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Creating a social media strategy for a tourism business | Block 3: E-Commerce in Tourism

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Creating a social media strategy for a tourism business
Block 3: E-Commerce in Tourism
International Master in Hospitality and Tourism Management
ESCP Europe - Cornell University School of Hotel Administration

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  1. 1. Creating a social media strategy for a tourism business Block 3: E-Commerce in Tourism International Master in Hospitality and Tourism Management February 4th, 2013 Francisco Hernández fran.me This document has been produced by 11 Goals & Associates. It is not complete unless supported by the underlying detailed analyses and oral presentation.
  2. 2. About me SHAMELESS SELF-PROMOTION Education: Universidad Politécnica de Madrid, UNED, London Business School, University of Chicago – Fundaciò “laCaixa” & Fundación Rafael del Pino scholarships. Firms worked for full-time: Abengoa, McKinsey&Co, ABN AMRO, Real Madrid C.F. Entrepreneurship: Crisalia Social Media & Internet consulting: 11goals.com Lectures & Speaker in 3 continents: The Wall Street Journal, Universidad Politécnica de Madrid, London Business School, Cornell University, Politecnico di Milano, CEIBS (Shanghai), Kungliga Tekniska högskolan, The Business Factory, Asociación J.W. Fulbright Spain, ESCP Europe, UIMP, and several private companies. Full profile: linkedin.com/in/franciscohm
  3. 3. Seminar’s agenda Block 1: Basics of online marketing (day 1) Block 2: Social tourism (days 2 & 3) Block 3: E-Commerce in tourism (day 3) Block 4: Case presentations (day 4) How do I make money in Internet? (Block 3) How can I market my business in Internet? (Blocks 1 and 2)
  4. 4. Summary of block 1 REMINDER  Online advertising  Affiliate programs  Referral marketing  Email marketing  SEO  Content marketing  Online public relations Social marketing  Fake marketing Block 1 presentation
  5. 5. Summary of block 2 Page 1 of 3 ¶ Tourism is a social activity by nature. Social media just changed the way that is expressed. ¶ Online Social Tourism sometimes happens through highly complex processes that involve several tech services. ¶ Internet de-socialized some human activities. But now Social Technologies are re- socializing them. It is a general trend observed in many human activities. ¶ When a new technology is introduced, it always takes years to discover models and formats to extract value from it. Innovation is frequently slow, and so it is the adoption of Social Technologies by companies. ¶ Web 2.0 is all about people participating in projects, contents, etc. ¶ Web 2.0 is a sound reality. No doubt about that. Hope you are not still thinking whether it makes sense or not! ¶ The huge importance of social media is due to the fact that SNS were able to translate online (and make it more efficient and powerful) one of the World’s most important human activities: socializing; managing and using our circle of trust. ¶ Facebook is Worldwide leader in usage and technology. The World is still leaning towards Facebook in many countries where it is not yet the leading SNS. Only China and Russia seem to stay away from Facebook’s rule, the second one due to its blocking.
  6. 6. Summary of block 2 Page 2 of 3 ¶ Web 2.0 is not only Social Networking websites. There are other categories like social blogging, microblogging, video, gaming, etc. ¶ In our opinion, the existence of an Social Graph that resembles a person’s real social life is what distinguishes an actual SNS from a Social Medium. ¶ There are also a ton of complementary services to SNS and other Web 2.0 tools. We call it the “Social Media Ecosystem”. ¶ It is interesting to observe and understand the 5 attitudes companies generally adopt regarding the Social Media Ecosystem. The best attitude is “to Complement it”, but few companies are mature enough to understand that. However bad experiences are helping a lot to let them understand. ¶ In Social Media, the medium is the people. Interesting little fact to have top of our minds… ¶ Social media advertising is intrinsically different from other type of ads like contextual advertising. They complement each other rather than compete. They should be used for different goals. ¶ People trust in people more than in brands. In the last years even more due to the never- ending roll of corporate scandals and the crisis.
  7. 7. Summary of block 2 Page 3 of 3 ¶ Some Marketers (even “traditional” ones) believe that “Marketing is dead”, at least in its current form. They believe brands should turn their eyes into tha “Community Marketing” ¶ “Community Marketing” is actually the oldest form of marketing. However brands had to leave it because of scale. ¶ Social technologies have proven useful for brands with the mission of applying “Community Marketing” while keeping their size. E.g.: Football clubs. ¶ Building an effective online brand community is an important business tool for many companies. However it is a very difficult one to achieve because it is a long term goal and the final impact in the P&L account is not easily measured. ¶ It is a frequent mistake to believe that having a good brand makes it easier to have a good online community. ¶ In order to build your own successful online community it is important to understand in depth your underlying community: how your members affiliate, what are their key roles within the community, how do they benefit from being a member, etc. ¶ Online communities take time: first hire fans, then engage them (almost immediately after hiring them), and finally try to monetize them in the least possible frictional way. Block 2 presentation
  8. 8. Quote of the block “What’s worth doing is worth doing for money” Gordon Gekko
  9. 9. Very recommended presentation E-commerce Landscape 2012
  10. 10. Agenda  E-Commerce  E-Commerce in tourism  Social E-Commerce in tourism  Social Mobile E-Commerce in tourism
  11. 11. Definition of E-Commerce “Electronic commerce, commonly known as e-commerce, ecommerce or e-comm, refers to the buying and selling of products or services over electronic systems such as the Internet and other computer networks. However, the term may refer to more than just buying and selling products online. It also includes the entire online process of developing, marketing, selling, delivering, servicing and paying for products and services.” We will focus on the Internet Source: Wikipedia
  12. 12. E-Commerce timeline Netscape browser & 1st Internet purchase (netmarket.com) “Dot Com” Amazon buys Online shopping burst Zappos.com concept 1st Browser Amazon ->Diapers.com Alibaba.com eBay -> GSI Commerce CERN 1984 1995 2010 1979 1990 1994 1998 2000 2009 2011 1st Electronic Mall Amazon.com Groupon rejects CompuServe eBay.com Google offer Highly-funded startups Small-funded startups Tech&Concept development (KSF: Tech) (KSF: Biz Model) Jeff Bezos: “I am more worried about 2 guys in a garage than about Barnes&Noble ”
  13. 13. Types of E-Commerce/E-Business  Not easy to classify  Many real models fall into multiple categories B2B B2C B2G Business to Business Business to Consumer Business to Government •PayPal (and B2C, “B2B2C”) •Amazon “E-Procurement” •Optize (and B2C) •FreshDirect •Alibaba Group •Zynga (and C2C) C2B C2C C2G Consumer to Business Consumer to Consumer Citizen to Government •Zonzoo •Prosper (“P2P”) •Agencia Tributaria (Tax agency •Fotolia •eBay online) •Google Adsense •Facebook G2B G2C G2G Government to Business Government to Citizen Government to Government “E-Government” “E-Government” •Government Gateway •AEPM •eDNI •Schengen Information System •Certificado Digital •USA.gov (also G2B)
  14. 14. Business models on the web (Professor Michael Rappa) Page 1 of 2 1. Brokerage: 3. Infomediary: • Marketplace Exchange [Orbitz, ChemConnect] • Advertising Networks [DoubleClick] • Buy/Sell Fulfillment [CarsDirect, Respond.com] • Audience Measurement Services [Nielsen//Netratings] • Demand Collection System [Priceline.com] • Incentive Marketing [Coolsavings] • Auction Broker [eBay] • Metamediary [Edmunds] • Transaction Broker [PayPal, Escrow.com] • Distributor 4. Merchant: • Search Agent • Virtual Merchant [Amazon.com] • Virtual Marketplace [Amazon.com] • Catalog Merchant [Lands' End] • Click and Mortar [Barnes & Noble] 2. Advertising: • Bit Vendor [Apple iTunes Music Store] • Portal [Yahoo!] • Classifieds [Monster.com, Craigslist] 5. Manufacturer (Direct): • User Registration [NYTimes] • Purchase [Dell Computer] • Query-based Paid Placement [Google, Overture] • Lease • Contextual Advertising / Behavioral Marketing • License • Content-Targeted Advertising [Google] • Brand Integrated Content • Intromercials [CBS MarketWatch] • Ultramercials [Salon] Source: Michael Rappa, http://digitalenterprise.org/models/models.html
  15. 15. Business models on the web (Professor Michael Rappa) Page 2 of 2 6. Affiliate: • Banner Exchange • Pay-per-click Check out detailed • Revenue Sharing descriptions here 7. Community: • Open Source [Red Hat] • Open Content [Wikipedia] • Classifying is difficult, on Internet is • Public Broadcasting [The Classical Station (WCPE.org)] even more difficult. • Social Networking Services [Flickr, Friendster, Orkut] • Some companies fall into multiple categories. Real business companies 8. Subscription: can have traits of several models. • Content Services [Listen.com, Netflix] • Person-to-Person Networking Services [Classmates] • Trust Services [Truste] • Internet Services Providers [America Online] 9. Utility: • Metered Usage • Metered Subscriptions [Slashdot] Source: Michael Rappa, http://digitalenterprise.org/models/models.html
  16. 16. Long-Tail business concept ILUSTRATIVE “Selling many marginal products in small quantities ” The sum can be much higher than the sum of few top-selling products, and no brick-and-mortar shop can offer such a broad catalogue on their shelves. Q Top sellers HEAD → Brick-and-mortar sellers’ focus Weird products TAIL Products A market in itself + a way to attract a customer at some point of time
  17. 17. Long tail. Weirdest items sold on Amazon Uranium Ore Wolf Urine Dagobert Wooden Toilet Throne Fat replica demonstration models
  18. 18. Freemium model ILUSTRATIVE Venture Capital favourite’s model FREEMIUM = FREE + PREMIUM “Attract audience with free versions of the product, introduce them to paying with affordable versions of the product, and monetize them with premium versions of the product” Examples: FREE •Spotify: •Free: Listen with ads •Cheap: 1 day pass/Unlimited •Premium: monthly subscription •Social games: •Free: Play •Cheap/Premium: Virtual goods CHEAP •Most Open-Source Software (Affordable) •Free: base software •Cheap: modules, extensions PREMIUM •Premium: professional services •Adult content
  19. 19. Is this Freemium? • Free: 2 Paragraphs • Premium: rest of the article • “Coitus-interruptus user experience” is not good for the user nor for the brand. • Smartest Freemium models do not compromise between user experience and monetizing. Otherwise you may stop attracting users, and therefore monetizing them. • Every time you think there is such a tradeoff, test, retest, and retest again the model with a sample of users before implementing it. www.wsj.com
  20. 20. E-Commerce sales are very large and grow strongly 19% Source: Internet Retailer, Goldman Sachs
  21. 21. Where are the largest E-Commerce markets? E-Commerce sales by region % of online consumers who in 2010 made a web purchase in 2009 Source: Internet Retailer, Goldman Sachs, Forrester Research
  22. 22. What markets are expected to grow more? E-retail sales CAGR U.S.A. EU 17 Brazil 10% 10% 18% In 2015 it would account 11% of retail sales in the USA Source: Internet Retailer, Forrester Research GAGR= Compounded Annual Growth Rate
  23. 23. Agenda  E-Commerce  E-Commerce in tourism  Social E-Commerce in tourism  Social Mobile E-Commerce in tourism
  24. 24. Tourism is widely considered as de #1 E-Commerce category Spain Source: Observatorio Nacional de las Telecomunicaciones y de la Sociedad de la Información
  25. 25. Expedia Travel agent • Founded in 1996 as a Microsoft division. • Expedia Inc. operates Expedia.com, Hotels.com & Hotwire.com • More than 60 countries, 1000s affiliates • Revenue model: margin on sales • Revenue: ~ USD 3.3 bill./yr • Largest online travel agent www.expedia.com
  26. 26. Trip Advisor Travel reviews • Founded in 2000 • Bought by Expedia in 2004, spun off by IPO in 2011 • More than 100 mill. travelers have used it • Revenue model: social infomediary • Revenue: ~ USD 486 mill/yr • Largest travel review site www.tripadvisor.com
  27. 27. Kayak Meta search engine • Founded in 2004 by Expedia, Travelocity and Orbitz veterans. • Revenue model: referral fee • Revenue: ~ USD 225 mill/yr www.kayak.com
  28. 28. Agenda  E-Commerce  E-Commerce in tourism  Social E-Commerce in tourism  Social Mobile E-Commerce in tourism
  29. 29. E-Commerce is more than the act of buying online, it’s the whole system of information and reputation, which makes it a highly social activity Social Shopping Source: Internet Retailer, Forrester Research
  30. 30. What form of advertising do consumers trust? Recommendations from people I know 92% Consumer opinions posted online 70% Editorial content such as newspaper articles 58% Branded Websites 58% Emails I signed up for 50% 28.000 Internet users in Ads on TV 47% 56 countries Brand sponsorships 47% Ads in magazines 47% Billboards and other outdoor advertising 47% Ads in newspapers 46% “Recommendations from Ads on radio 42% people I know” is, by far, Ads before movies 41% the most trusted form of TV program product placements 40% marketing Ads served in search engine results 40% Online video ads 36% However, “Ads on social Ads on social networks 36% networks” not really Online banner ads 33% trusted Display ads on mobile devices 33% Text ads on mobile phones 29% Source: Nielsen, Global Trust in advertising and Brand Messages, Abril 2012
  31. 31. Definition of Social Commerce “a subset of electronic commerce that involves using social media, online media that supports social interaction and user contributions, to assist in the online buying and selling of products and services.” Two types : • Social Media on E-Commerce Platforms: “Helping people connect where they buy”. • E-Commerce on social media platforms: “Helping connected people to buy where they connect”. Source: Wikipedia, Syzygy
  32. 32. What are CMOs (Chief Marketing Officers) worried for the next few years? Source: Customer Data, Social Media Top Marketing Priorities for CMOs Worldwide, eMarketer.com
  33. 33. What Booz & Co thinks social commerce is going to be worth in 5 years Source: Booz & Co.
  34. 34. The 6 dimensions to social commerce success (Syzygy) Social Commerce : Sharing your purchase experience before, during, and after buying. •Twitter.com/Dell •Groupon •My Starbucks Idea SCARCITY •Blendetc Less is more (perceived value) •Vente-privee.com •Twitter.com/Dell AFFINITY CONSISTENCY Shop with like- One step at a time minded people •Adidas Social Coupons AUTHORITY •Starbucks @ 4S Follow the leader RECIPROCITY Payback favours (experts) POPULARITY Follow the crowd •Vente-privee.com •Apple Expert Forums •Facebook.com/1800flowers Source: The 6 Dimensions of Social Commerce - Mark Ellis, Syzygy
  35. 35. TripAdvisor pivoting from reviews to social Your friends’ trip wall Recommendations from people I know 92% Consumer opinions posted online 70% Editorial content such as newspaper articles 58% Branded Websites 58% Emails I signed up for 50% Ads on TV 47% Brand sponsorships 47% Ads in magazines 47% Billboards and other outdoor advertising 47% Ads in newspapers 46% Ads on radio 42% Ads before movies 41% TV program product placements 40% Ads served in search engine results 40% Online video ads 36% Ads on social networks 36% Online banner ads 33% Display ads on mobile devices 33% Text ads on mobile phones 29%
  36. 36. TripAdvisor pivoting from reviews to social Friends’ map and ads Source: Internet Retailer, Forrester Research
  37. 37. TripAdvisor pivoting from reviews to social Identifying and outstanding friends reviews Source: Internet Retailer, Forrester Research
  38. 38. Key points about Social-Commerce on social media platforms • Still in its infancy. Almost inexistent as of today. Mostly focused on the pre-selling stage: people talk about and discover products through social media, ads on social media, etc. • Most cases take advantage of the huge traffic that some social media platforms have, but do not leverage on social integration to offer better, customized products and services. Leveraging on social integration is better than merely sucking traffic because it adds value to the customer. The customer can find it very interesting to shop in a place where he/she has products he/she and his/her friends really like. Remember shopping can/should be a pleasant experience! • Referral marketing through social networks seems to be an obvious way to take advantage of someone’s social graph when doing E-Commerce. Concept of “Horizontal Marketing”. • Spotify integrated on Facebook is a good example of social commerce: you see what your friends are listening to, which is probably what you would like. Also, a friend listening to a song and you seeing it is a form of referral marketing. • Brands need to lose their fear to let people talk about them, and to invest in personalized, smart social apps to tackle the full potential of Social-Commerce. How would it be a social-commerce strategy in your company?
  39. 39. F-Commerce “Facebook commerce, f-commerce, and f-comm refer to the buying and selling of goods or services through Facebook, either through Facebook directly or through the Facebook Open Graph.” “Experts forecast that F- commerce transactions on Facebook will overcome Amazon’s annual sales ($34 Billion) over the next 5 years.” First purchase within Facebook: July 8th, 2009 on facebook.com/1800flowers Source: Wikipedia, Janice Diner, F-Commerce Ecosphere Visual
  40. 40. Agenda  E-Commerce  E-Commerce in tourism  Social E-Commerce in tourism  Social Mobile E-Commerce in tourism
  41. 41. Hotel tonight Last minute hotel reservations. Remember? • Founded in 2010 • Revenue model: referral fee www.hoteltonight.com
  42. 42. Hotel tonight Really Social? www.hoteltonight.com
  43. 43. Blink www.hoteltonight.com
  44. 44. Today’s main takeaways ¶ E-Commerce, E-Business… difficult to define and classify. Do not waste much time in figure-out where your model fits. ¶ E-Commerce success stories have evolved in the last years: ¶ Before: Highly capitalized, tech-based companies (invest, invest, invest…) ¶ Now: Small capital business model incubators (test, test, test…) Technology not a problem anymore; success is many times driven by innovative business models, sometimes easily copycatted if one does not protect oneself. ¶ Long tail concept / Freemium concept / “Piggyback” concept. ¶ 17-year history but still growing strong, now specially in emerging markets (broadband penetration, purchasing power), but maybe on mobile channels soon. ¶ Tourism was and is the #1 Ecommerce segment. It is also a good example of trends. ¶ E-Commerce is an intrinsically social activity. It evolved to the social space even before the social media phenomenon started. ¶ 6 dimensions to social E-Commerce success. ¶ Social Tourism Ecommerce ready to take off. Few startups working already on it. ¶ Takes time to refine an innovative business model. Test and error based on analytics is the best way to refine a model. Be patient, imaginative, and analytical.
  45. 45. Thanks Francisco Hernández francisco_hernandez@11goals.com www.11goals.com

Description

Creating a social media strategy for a tourism business
Block 3: E-Commerce in Tourism
International Master in Hospitality and Tourism Management
ESCP Europe - Cornell University School of Hotel Administration

Transcript

  1. 1. Creating a social media strategy for a tourism business Block 3: E-Commerce in Tourism International Master in Hospitality and Tourism Management February 4th, 2013 Francisco Hernández fran.me This document has been produced by 11 Goals & Associates. It is not complete unless supported by the underlying detailed analyses and oral presentation.
  2. 2. About me SHAMELESS SELF-PROMOTION Education: Universidad Politécnica de Madrid, UNED, London Business School, University of Chicago – Fundaciò “laCaixa” & Fundación Rafael del Pino scholarships. Firms worked for full-time: Abengoa, McKinsey&Co, ABN AMRO, Real Madrid C.F. Entrepreneurship: Crisalia Social Media & Internet consulting: 11goals.com Lectures & Speaker in 3 continents: The Wall Street Journal, Universidad Politécnica de Madrid, London Business School, Cornell University, Politecnico di Milano, CEIBS (Shanghai), Kungliga Tekniska högskolan, The Business Factory, Asociación J.W. Fulbright Spain, ESCP Europe, UIMP, and several private companies. Full profile: linkedin.com/in/franciscohm
  3. 3. Seminar’s agenda Block 1: Basics of online marketing (day 1) Block 2: Social tourism (days 2 & 3) Block 3: E-Commerce in tourism (day 3) Block 4: Case presentations (day 4) How do I make money in Internet? (Block 3) How can I market my business in Internet? (Blocks 1 and 2)
  4. 4. Summary of block 1 REMINDER  Online advertising  Affiliate programs  Referral marketing  Email marketing  SEO  Content marketing  Online public relations Social marketing  Fake marketing Block 1 presentation
  5. 5. Summary of block 2 Page 1 of 3 ¶ Tourism is a social activity by nature. Social media just changed the way that is expressed. ¶ Online Social Tourism sometimes happens through highly complex processes that involve several tech services. ¶ Internet de-socialized some human activities. But now Social Technologies are re- socializing them. It is a general trend observed in many human activities. ¶ When a new technology is introduced, it always takes years to discover models and formats to extract value from it. Innovation is frequently slow, and so it is the adoption of Social Technologies by companies. ¶ Web 2.0 is all about people participating in projects, contents, etc. ¶ Web 2.0 is a sound reality. No doubt about that. Hope you are not still thinking whether it makes sense or not! ¶ The huge importance of social media is due to the fact that SNS were able to translate online (and make it more efficient and powerful) one of the World’s most important human activities: socializing; managing and using our circle of trust. ¶ Facebook is Worldwide leader in usage and technology. The World is still leaning towards Facebook in many countries where it is not yet the leading SNS. Only China and Russia seem to stay away from Facebook’s rule, the second one due to its blocking.
  6. 6. Summary of block 2 Page 2 of 3 ¶ Web 2.0 is not only Social Networking websites. There are other categories like social blogging, microblogging, video, gaming, etc. ¶ In our opinion, the existence of an Social Graph that resembles a person’s real social life is what distinguishes an actual SNS from a Social Medium. ¶ There are also a ton of complementary services to SNS and other Web 2.0 tools. We call it the “Social Media Ecosystem”. ¶ It is interesting to observe and understand the 5 attitudes companies generally adopt regarding the Social Media Ecosystem. The best attitude is “to Complement it”, but few companies are mature enough to understand that. However bad experiences are helping a lot to let them understand. ¶ In Social Media, the medium is the people. Interesting little fact to have top of our minds… ¶ Social media advertising is intrinsically different from other type of ads like contextual advertising. They complement each other rather than compete. They should be used for different goals. ¶ People trust in people more than in brands. In the last years even more due to the never- ending roll of corporate scandals and the crisis.
  7. 7. Summary of block 2 Page 3 of 3 ¶ Some Marketers (even “traditional” ones) believe that “Marketing is dead”, at least in its current form. They believe brands should turn their eyes into tha “Community Marketing” ¶ “Community Marketing” is actually the oldest form of marketing. However brands had to leave it because of scale. ¶ Social technologies have proven useful for brands with the mission of applying “Community Marketing” while keeping their size. E.g.: Football clubs. ¶ Building an effective online brand community is an important business tool for many companies. However it is a very difficult one to achieve because it is a long term goal and the final impact in the P&L account is not easily measured. ¶ It is a frequent mistake to believe that having a good brand makes it easier to have a good online community. ¶ In order to build your own successful online community it is important to understand in depth your underlying community: how your members affiliate, what are their key roles within the community, how do they benefit from being a member, etc. ¶ Online communities take time: first hire fans, then engage them (almost immediately after hiring them), and finally try to monetize them in the least possible frictional way. Block 2 presentation
  8. 8. Quote of the block “What’s worth doing is worth doing for money” Gordon Gekko
  9. 9. Very recommended presentation E-commerce Landscape 2012
  10. 10. Agenda  E-Commerce  E-Commerce in tourism  Social E-Commerce in tourism  Social Mobile E-Commerce in tourism
  11. 11. Definition of E-Commerce “Electronic commerce, commonly known as e-commerce, ecommerce or e-comm, refers to the buying and selling of products or services over electronic systems such as the Internet and other computer networks. However, the term may refer to more than just buying and selling products online. It also includes the entire online process of developing, marketing, selling, delivering, servicing and paying for products and services.” We will focus on the Internet Source: Wikipedia
  12. 12. E-Commerce timeline Netscape browser & 1st Internet purchase (netmarket.com) “Dot Com” Amazon buys Online shopping burst Zappos.com concept 1st Browser Amazon ->Diapers.com Alibaba.com eBay -> GSI Commerce CERN 1984 1995 2010 1979 1990 1994 1998 2000 2009 2011 1st Electronic Mall Amazon.com Groupon rejects CompuServe eBay.com Google offer Highly-funded startups Small-funded startups Tech&Concept development (KSF: Tech) (KSF: Biz Model) Jeff Bezos: “I am more worried about 2 guys in a garage than about Barnes&Noble ”
  13. 13. Types of E-Commerce/E-Business  Not easy to classify  Many real models fall into multiple categories B2B B2C B2G Business to Business Business to Consumer Business to Government •PayPal (and B2C, “B2B2C”) •Amazon “E-Procurement” •Optize (and B2C) •FreshDirect •Alibaba Group •Zynga (and C2C) C2B C2C C2G Consumer to Business Consumer to Consumer Citizen to Government •Zonzoo •Prosper (“P2P”) •Agencia Tributaria (Tax agency •Fotolia •eBay online) •Google Adsense •Facebook G2B G2C G2G Government to Business Government to Citizen Government to Government “E-Government” “E-Government” •Government Gateway •AEPM •eDNI •Schengen Information System •Certificado Digital •USA.gov (also G2B)
  14. 14. Business models on the web (Professor Michael Rappa) Page 1 of 2 1. Brokerage: 3. Infomediary: • Marketplace Exchange [Orbitz, ChemConnect] • Advertising Networks [DoubleClick] • Buy/Sell Fulfillment [CarsDirect, Respond.com] • Audience Measurement Services [Nielsen//Netratings] • Demand Collection System [Priceline.com] • Incentive Marketing [Coolsavings] • Auction Broker [eBay] • Metamediary [Edmunds] • Transaction Broker [PayPal, Escrow.com] • Distributor 4. Merchant: • Search Agent • Virtual Merchant [Amazon.com] • Virtual Marketplace [Amazon.com] • Catalog Merchant [Lands' End] • Click and Mortar [Barnes & Noble] 2. Advertising: • Bit Vendor [Apple iTunes Music Store] • Portal [Yahoo!] • Classifieds [Monster.com, Craigslist] 5. Manufacturer (Direct): • User Registration [NYTimes] • Purchase [Dell Computer] • Query-based Paid Placement [Google, Overture] • Lease • Contextual Advertising / Behavioral Marketing • License • Content-Targeted Advertising [Google] • Brand Integrated Content • Intromercials [CBS MarketWatch] • Ultramercials [Salon] Source: Michael Rappa, http://digitalenterprise.org/models/models.html
  15. 15. Business models on the web (Professor Michael Rappa) Page 2 of 2 6. Affiliate: • Banner Exchange • Pay-per-click Check out detailed • Revenue Sharing descriptions here 7. Community: • Open Source [Red Hat] • Open Content [Wikipedia] • Classifying is difficult, on Internet is • Public Broadcasting [The Classical Station (WCPE.org)] even more difficult. • Social Networking Services [Flickr, Friendster, Orkut] • Some companies fall into multiple categories. Real business companies 8. Subscription: can have traits of several models. • Content Services [Listen.com, Netflix] • Person-to-Person Networking Services [Classmates] • Trust Services [Truste] • Internet Services Providers [America Online] 9. Utility: • Metered Usage • Metered Subscriptions [Slashdot] Source: Michael Rappa, http://digitalenterprise.org/models/models.html
  16. 16. Long-Tail business concept ILUSTRATIVE “Selling many marginal products in small quantities ” The sum can be much higher than the sum of few top-selling products, and no brick-and-mortar shop can offer such a broad catalogue on their shelves. Q Top sellers HEAD → Brick-and-mortar sellers’ focus Weird products TAIL Products A market in itself + a way to attract a customer at some point of time
  17. 17. Long tail. Weirdest items sold on Amazon Uranium Ore Wolf Urine Dagobert Wooden Toilet Throne Fat replica demonstration models
  18. 18. Freemium model ILUSTRATIVE Venture Capital favourite’s model FREEMIUM = FREE + PREMIUM “Attract audience with free versions of the product, introduce them to paying with affordable versions of the product, and monetize them with premium versions of the product” Examples: FREE •Spotify: •Free: Listen with ads •Cheap: 1 day pass/Unlimited •Premium: monthly subscription •Social games: •Free: Play •Cheap/Premium: Virtual goods CHEAP •Most Open-Source Software (Affordable) •Free: base software •Cheap: modules, extensions PREMIUM •Premium: professional services •Adult content
  19. 19. Is this Freemium? • Free: 2 Paragraphs • Premium: rest of the article • “Coitus-interruptus user experience” is not good for the user nor for the brand. • Smartest Freemium models do not compromise between user experience and monetizing. Otherwise you may stop attracting users, and therefore monetizing them. • Every time you think there is such a tradeoff, test, retest, and retest again the model with a sample of users before implementing it. www.wsj.com
  20. 20. E-Commerce sales are very large and grow strongly 19% Source: Internet Retailer, Goldman Sachs
  21. 21. Where are the largest E-Commerce markets? E-Commerce sales by region % of online consumers who in 2010 made a web purchase in 2009 Source: Internet Retailer, Goldman Sachs, Forrester Research
  22. 22. What markets are expected to grow more? E-retail sales CAGR U.S.A. EU 17 Brazil 10% 10% 18% In 2015 it would account 11% of retail sales in the USA Source: Internet Retailer, Forrester Research GAGR= Compounded Annual Growth Rate
  23. 23. Agenda  E-Commerce  E-Commerce in tourism  Social E-Commerce in tourism  Social Mobile E-Commerce in tourism
  24. 24. Tourism is widely considered as de #1 E-Commerce category Spain Source: Observatorio Nacional de las Telecomunicaciones y de la Sociedad de la Información
  25. 25. Expedia Travel agent • Founded in 1996 as a Microsoft division. • Expedia Inc. operates Expedia.com, Hotels.com & Hotwire.com • More than 60 countries, 1000s affiliates • Revenue model: margin on sales • Revenue: ~ USD 3.3 bill./yr • Largest online travel agent www.expedia.com
  26. 26. Trip Advisor Travel reviews • Founded in 2000 • Bought by Expedia in 2004, spun off by IPO in 2011 • More than 100 mill. travelers have used it • Revenue model: social infomediary • Revenue: ~ USD 486 mill/yr • Largest travel review site www.tripadvisor.com
  27. 27. Kayak Meta search engine • Founded in 2004 by Expedia, Travelocity and Orbitz veterans. • Revenue model: referral fee • Revenue: ~ USD 225 mill/yr www.kayak.com
  28. 28. Agenda  E-Commerce  E-Commerce in tourism  Social E-Commerce in tourism  Social Mobile E-Commerce in tourism
  29. 29. E-Commerce is more than the act of buying online, it’s the whole system of information and reputation, which makes it a highly social activity Social Shopping Source: Internet Retailer, Forrester Research
  30. 30. What form of advertising do consumers trust? Recommendations from people I know 92% Consumer opinions posted online 70% Editorial content such as newspaper articles 58% Branded Websites 58% Emails I signed up for 50% 28.000 Internet users in Ads on TV 47% 56 countries Brand sponsorships 47% Ads in magazines 47% Billboards and other outdoor advertising 47% Ads in newspapers 46% “Recommendations from Ads on radio 42% people I know” is, by far, Ads before movies 41% the most trusted form of TV program product placements 40% marketing Ads served in search engine results 40% Online video ads 36% However, “Ads on social Ads on social networks 36% networks” not really Online banner ads 33% trusted Display ads on mobile devices 33% Text ads on mobile phones 29% Source: Nielsen, Global Trust in advertising and Brand Messages, Abril 2012
  31. 31. Definition of Social Commerce “a subset of electronic commerce that involves using social media, online media that supports social interaction and user contributions, to assist in the online buying and selling of products and services.” Two types : • Social Media on E-Commerce Platforms: “Helping people connect where they buy”. • E-Commerce on social media platforms: “Helping connected people to buy where they connect”. Source: Wikipedia, Syzygy
  32. 32. What are CMOs (Chief Marketing Officers) worried for the next few years? Source: Customer Data, Social Media Top Marketing Priorities for CMOs Worldwide, eMarketer.com
  33. 33. What Booz & Co thinks social commerce is going to be worth in 5 years Source: Booz & Co.
  34. 34. The 6 dimensions to social commerce success (Syzygy) Social Commerce : Sharing your purchase experience before, during, and after buying. •Twitter.com/Dell •Groupon •My Starbucks Idea SCARCITY •Blendetc Less is more (perceived value) •Vente-privee.com •Twitter.com/Dell AFFINITY CONSISTENCY Shop with like- One step at a time minded people •Adidas Social Coupons AUTHORITY •Starbucks @ 4S Follow the leader RECIPROCITY Payback favours (experts) POPULARITY Follow the crowd •Vente-privee.com •Apple Expert Forums •Facebook.com/1800flowers Source: The 6 Dimensions of Social Commerce - Mark Ellis, Syzygy
  35. 35. TripAdvisor pivoting from reviews to social Your friends’ trip wall Recommendations from people I know 92% Consumer opinions posted online 70% Editorial content such as newspaper articles 58% Branded Websites 58% Emails I signed up for 50% Ads on TV 47% Brand sponsorships 47% Ads in magazines 47% Billboards and other outdoor advertising 47% Ads in newspapers 46% Ads on radio 42% Ads before movies 41% TV program product placements 40% Ads served in search engine results 40% Online video ads 36% Ads on social networks 36% Online banner ads 33% Display ads on mobile devices 33% Text ads on mobile phones 29%
  36. 36. TripAdvisor pivoting from reviews to social Friends’ map and ads Source: Internet Retailer, Forrester Research
  37. 37. TripAdvisor pivoting from reviews to social Identifying and outstanding friends reviews Source: Internet Retailer, Forrester Research
  38. 38. Key points about Social-Commerce on social media platforms • Still in its infancy. Almost inexistent as of today. Mostly focused on the pre-selling stage: people talk about and discover products through social media, ads on social media, etc. • Most cases take advantage of the huge traffic that some social media platforms have, but do not leverage on social integration to offer better, customized products and services. Leveraging on social integration is better than merely sucking traffic because it adds value to the customer. The customer can find it very interesting to shop in a place where he/she has products he/she and his/her friends really like. Remember shopping can/should be a pleasant experience! • Referral marketing through social networks seems to be an obvious way to take advantage of someone’s social graph when doing E-Commerce. Concept of “Horizontal Marketing”. • Spotify integrated on Facebook is a good example of social commerce: you see what your friends are listening to, which is probably what you would like. Also, a friend listening to a song and you seeing it is a form of referral marketing. • Brands need to lose their fear to let people talk about them, and to invest in personalized, smart social apps to tackle the full potential of Social-Commerce. How would it be a social-commerce strategy in your company?
  39. 39. F-Commerce “Facebook commerce, f-commerce, and f-comm refer to the buying and selling of goods or services through Facebook, either through Facebook directly or through the Facebook Open Graph.” “Experts forecast that F- commerce transactions on Facebook will overcome Amazon’s annual sales ($34 Billion) over the next 5 years.” First purchase within Facebook: July 8th, 2009 on facebook.com/1800flowers Source: Wikipedia, Janice Diner, F-Commerce Ecosphere Visual
  40. 40. Agenda  E-Commerce  E-Commerce in tourism  Social E-Commerce in tourism  Social Mobile E-Commerce in tourism
  41. 41. Hotel tonight Last minute hotel reservations. Remember? • Founded in 2010 • Revenue model: referral fee www.hoteltonight.com
  42. 42. Hotel tonight Really Social? www.hoteltonight.com
  43. 43. Blink www.hoteltonight.com
  44. 44. Today’s main takeaways ¶ E-Commerce, E-Business… difficult to define and classify. Do not waste much time in figure-out where your model fits. ¶ E-Commerce success stories have evolved in the last years: ¶ Before: Highly capitalized, tech-based companies (invest, invest, invest…) ¶ Now: Small capital business model incubators (test, test, test…) Technology not a problem anymore; success is many times driven by innovative business models, sometimes easily copycatted if one does not protect oneself. ¶ Long tail concept / Freemium concept / “Piggyback” concept. ¶ 17-year history but still growing strong, now specially in emerging markets (broadband penetration, purchasing power), but maybe on mobile channels soon. ¶ Tourism was and is the #1 Ecommerce segment. It is also a good example of trends. ¶ E-Commerce is an intrinsically social activity. It evolved to the social space even before the social media phenomenon started. ¶ 6 dimensions to social E-Commerce success. ¶ Social Tourism Ecommerce ready to take off. Few startups working already on it. ¶ Takes time to refine an innovative business model. Test and error based on analytics is the best way to refine a model. Be patient, imaginative, and analytical.
  45. 45. Thanks Francisco Hernández francisco_hernandez@11goals.com www.11goals.com

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