2:00    Case Study: The power of streaming videos as a motivator to turn browsers
into buyers
• John Bobel, President and ...
As we saw yesterday in the keynote, more consumers now use the Internet for travel
planning than any other research tool a...
they click, they wait, hopefully not too long, but they see the video right there; they get
the experience, they get the c...
I have a daughter that graduated from college last May and she got a job in Biloxi,
Mississippi, and her primary means of ...
PETER:                  Thank you John. As usual, I’m afraid I have a load of questions. I
guess the first question, and I...
with G3 type technology over the interactive device, is that we may start to see and I
think Finland will be the first cou...
wonder if that clip’s there?” Now it is there, you don’t have to wait for it to download,
you either click or double-click...
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AV interferance

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AV interferance

  1. 1. 2:00 Case Study: The power of streaming videos as a motivator to turn browsers into buyers • John Bobel, President and COO, Travelago.com What we are going to do is kind of go through the whole, little bit on streaming video, a little bit on how Travelago enables streaming video to other Web sites and other providers of travel services but I want to use an Atlantic example first. Home town brand Coca Cola. It is one of the top ten brands in the entire world. You can go to the Soviet Union, you can go to China, you can go literally anywhere in the known world and you will see this brand. Anybody here who doesn’t know what this brand is? But what does the brand mean? Does the Coca Cola brand mean, oh, 9.9 ounces of water from somewhere and caramel color and a little bit of flavoring that is locked in the safe somewhere? No, the Coca Cola brand is what you associate with an experience. It is a coke you had with your kid at the ball game, it is the first coke you had with somebody on a date, it is an experience and what we want to do in the travel industry is exactly what Coca Cola has done with its brand. It has associated its brand with an experience. Travel is all about experiences and what we try to do as marketers is to create a very favorable experience, especially for that leisure traveler. What we at Travelago do is we enable Websites, along with our own Website to create an experience, an enhanced experience, for the travel consumer through streaming video. What we want to do and what we have done and what industry studies show is that the power of broadband streaming, and the power of video streaming itself, is a travel purchase motivator. Let’s talk a little bit about behavior. Studies show that people spend more time researching travel plans, especially vacation, than they do in making any purchase, including a home or a car. They will think about it. Think about it not from your consumer standpoint but think about it from your own standpoint. It is typically January, February, it’s time to plan the family vacation and your spouse says, “you’re the travel professional, you plan the vacation, you make sure that we have a good time, you make sure that the kids have activities, you make sure that I can spend my time on the beach, if there is a little bit of good shopping or good restaurants and the kids have a sitter.” I don’t know about you, but I now have had the entire weight of the known universe put on my shoulders and you know what happens if you guess correctly using a travel agent or the Internet or any consulting service, you hit a home run on that vacation and you are home free; you can glide for at least another six months. You have a problem – I think one of my favorite commercials is the one that Expedia does where the couple, perhaps on their honeymoon, they look like newlyweds, at least they look like newlyweds to me, but they are getting to their destination, they go passed the beachfront hotel and they go up the causeway and all of a sudden they think, ‘We are going to stay at this wonderful beachfront hotel” and all of a sudden they are six blocks away; they might as well be six miles away from the ocean and she looks at him and he looks at her at it’s “This is not going to be fun.” What we want to do is give the travel consumer the best tool possible to plan their leisure travel and their business travel.
  2. 2. As we saw yesterday in the keynote, more consumers now use the Internet for travel planning than any other research tool and we know that online travel sales are the fastest growing sector on the Internet and travel related revenues are forecast to increase 50% annually for the foreseeable future. What a deal, a tremendous market for all of us to capitalize on. Now AOL, the largest single presence on the Internet, it is the most lucrative online commercial industry, an estimated spending potential of $410 billion annually but less than 10% of it is booked on the Internet, a tremendous opportunity for those of us who are into Internet e-commerce for travel. The challenge, as again we have seen today in other sessions, a lot of people use the Internet for research but there are significant barriers for them actually booking. We seem to have gotten past the hump of having people booking airline tickets depending on whether they go to Expedia, an airline Website, Priceline, some of even the newer Websites that have just come up the Hotwire site is up; through any one of those economic models, booking air on the Internet is an accepted practice. Booking packages, booking rental cars, booking hotels, that is going to be a challenge but we are going to get over that. Travel video is a motivating factor in a travel purchase decision. The TIA in their studies, the travel consumers are 70% more likely to purchase a travel service if they have seen a relevant video; that is a hotel video, that is a destination video, because what does that video do? It is Coca Cola. What we are doing is we are creating the experience, we are letting them preview the experience of being on that resort, we are showing them that Yes, you have made the right decision because we have shown you that this resort is on the beach, it is not six blocks away. We can show you, this is what the room looks like, this is what the childcare facility looks like, these are the fifteen pools that you have available, this is the golf course, the tennis court, this is a little bit about the retail. It is something that streaming video can do, it is the power of television, it is the power of video. It tells a story like no other medium can and that is what we want to do; that is how we motivate lookers into bookers. We create an experience that motivates them, that assures them that they have made the right decision and by using the power of the Internet to price it effectively, they can’t say No. Videos work. Videos have worked for, well, ever since engineers were able to create the first betamax tape. Videos have been created by the cruise lines, by the resort companies, by hotels and when those service providers are able to get a video into the hands of the potential buyer it is a, can’t say it is a sure thing because as we all know there is nothing that is a sure thing, but getting a video into somebody’s hands and having them watch it is a strong motivator to purchase; it is a strong motivator to book. But what we have found is that traditional video distribution channels don’t work. It is very hard to get somebody to fill out a form, it goes to the hotelier or an intermediary distributor, the video comes, it is ten days later and you know it gets put in with, you know, the dog food samples that came in the mail, you have lost them. The future is now with streaming video. The streaming video is there, it is available, the technologies continue to get better and better so that when that customer sees the property, sees the cruise, sees the package,
  3. 3. they click, they wait, hopefully not too long, but they see the video right there; they get the experience, they get the comfort of knowing what’s there. And again, that is a huge motivator. Now we have also heard at this conference that the streaming video is not quite there yet and I can’t disagree with that. One of the things that we do is that we take a particular clip for a destination and we process it eleven different ways, three different formats, real video, windows media and quick-time and four different availabilities of bandwidth low, medium and high and for quick-time there is just three that we are using and the reason that we do that is to maximize the users experience. What is coming in our favor is that more and more consumers have high-speed Internet access at home and the office. One of the things that we have found, for two years we were the streaming provider to Travelocity. Deep down within Travelocity there was a video destination guide and one of the things that our server logs found was that traffic started to increase at about 11.30 in the morning eastern standard time and it would peak about noon and it would stay peaked through about 3.30 in the afternoon eastern standard and it would tail off – lunch time. Even though you may be at your desk for eight hours a day, you have got a lunch break, people with high-speed Internet access, people in the office, they’re not going out to lunch, they’re researching their vacation, they’re researching their business trip. They want to be able to see where they are going before they go, especially if they are not familiar with the destination and given the choice between just reading about it and experience it in streaming video, they will experiment and use the streaming video. It creates an experience that nothing else can. Now, just some facts and figures about broadband Internet access. Right now in American homes you have got 3 million cable modems installed, 1.6million DSL installed and there are 100 000 satellite Internet points installed, so about 4.6, 4.7 million home users that can get high quality broadband access. But let’s not forget about the undiscovered country, no I’m not doing Priceline and Bill Shattner, but undiscovered and to some degree undocumented Internet broadband users are nearly 30 million workers with that in office Internet access. Not a force to be forgotten. And then there is an undocumented number of educators and students with high speed Internet access that is not at all constricted. That is another huge market for all of us and it those college students that become the young professionals that have significant discretionary income and those are the people who buy travel. Now the leap of fate. The combined cable modem and DSL installation will grow to 7 million by 2002 and office broadband use will increase. Now those are very conservative figures that doesn’t take into account that in the United States and worldwide there is starting to be a deployment and truly two-way satellite broadband Internet access and we are currently testing, in our offices, a system that will be rolled out by a company called Jellot and that broadband Internet access is truly wireless. It is like another DBS dish on your roof but it is broadband Internet access to the desktop. Again, it is enabling the power of video to sell your destination product and again another market we cannot deny and we have done research to demonstrate this, that college students with broadband access, after they graduate are some of the most demanding Internet users around.
  4. 4. I have a daughter that graduated from college last May and she got a job in Biloxi, Mississippi, and her primary means of determining whether or not she would stay in an apartment complex is whether or not the apartment complex either had a cable system that allowed a cable modem or did they… and it was one of her questions and I was just stunned. She wanted to know, well do you….are your apartments wired with T1’s? That is the kind of mentality we are dealing with. We are dealing with people who expect high-speed Internet access and that is broadband and all the benefits that it brings to us. Now, broadband users are more likely to buy on the Internet. Obviously they are more likely to use the Internet to research and purchase travel and they have got high disposable income. The broadband access in the office obviously is there for the using. Broadband access to home now is anywhere between $35 and $45 a month and most of the time that can piggy-back or in some cases it can piggy-back on an existing phone line. Now, what do we do, what is our partnership? Mark Abrahams is the Internet Manager and associate publisher of Ocean Drive magazine in Miami Beach, Florida. He was unable to be with me here to co-present so let me tell you a little bit about how Ocean Drive and Travelago are working together. Very simply, we at Travelago creates a co- branded site with Travelago content and the Ocean Drive brand. They have an extraordinarily powerful brand and that brand was developed by their magazine Ocean Drive that has an enormous circulation in South Florida. It is slick, it is excellent editorial, it is well read by the upper income group and what the folks at Ocean Drive saw was that they were missing a huge opportunity, they were reaching people with high levels of disposable income, they had advertisers coming to them saying “We want to buy travel in your magazine,” and I mean they are brilliant marketers. They knew that they just couldn’t have a paper product to sell. They wanted an Internet product to sell to motivate people in South Florida who were traveling outside of South Florida and a product for people coming to South Florida. So we are enabling the Ocean Drive site with travel information in streaming video. We are also in the process of finalizing negotiations with two very large travel wholesalers who recognize the power of streaming video, again, as the motivator, as the creator of an experience, a positive experience that will make their packages more engaging to the leisure and business traveler and that we expect to be able to announce in the next couple of weeks and you will see it in the next 60 – 90 days. Now we are going to bounce past the future. There is no question that, you know, the Internet is based on partnerships, the Internet is based on enabling technologies going from one business to another business to another business and providing an enhanced experience for the consumer. It is not what I do, not at all. It is what we will do in this room because frankly our futures depend on it. It is a highly fractionalized business, it is a highly competitive business and each of us specializing in our particular field, whether it is a GDS system or a traditional travel agent or an Internet based specialty travel site, it is a question of turning those lookers into bookers and it is an issue for us of enabling the experience and for us it is enabling the experience through streaming video. Thank you.
  5. 5. PETER: Thank you John. As usual, I’m afraid I have a load of questions. I guess the first question, and I’m going to back it up a little here is how long before leisure travel is booked on an interactive TV kind of deal rather than the Internet? And I will back it up in a second once you have answered it because there is a lot of different things happening? JOHN: I honestly believe from what I have seen and what I have read and from what I have experienced, is that I am not a believer in interactive TV simply because I am a believer in what the television experience is; it is a passive experience. If I am watching television, I’m there to be entertained, I’m there to be informed, I’m there just to let it wash over me and it’s not, for me at least and for other consumers if you look at the numbers for Web TV and other interactive TV devices, it continues to be kind of a ….it continues to be a passive experience and it really is a lot of work, whereas the Internet, I forget who it was and I really do want to give credit where credit is due, but there was a talk earlier today about television being a lean back experience and the Internet being a lean forward experience; I think it is very hard to motivate someone who is engaged in that lean back easy chair experience to pick up some sort of planning device or a keyboard and start figuring out “Oh, honey, guess where we are going to go on vacation?” I think the research and travel booking behavior that is a one-on-one or perhaps a two-on-one experience with that other one being the personal communication device, be it a computer or a PDA or some sort of wireless, although, you know again, when you are talking about leisure vacation travel creating the experience, you really can’t create that experience on a PDA. You really need the monitor for that one-to-one interaction. PETER: I guess, you know, there are parts of the world, I mean the UK right now, Bill Gates himself has invested in a company called TeleWest Communications, the UK of all countries in the world, will be the first country in the world to have 70% is the take right now of broadband access into the home via the cable network and what TeleWest have done is they have given a package to the family unit which is around twenty-four pounds, which is about thirty-five bucks a month, it actually gives them broadband open Internet access twenty-four hours a day, it is an open pipe- line. Now what they have also done is they have given access to around 60 TV channels and right now there is a company called The Travel Shop in the UK and they have put up a new experience called the Walled Garden and the Walled Garden right now, tour operators in the UK, which is a different model than happens over here in the States, but tour operators cruise operators, even the airlines, the low-cost carriers, that type of thing in Europe have suddenly realized that the real power of the video experience is the TV. It is the big screen, it is the lean-back, I totally agree with you, but they are splitting the screen in such a way that the remote control, there are a series of buttons at the bottom that says, “OK I love what I am seeing, I want to see what the offer is,” and those involved in leisure travel in Europe are convinced and they are going to put their marketing dollars towards that walled garden type experience. They won’t give up on the Internet, they may put stuff on the Internet. Now the other point is what is happening in Finland and Scandinavia and this I think is very interesting indeed. Right now with blue tooth type technologies the vision and the vision may be 18 months away, particularly
  6. 6. with G3 type technology over the interactive device, is that we may start to see and I think Finland will be the first country where we will see it, to actually see what they call the interactive billboard. The interactive billboard will be an advert as you walk along the street. It will have a chip imbedded into it, a blue tooth chip imbedded into it and actually through the interactive device, you will be able to point at that interactive thing and then you will get a series of questions that says “OK, what do you want to do with this information?” There is a video here because it is a cruise ship, would you like the video sent to your T- mail? television mail, and therefore the video clip will actually be sent by that company to a place which is more convenient to me. In other words when I get home I know I just requested that video to be launched because I would like to get home, I would like to say to the wife, “Hey, honey I saw this great ad, let’s sit down, let’s watch and see what it is all about, it was a fabulous price,” and it is going actually give me a thing. Now I think although that is visionary type thing, I think it is going to come John, and I am intrigued to know what your thoughts are because I couldn’t agree with you more that video really sells travel. JOHN: I mean on of the things, I mean, first of all it is behavior, it is to some degree it is an education or training issue for the provider to give the consumer enough information so that they can use the technology to enable their behavior and experience. Does it save them time, does it save them money, does it help them to make a better decision? I mean, one of the key things, I mean there was a tremendous video AV interferance ………… millions of dollars on video servers and broadband and huge amounts of technology and the problem was that the remote control that somebody needed to use was about as long as your arm, had 200 buttons on it and nobody could navigate it. So I think navigation for any of these systems is going to be key. I think the other issue very simply is that very few people in the United States have an always on Internet access and one of the keys to any sort of video enabling, even if it is an on demand video enabling, has always been that issue of how long does it take to click to down-load. Oh, please, not more hours, but with the deployment of broadband, especially with cable modems and always on DSL one of the behaviors that we have to take into account is the fact that a person’s computer is going to be always on; it’s not going to matter and especially in Europe, in the UK, where you are paying by the minute, all of a sudden you have removed that barrier. In the United States, if you are on a cable modem or DSL, that is an always on technology. If there is a reason to keep yourself always on, remain connected, remain available so that you are constantly getting emails, so that if you are away from the house and you do respond to an ad like that and say, “Yes, I would like to see that clip,” and be able to watch it when I want to, right. The issue there is that as soon as you walk by and you say “Yeh, I’d like that, OK,” well all of a sudden that clip and that request is processed and it is sent to your email address and it is done within seconds or minutes. The download of that video clip to your mailbox is accomplished when you are not home, so you walk in, you have dinner, get the kids in bed, say “I
  7. 7. wonder if that clip’s there?” Now it is there, you don’t have to wait for it to download, you either click or double-click on it and you can watch it right there and it is a beautiful broadband experience because it is not streaming, it’s right there in your desktop. So that is a huge advantage. PETER: I agree, do we have any questions for John. I am conscious that we are eating into your coffee time, but if anybody has any questions? No. We have one question just here. If you could state your name and your company. QUESTION: My name is Splitvee, I’m from Cool Forms. I am just interested in knowing as to how do you get your content? What is your source? JOHN: We have got several models for content acquisition. We are in contact with every convention and visitors bureau and tourism organization in the world where we have agreements with them that we will stream their videos free of charge worldwide. We have our own video production team and our own library of stock footage so we will go out and create videos. We also have agreements with producers worldwide that we have the right to stream excerpts or their videos in total; so, several ways that we acquire video to provide that experience. PETER: Great, OK. John, thank you very much. I think it is a very colorful future. Thank you. We will be resuming back in here at 3 o’clock with enhancing the travel experience with wireless technology.

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