone -- from ATA to United.
?Most of these sites,? says Lawson, referring to both the meta-searchers and the deal publishers, ?don?t have their own audience that goes to them directly. They buy that traffic by the click from somewhere else. Then the click comes into the Web site, and they are hoping they can pay for one click coming in and receive money from three clicks going out.?
And what a tangled Web they weave. For example, this click arbitrage practice has Kayak advertising on the sites of competitors BookingBuddy and Cheapflights. Travelzoo?s Yahoo ads appear on FareChase. BookingBuddy?s advertising appears on Mobissimo.
Moreover, the costs of acquiring that Web traffic is problematic. For example, Travelzoo?s average cost to add a new subscriber in the third quarter -- during which it added almost 741,000 subscribers and lost nearly 423,000 -- was $3.19. That was 57 cents more than it cost in the second quarter.
Much of the debate and competition hinges on when to show pricing to consumers. The search results from the meta-search companies generally feature side-by-side comparisons of fares and rates. In contrast, the facilitated search engines emphasize advertisers? brands, and consumers don?t see price until after they select individual advertisers? search engines and land on their Web sites.
?I would assume that the meta-search engine delivers a much more highly targeted click,? Lawson says. ?I think they provide infinitely more value. I struggle to see how any comparison-shopping value is delivered [by the facilitated search engines] to the user.?
Travelzoo founder and CEO Ralph Bartel, who owns 78% of the company, said one reason Travelzoo is successful is because its model accommodates the desire of suppliers and agencies to avoid price comparisons. He scoffs at the notion that real price differentiation even exists.
?I think the meta-search engines will always be challenged by the same things that have challenged the online travel agencies,? Lawson says. ?And that is that you are dealing with the least loyal audience -- the price-comparison people.?
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