Published on

Published in: Travel
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide


  1. 1. MoContent,MoProblems:Google’sFrommer’sAcquisitionCouldLeadToAdditionalAntitrustScrutinyMonday, August 13th, 2012―There is a fundamental conflict between being a search provider and a content provider,‖said John M. Simpson, Consumer Watchdog’s Privacy Project Director. ―As Google hasincreased its content and services, it has unfairly favored them in its search results anddamaged competitors.‖ The deal, says Simpson, means ―Google executives are thumbingtheir noses at regulators‖ and ―if it is allowed with conditions, there is absolutely no reasonto believe the Internet giant will live up to it’s word.‖The group, which counts TripAdvisor, Expedia, Kayak and Microsoftamong its members, also just issued a statement in which it ―encourages governmentofficials to look closely at its ability to use its dominance in search and search advertisingto steer users away from competitors in order to keep users on Google’s own pageslonger, and the potentially devastating effects that could have on the online economy.‖It’s worth noting that a number of companies – including some that could be considered tobe Frommer’s competitors – have accused Google of highlighting its own content overthat of its competitors in its search results over the last few years. Last year, for example,Yelp CEO Jeremy Stoppelman told the Senate Judiciary Committee that he believesGoogle has abused its market dominance in search. Earlier this year, Nextag CEO JeffreyKatz, one of Google’s most outspoken critics, wrote an op-ed piece in the WSJ in whichhe noted that the company ―needs to become more transparent about when advertisersget better placement in search results and when a result is a Google-owned property.‖With more of its own content to highlight on Google Search, chances are Google willindeed face additional pressure from antitrust regulators to ensure that it doesn’t givepreference to its own content on its search results pages. Google, of course, argues that itsimply tries to provide the best search results for its users but chances are that theexecutives over at Rough Guides, Fodor’s and Lonely Planet would have preferred to seeGoogle stay out of the travel content business. companys dream is to become the worlds most dominant company. A startups goal is to survive. Asmall-to-medium sized companys goal is to become a large company. A large companys goal is to become theworlds largest company and so on.Whenever a large company has a lot of power, they will always try to stop the startups and small-to-mediumcompanies from becoming larger ones. You can look back at history and find many instances of this theory, fore.g. Microsoft did this to Netscape, Google did this to Yelp/Dropbox, Facebook did it to Friendfeed/,
  2. 2. Twitter did it to Tinyurl/Twitpic etc. They can either do this by acquisition (legal), direct competition (legal) or byabusing their power of monopoly in their existing businesses (illegal).However, the larger companies (as of now) have also faced these exact same hurdles when they were trying toget bigger. Thats how capitalism works. As Bill Gates famously said: "Life is unfair, get used to it".Google Buys Frommer’s Travel Guides in Yet AnotherContested Move as a Content PublisherMiranda Miller, August 21, 2012Google acquired Frommer‘s brand of travel guides from Wiley & Sons last week, in adealreportedly worth $23 million. While the actual acquisition is small by Google‘sstandards, it is another big indicator Google plans to continue building their business as apublisher of unique content.Wiley‘s announcement of the sale read, ―On August 10, 2012, Wiley entered into adefinitive agreement to sell all of its travel assets, including all of its interests in theFrommers brand, to Google.‖―The Frommer‘s team and the quality and scope of their content will be a great addition tothe Zagat team,‘‘ a Google rep told the Financial Post. ―We can‘t wait to start working withthem on our goal to provide a review for every relevant place in the world.‖Yelp Stock Down in Light of Google-Frommer AcquisitionAt one point, Frommer‘s were the premier travel guides; that is, until Lonely Planet camealong to dominate the scene. Google reportedly plans to combine Frommer‘s with theirZagat reviews. Last year, Google acquired Zagat and earlier this summer, integratedZagat reviews with the merged Google+ Pages/Places.Google‘s foray into publishing local reviews is bad news for Yelp, whose stock plummetedafter the announcement. Yelp was sitting at $20.17 a share as of this writing, substantiallydown from their 52-week high of $31.96. Just before Google announced the Frommer‘sdeal, Yelp was trading at over $26.Google used to pay Yelp in order to use their reviews on Google Maps. That ended whenYelp became unhappy with what they said was Google‘s practice of promoting their ownpages over those of others.Google actually tried to buy Yelp in 2009, though the deal didn‘t go through. BySeptember 2011,Yelp was testifying against Googlein the Senate Subcommittee onAntitrust, Competition Policy and Consumer Rights.
  3. 3. Consumer Watchdog, Asking for FTC InterventionYelp aren‘t the only ones unhappy about the Frommer‘s deal. Consumer Watchdog iscalling on the FTC to block the acquisition."There is a fundamental conflict between being a search provider and a content provider,‖Consumer Watchdog Privacy Project Director John Simpson told The Inquirer. ―AsGoogle has increased its content and services, it has unfairly favoured them in its searchresults and damaged competitors. It makes absolutely no sense to approve this deal.‖, a group of companies including Microsoft, Expedia, and TripAdvisor,among others, released a blog post about Google‘s latest acquisition. It read, in part:―As Google expands beyond general search into content development in key searchverticals, encourages government officials to look closely at its ability touse its dominance in search and search advertising to steer users away from competitorsin order to keep users on Google‘s own pages longer, and the potentially devastatingeffects that could have on the online economy.‖Can Google Do Fair Search and Create Content?Forbes staff writer Jeff Bercovici doesn‘t think it‘s even a question whether Google hasbecome a media empire. He takes a stab at what Google will do with Frommer‘s in arecent article:―...the obvious guess is that Google will Zagat-ize Frommer‘s, de-emphasizingprofessionally-produced content in favor of user-gen stuff, which is both cheaper toproduce and more in keeping with its traditional competencies. For the moment, however,Google is, at least in a small way, unarguably a media company.‖This raises the obvious question, he says; one that has been on the minds of many ascomplaint after complaint has rolled into the FTC: ―How long can Google be a fair arbiterof all the world‘s information when it increasingly has information of its own that it wants topromote?‖The New York Times published previously unpublished quotes from Eric Schmidt, whowas CEO at the time he is reported to have given the interview in 2010. According to theNYT, Schmidt said Google is ―careful to define a line where we don‘t cross into content‖and wanted to remain a ―neutral platform for content and applications.‖That line seems to blur more every day. Whether the FTC will heed the warnings ofgroups like Consumer Watchdog and remains to be seen. For now,companies like Yelp and TripAdvisor have every reason to feel threatened, as the giant ofthe web encroaches further into their business model.
  4. 4. Frommers, Google Taps GurusBy AMIR EFRATI And JEFFREY A. TRACHTENBERGUpdated August 14, 2012, 3:54 a.m. ET Google Inc. GOOG +0.50% for years swore it wasnt interested in creating content, choosing instead to point people to information on the Web. Google also championed the vox populi, letting crowd-sourced opinions bubble to the top when users search for answers online. Slowly, though, the experts have been moving up in Googles eyes, and its business.Google is buying the Frommers brand of travel guides from publishing house John Wiley &Sons for an undisclosed price, Jeffrey Trachtenberg reports on digits.On Monday, Google said it is acquiring the Frommers travel-guidebusiness in a bid to attract more advertising dollars tied to online-travelbookings and local-business information. Google is buying Frommersfrom publisher John Wiley & Sons Inc. JWB +0.67% Google paid around $25 million for Frommers, according to a person briefed on the deal, which hasnt yet closed. But the deal is more significant for its strategy than its price tag. By owning Frommers travel-guide content and showing it in search results, Google could sell travel-related ads against it and provide more tools for people to book travel arrangements. The Frommers deal follows Googles 2011 acquisition of Zagat Survey, whose reviews and ratings of millions of businesses have since been incorporated into Google+ local-business listings. Google said Monday that the Frommers brand would be melded with the Zagat brand. Frommers data about local businesses around the world could boost the Google+ business listings—where both Zagat ratings and individual customer reviews are displayed—and Google Maps.
  5. 5. With Zagat and Frommers, Google is betting it can become a trustedguide for travel and local-business information by using expert ratingsand aggregating online comments from thousands of customers, the and do.Frommers is more evidence that Google has grown fonder ofprofessionally produced content. There are other examples: It recentlytook an equity stake in Machinima Inc., which creates video contentmainly for Googles YouTube video site.A Google spokeswoman declined to comment.In addition, Google is investing more than $350 million to help create andmarket professional-grade videos for YouTube, located on special"channels," as the site upgrades its offerings from the simpleuser-generated videos of its roots.A separate content effort, though—Googles Knol online encyclopedia,which took contributions from experts—wound down this year as GoogleCEO Larry Page killed off some underperforming services.In addition to owning content, Google also is trying to become "verticallyintegrated" in terms of mobile devices. Googles strategy for years was toallow manufacturers to use its free Android operating software, helpingthem compete with Apple Inc. gadgets and ensuring that its searchengine would be built into the devices. But Google recently boughthandset maker Motorola Mobility and has embarked on an effort to buildits own mobile devices.The Frommers deal could put Google at odds with other websitepublishers. In recent years, Google has expanded its array of services
  6. 6. that seek to directly answer users queries, departing from its originalstrategy of sending them quickly to the most relevant site. For example,people who search for local-business information now often see links toGoogle+ business listings—and Zagat ratings—in the search-engineresults above other sites like Yelp.Google—and its ambitions to capture more online ads related to traveland local-business information—are under scrutiny by antitrustauthorities, who are looking into allegations that the company directs itssearch-engine users to its Google+ business listings, undermining traveland online-review sites such as TripAdvisor and Yelp. The Frommersdeal is too small to trigger an automatic review by antitrust authorities.Google has denied any anticompetitive practices and has repeatedly saidit creates its services to benefit users, rather than other websites. SomeU.S. courts have agreed with Googles assertion that its search-engineresults are a kind of opinion that is protected by free-speech rights.Stephen Kaufer, the CEO of TripAdvisor Inc., TRIP -0.80% said Monday,"It is puzzling to us that Google is going backwards to the opinion ofone—a writer—when TripAdvisor is proof that travelers like the wisdom ofcrowds" and their social-network friends.Mr. Kaufer, who has spoken out about Googles practice of pointing usersto Google-owned sites, added: "I absolutely worry that Google willpreference Frommers content above organic search results to thedetriment of the users experience and the enrichment of Google."Yelp Inc. YELP +1.43% declined to comment.TripAdvisor shares fell 4.6% in Monday trading; Yelps stock dropped7.7%.Google in 2010 made its first big foray into the travel industry by acquiringflight-data company ITA Software, which powers the flight-booking toolsof numerous websites.Last year Google launched its own flight-booking service.
  7. 7. Google generates about $2 billion to $3 billion per year from selling travel-related ads on its search engine and hotel- and flight-booking service, with travel sites Expedia Inc. EXPE -0.23% and Priceline Inc. being among the top advertisers, according to Herman Leung, a stock analyst at Susquehanna International Group LLP. The U.S.-based leisure-travel industry spent $2.56 billion on online advertising last year, up 40.6% from a year earlier, according to research firm eMarketer Inc. Last year U.S.-based travelers spent more than $100 billion to book trips online, a figure that is expected to grow by around 10% annually, eMarketer said. Google said Monday it hasnt yet decided whether the Frommers guidebooks will continue to be published in print or whether they will eventually migrate entirely to online.Flight DeckGoogles travel and content acquisitionsJuly 2010: Announced acquisition of flight information software company ITA Softwarefor $700 million. Last year Google launched its own flight-booking service.Sept. 2011: Purchased Zagat review guides for $151 million. Reviews have sincebeen incorporated into Google+ local-business listings.Aug. 2012: Announced acquisition of the Frommers travel-guide business, payingless than $66 million. "Our commitment is to keep things as they are today and once we combine operations, well know better what the future looks like," said Bernardo Hernandez, a director of product management within Googles Zagat unit. "Consumers need fresh, accurate information," Mr. Hernandez said. "When you add information you can trust to phone numbers and addresses as part of the Google search experience, it enables users to convert their intentions into actions," meaning to book travel online. Wiley, which has owned Frommers since 2001, said it intended to sell the brand in March as it no longer aligned with its long-term strategies. Frommers dates back to 1957, when Arthur Frommer, founder of the Frommers series, published "Europe on Five Dollars a Day."
  8. 8. Bill Newlin, publisher of Avalon Travel, an imprint of the Perseus Books Group that publishes travel expert Rick Steves and the Moon branded guides, said he wasnt worried about Frommers titles getting an unfair advantage in Web search. "Theres only one way to spell Rick Steves," he said. Google’s Acquisition of Frommer’s Will Shake the Travel IndustryPosted by Kathryn Armson & Andrew Berriz (@andrewberriz) / August 20, 2012 3:23 pmThe travel industry‘s visibility in search changed dramatically last week. As of last Mondaymorning, Google has purchased Frommer‘s Travel Guides. CM‘ers across our office rejoicedrealizing just how big of an impact this buyout could have on the traveler‘s experience.In 2011, 69 percent of users looking for travel related information went to the search engines tofind online content. Currently controlling 66.8% of all U.S. searches, we see that whenGoogle makes a change, the majority of online users have no choice but to follow.With Google‘s most recent acquisition of Frommer‘s the travel industry may be on thethreshold of big changes. How will these changes affect your travel company‘s searchrankings and website performance?Google monopolizes the traveler’s journeyOver the past several years Google has begun expanding its capabilities beyond those of astandard search engine. When Google was originally founded, their goal was to accuratelydirect users to the websites most relevant to their needs. The idea was for a user to spend aslittle time on the Google site as possible. A searcher would type in their search query, and inthe perfect scenario would be directed to the most relevant content to their query without everhaving to scroll down the page.However, as Google expanded their technology and began to monetize on-siteadvertisements and searcher behavioral research it seems the goal was now to keep users onGoogle owned properties as long as possible. Google recently rolled out ‗knowledge graphs‘,grids powered by rich-snippets that appear on the Google search results pages forinformational-based search queries.
  9. 9. The ink is still drying on the contract, and it is unclear exactly how this latest acquisition willaffect websites competing in the travel industry. However, there are a few things yourcompany can do to prepare yourself for any impending changes Google may release.What You Can Do to Prepare1. Keep Users at CenterThe number one action you can take to protect your site from being severely affected by anyfuture Google changes is to always aim to provide value to your users. Sites like Pinteresthave shown us that an intuitive user interface, and wealth of valuable content is always moreeffective at driving traffic than a flashy, complex site. Another great example of a site that aimsto satisfy the user instead of Google is Twitter. The interface is simple, with only a fewcapabilities, but the wealth of content related to celebrities, top news, local events and more isdelivered directly to the user in a timely fashion.It‘s easy to lose sight of the end user, and try to find the ―silver bullet‖ that will quickly propelyour site to fame in that #1 search result spot. However, past Google updates (Panda being aprime example) have shown that sites trying to manipulate the algorithm, social networkingsites or content schemes for quick wins will ultimately fail. Provide your users with theinformation they are looking for in an easy-to-navigate site will more quickly build user loyaltydrive traffic flow to your site. Investing the time and money upfront to truly understand yourconsumer and their online behaviors is always the best strategy.2. Embrace All SEO ToolsSites in the travel industry should also utilize rich snippets, and basic marketing skills tomake their sites more visible and appealing in the search results pages. Be sure all TitleTags and Meta Descriptions on your pages are optimized, not just for the search engines, butto fully inform users and help increase click-though rate. Embracing recent technology, suchas, to transform your regular search engine results into interactive rich snippets,with imagery, videos and product information embedded right into the search results page canhelp your site stand out, as well.3. A Holistic Support StrategyFinally, travel sites should work to embrace many different facets of vertical search andonline advertisement. If your site relies solely on SEO performance, one big change fromGoogle and you may see your site‘s traffic drop severely. Aim to produce content that performswell in image search, news search, and blog search, while also building up a large user baseon social media sites and driving traffic through paid media.Final Thoughts – The Scramble for Quality Travel ContentThe online travel marketplace is infamous for a high “look-to-book ratio” – an astounding4,500 to 1 – which basically says travelers are doing a lot of searching, researching, and
  10. 10. comparing before selecting a destination and booking their vacations. The question for travelermarkets is how to capture and convert those travel shoppers.The buyout of Frommer‘s and potentially heightened prominence of their travel content insearch results accentuates the call to arms for travel brands to up their game. Sheepishlycowering to the massive players cannot be your answer. As the sheer quantity of travel-relatedcontent grows, travel brands are hustling to develop more compelling content to improvesearch visibility. Boldly claim a distinctive voice among the crowds to hold an essential role.Share content about the local culture and cuisine, for example, in addition to speaking aboutyour brand. If they can‘t find the information anywhere else, you‘l live to tell the tale of anotherday in this competitive industry. IT WOULD BE A MISTAKE FOR GOOGLE TO KILL FROMMER’S TRAVEL GUIDESBy buying a travel guidebook publisher solely to bolster its local search content, Google risks bothstraddling itself with an unprofitable albatross and missing out on a way to differentiate itself from itsrivals.Google’s recent acquisition of Frommer’s has given rise to much comment about the ―real‖ intentions ofthe Big G and what this means for other travel publishers. While it’s less entertaining than some of thetheories floating around, for time being I’m willing to accept their stated rationale at face value: justanother stepping stone to ―provide a review for every relevant place in the world―, and thus a tacticalmove to bolster local coverage for the ailing Google+.There are, however, two fundamental problems with the purchase and this goal that do not seem to havegarnered much attention.Frommer’s claims ―4,500 destinations, 50,000 images and 300,000 events―, but they leave unsaid thesource of every one of those bits of data: their own printed guidebooks. Google thus has an unpalatablearray of choices: 1. Keep producing printed guidebooks and digitizing the incoming content as usual. This is clearly Google’s starting point, as they will be retaining Frommer’s print staff, but it’s also almost certainly a money-losing proposition: given the fire sale price of barely over 1x revenue, there’s no way the books are making money. With the overall travel guidebook market declining by 10% year and the new owner focused on entirely different things, a turnaround seems fanciful. Google will thus be looking to jettison them as soon as it can, which leads us to the next option: 2. Stop print production, but keep the authors and editors around producing travel guides in digital form. Alas, this would only exacerbate the losses, as e-book and app sales make up only a small
  11. 11. fraction of printed book sales and the actual printing is only a fraction of the cost of book production. This option seems thus very unlikely, and my money is thus on: 3. Stop producing guidebooks in any shape or form, dispense with narrative content entirely and focus purely on points of interest. (This is what Zagat has always done.) It also means throwing any direct revenue model out the window, although it does keep their B2B arm Frommer’s Unlimited afloat. It will be interesting to see how much money Google is willing to sink into paying authors and editors to update those reviews, but it’s quite conceivable that the answer is ―none‖, in which case we end up at the final option: 4. Fire all editorial staff and let the content decay. If the purchase is indeed purely a tactical ploy to temporarily beef up their reviews while they wait for Google+ to reach critical mass and start to create fresh, user-generated content à la Zagat, this actually makes perfect sense. Google doesn’t even need authors for the other half of their usual job, verifying practicalities details (addresses, telephones, etc), as Google has already mastered that process through other means.If Google goes with the 3rd or 4th option, and I have hard time seeing them not do so, their secondproblem (or, rather, missed opportunity) will be the lack of content curation. By treating guidebooks asno more than a database in print form, turning them into a homogenous soup of atomic points of interest,Google is effectively conceding to compete on a level playing field withlocal search rivals like Facebookand Foursquare. All three now assume that users are searching for individual points, easily filtered onindividual axes: ―best five-star hotel in New York by user ratings‖, ―cheap Japanese restaurant inMelbourne CBD open for lunch‖ etc.But a guidebook is not the same as a phone book: it’s supposed to contain a careful selection of the bestplaces to go, arranged in a sensible way. Neither Facebook nor Foursquare can offer a sensible answerto real travel questions like ―Funkiest bars in Brussels‖, ―Romantic day in Paris‖, ―Three-day hike in NewZealand‖, whereas any guidebook about those places that is worth its salt can. As anengineering-driven company, Google has given things like this little thought simply because they are hardproblems for artificial intelligence to solve — but using Frommer’s team of authors, it would be possible toaugment the automated results produced by things like theKnowledge Graph to field hand-curatedcontent as well.If Google goes ahead and does this, then the Guidebook of the Future will be that much closer to realityand travel publishers will have a real problem on their hands. But I doubt it, and that’s why thosepublishers are breathing a sigh of temporary relief: one competitor less means a bigger slice of theshrinking pie for the rest.