David Soskin CEO Cheapflights.co.uk 1 st May 2007 Understanding the long tail - why small customers are vital to web success

Agenda: What is the long tail? Why vertical and “Web 2.0” search extend the long tail Outlook for “long tail” – orientated companies

What is the long tail?

Why vertical and “Web 2.0” search extend the long tail

Outlook for “long tail” – orientated companies

Acknowledgement to Chris Anderson

The new growth market: Products you can’t find anywhere but online Source: Chris Anderson Typical Blockbuster: 3,000 DVDs Typical Borders Bookstore: 100,000 books

Britannica vs. Wikipedia 7,000,000 64,900 * Source: www.amazon.com & en.wikipedia.org January 15, 2001 1768 Established: Number of articles*

Aggregators Transactional Digital goods Advertising services Communities/ user generated content Information

The long tail: The root calculus “ the lower the costs of selling, the more you can sell. As such, aggregators are a manifestation of the second force, democratizing distribution. They all lower the barrier to market entry, allowing more and more things to cross that bar and get out there to find their audience.” Chris Anderson Source: The Long Tail

“ the lower the costs of selling, the more you can sell. As such, aggregators are a manifestation of the second force, democratizing distribution. They all lower the barrier to market entry, allowing more and more things to cross that bar and get out there to find their audience.”

Chris Anderson

Crap vs. choice Old economy: crap matters New economy: choice matters

Old economy: crap matters

New economy: choice matters

Book Sales (USA), 2004 Source: Book Industry Study Group 1,242,185 1,240,998 767 324 64 22 10 Titles 17 1,000,000 or more 665 Million+ Total 513 0 to 49,999 52 50,000 to 99,999 47 100,000 to 249,999 22 250,000 to 499,999 14 500,000 to 999,999 Units (Million) Sales Range

Google: Ultimate long tail company? “ By going to the bottom with self-service, we were able to reach advertisers who fell below the threshold of traditional advertising. And by going all the way to the top, we were able to capture very large and historically underserved businesses as well as a whole new area that never had access to these kinds of online services.” Eric Schmidt, CEO Google Source: The Long Tail

“ By going to the bottom with self-service, we were able to reach advertisers who fell below the threshold of traditional advertising. And by going all the way to the top, we were able to capture very large and historically underserved businesses as well as a whole new area that never had access to these kinds of online services.”

But how good is Google search? “ The ultimate search engine would basically understand everything in the world, and it would always give you the right thing. And we're a long, long ways from that. ” - Larry Page, Google Co-Founder “ Search as a problem is only about 5% solved ” - Udi Manber, CEO of Amazon’s A9.com search engine “ It's clear there's a lot of room for improvement, there's no inherent ceiling we're hitting up on. ” - Sergey Brin, Google Co-Founder

“ The ultimate search engine would basically understand everything in the world, and it would always give you the right thing. And we're a long, long ways from that. ”

- Larry Page, Google Co-Founder

“ Search as a problem is only about 5% solved ”

- Udi Manber, CEO of Amazon’s A9.com search engine

“ It's clear there's a lot of room for improvement, there's no inherent ceiling we're hitting up on. ”

- Sergey Brin, Google Co-Founder

Search can get a lot better… Vertical Search Horizontal Search

Cheapflights Before …

Not much use for Borat …

UK Cheapflights users seeking deals to Kazakhstan April 2006 – March 2007 7,117 clicks

What appeals to Borat?

End Result: Borat is a happy user

Long tail of advertisers Cheapflights Traditional Media

Long tail of advertisers Cheapflights Traditional Media

The Cheapflights long tail … Founded 1967 Employees100 Specialize in Greece & Cyprus

Founded 1967

Employees100

Specialize in Greece & Cyprus

The Cheapflights long tail … Founded 2004 Employees18 Specialize in Florida; flights, holidays & cruise

Founded 2004

Employees18

Specialize in Florida; flights,

holidays & cruise

The Cheapflights long tail … Founded 1966 Employees 39 Specialize in Bulgaria, Croatia, Montenegro, Slovenia, Serbia and Romania

Founded 1966

Employees 39

Specialize in Bulgaria, Croatia, Montenegro, Slovenia, Serbia and Romania

The Cheapflights long tail

Dohop: A global flight planner

Travel is a natural subject for the long tail – highly fragmented “ Everywhere” Mainly short haul Destinations Scheduled Many charters, specialists Low Cost Online travel agencies State owned/ monopolistic airlines Some charters, specialist Travel Companies Everybody Mainly the very rich Travellers Now Then

Long tail and Web 2.0 Search User Reviews Social Networking

User reviews Then Now Everyone Michelin Rough Guide Hardens Frommers

Everyone

Michelin

Rough Guide

Hardens

Frommers

Frommers vs. WAYN HB slide

HB slide

Trusted Places: example a restaurant in London

The long tail: Social networking Then club local pub street school charity hobby sport Now World Your -

Then

club

local pub

street

school

charity

hobby

sport

Now

World

Time spent online More and more people are using the internet People now spend an extra 1 hour 16 minutes each month online compared with 2001 16-24 year olds spend even more time online: 11 hours 20 minutes per month on the internet Source: Ofcom research, April 2006 Hours Year

More and more people are using the internet

People now spend an extra 1 hour 16 minutes each month online compared with 2001

16-24 year olds spend even more time online: 11 hours 20 minutes per month on the internet

How to create a thriving long tail business “ 1) Make everything available. 2) Help me find it.” Chris Anderson Source: The Long Tail

“ 1) Make everything available.

2) Help me find it.”

Chris Anderson

Long tail of the internet Web 2.0 Reviews Social networking Blogging Vertical search 2007 2002

Conclusion: “ Long tail” is suited to the internet Vertical search is an ideal “long tail” application Web 2.0 has accelerated the “long tail” Understanding and using the “long tail” represents a significant and growing business opportunity

“ Long tail” is suited to the internet

Vertical search is an ideal “long tail” application

Web 2.0 has accelerated the “long tail”

Understanding and using the “long tail” represents a significant and growing business opportunity

Thank you Questions, suggestions, feedback or complaints welcome… [email_address]