Travel Meta-Search: What's Broken & How to Fix It
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The document discusses issues with current travel meta-search and provides suggestions for improvements. It notes that the current model focuses only on low prices, lacks product differentiation, and has a "one size fits all" pricing model. The author proposes fixing this by encouraging suppliers to provide more product-level details to differentiate options, demand variable pricing tied to demand, and promote ancillary revenue opportunities. This would benefit travelers with more choices and opportunities to spend more, while driving more revenue for suppliers and meta-search platforms.
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Travel Meta-Search: What's Broken & How to Fix It
- 1. Travel Meta-Search: What’s Broken & How We Can Fix It Sam Shank CEO, DealBase.com
- 2. A Meta-Search Point of View Worked in comparison shopping since 1996 Worked at Sidestep until December 2007 Founder of DealBase.com – meta-search approach to travel deals
- 3. “But if it ain’t broke?...” Consumers love travel meta-search Solves a real consumer problem For suppliers, it’s an essential marketing channel The strongest indicator it’s working…
- 4. …Imitation is the sincerest form of flattery
- 5. What’s Wrong It’s a zero sum game, low prices win Focus is on selling leads, not driving incremental revenue One size fits all pricing model
- 6. When travelers see this flight search…
- 7. …here’s what they really see Best Okay Worst
- 8. When travelers see this hotel search…
- 9. …here’s what they really see Good Bad
- 10. Fixing It – Lessons from Comparison Shopping
- 11. Fixing It – Lessons from Comparison Shopping Seller reviews Product-level custom messaging Best Value indicator *best value is lowest total price, new items, in stock with a seller rating of 4+ stars and 20+ reviews
- 12. Fixing It – Differentiate beyond price Reviews Quality warnings a good start Aircraft Rating:★★★★★14 Ratings Route-specific custom messaging Aircraft Rating: ★★★★★ 92 Ratings Only Tues non-stop Between SFO & LON Best Value Aircraft Rating: ★★★★★ 55 Ratings Best Value indicator
- 13. Fixing It – DealBase.com Sort by Quality – low price, most savings & high customer interest
- 14. What’s Wrong It’s a zero sum game, low prices win Focus is on selling leads, not driving incremental revenue One size fits all pricing model
- 15. Fixing It – Ancillary Revenue Relevant, interesting & affordable offer Just for you! Special Offer for this Flight from United For $49 you will receive priority standby for a full row. Based on the seats open right now, your odds of getting the row are 85%. If the row is not available, you don’t pay. Book this flight and offer now! Full Row Priority Standby $49
- 16. Fixing it – DealBase.com Merchandising the benefits of the offer Savings is transparent & compelling
- 17. What’s Wrong It’s a zero sum game, low prices win Focus is on selling leads, not driving incremental revenue One size fits all pricing model
- 18. Fixing it – Inspiration from Google “Chicago Hotels” $3.71-$6.14 “Quad Cities Hotels” $0.05-$1.92 340% difference in top keyword prices
- 19. A Product’s Value is Variable Historically sells 90% of seats. Why should Delta pay for more customers? 60% sold, 5 days before departure. How can United pay for more customers?
- 20. Fixing it - How this can happen Suppliers demand variable pricing Share a percentage of margin, vs. a percentage of revenue Suppliers build systems to deliver variable pricing Meta-search engines build systems to track the dynamic prices Suppliers commit to maintain the variable pricing rules Incentives are aligned towards profit Meta-search functionality will “follow the money” and direct people to higher margin travel products
- 21. Fixing it – a Shared Responsibility Differentiate beyond low prices Suppliers: provide content to differentiate products Meta-search Engines: surface this content to travelers Drive ancillary product sales Suppliers: build systems to distribute offers for ancillary products Meta-search Engines: promote the offers to consumers Product-level pricing Suppliers: demand variable pricing, commit to maintain pricing Meta-search Engines: build systems for product-level pricing
- 22. What’s on the Line Travelers get new choices & purchase opportunities Travelers spend more money and travel more frequently Everyone wins
Editor's Notes
- [sidestep anecdote about how results were off the charts during focus groups][Travelers have a perception that there’s always a better price out there on the web for a dynamic pricing category like travel travelers want to search many sites, but can only search a max of 5-8 given time constraints. but services that search hundreds save them time & give them confidence – BTW this is the consumer benefit of DealBase.com as we search thousands of sites to find unique deals][Large source of demand, high levels of purchase intent, and suppliers retain customer ownership]
- This is harmful for the industry as it compels all shoppers to be price shoppers
- For inspiration, let’s look to the product comparison shopping industry – it’s been around for 15 years, vs. 5 for meta-search. They’ve overcome price-only shopping. How do they make buying an iPod – a quintessential commodity product – not a zero sum game?
- for the seller at the BOTTOM of the default ranking by sponsorship level, and not the lowest price
- What would meta-search look like with this approach? Best value: flight quality, duration, stops, reviews… Gives #3 price a chance to express value
- Here’s our approach at DealBase.com
- Generate profits by encouraging customers to spend more, and feel good about it. Another opportunity for non-price-based shoppingLeaves money on the table for both meta-search engines and suppliersMissed opportunity to make travel move exciting for consumers
- Another approach is to offer premium products at the point of multi-supplier purchase decision – ancillary revenue. Ancillary revenue up 365% from 2006 to $10.25B.In this case, selling a standby product. Could be a meal, red carpet club access, accelerator miles, Priority seating. For hotels, resort credit, late check-out, room upgrade. Move customers to more profitable routes, shift share, surprise & delight, and get them to open their walletsTo align incentives, suppliers should not pay rev share or flat rate per item sold, but pay a “profit share” – or a variable commission rate by the contribution margin of the category.
- At DealBase.com, our approach is to give context on savings via our Deal Analyzer, which let’s travelers see the value they’re getting in a deal in a standard, transparent way. Our advertisers love the results.
- all items are the same CPC or rev share percentage. By items, I mean routes, hotels, dates, capacity levels…This ignores market conditions and the realities of a product with a shelf life
- Not every click is worth the same price.
- But with flat rate pricing, there’s no incentive for meta search engines to change the UI or direct consumers to more profitable routes, even if they know which ones these are