Did Google Signal A Push Into Online Travel Sales?


Google's acquisition of ITA Software will shake up the online travel industry, despite Google Chief Executive Officer Eric Schmidt's attempt to convince press and analysts on Thursday otherwise. Insights into the travel purchase funnel could push the engine past services for consumers and advertisers, and into online sales.

Schmidt told those on the call that the search engine intends to tap the data from the $700 million ITA Software acquisition to build out search tools allowing consumers to discover and compare information on air travel flights. And while he likely believes that today, stopping at this search-and-discover model would present missed opportunities to tie in additional ad targeting signals running through the entire purchase funnel.

Google will gain a stronger position at the end of the consumer purchase funnel. Some might argue the company already had the ability to see the entire path, but stakes get much higher after acquiring the data. Schmidt admitted during the call Google could have licensed the data from ITA, but it wouldn't give the company all it needed to sort through and build out complicated algorithms that allow consumers to search in a conversational tone.



That purchase funnel for air travel-related searches begins with intent, the first search after seeing a display or search ad for travel, to the purchase of airline tickets on the search engine through Google Checkout. It could not only give Google a percentage of the sale, and advertisers a complete view of the purchase funnel for the air travel industry, but drive traffic to a variety of travel-related Web sites for more information.

J.P. Morgan Analyst Imran Khan estimates the total U.S. travel market at $239 billion with about 40% of it booking online. Although Google has no plans to sell tickets today, increases in online bookings will likely drive both higher query growth and increased CPCs.

While some analysts define benefits in terms of CPCs, Douglas Anmuth, analyst at Barclay Capital, believes the acquisition pushes Google toward a CPA-based search advertising model. "We have long thought search would ultimately move toward more of a CPA model, at least in certain categories, with air ticketing a prime CPA opportunity," he wrote in a research note.

A Google travel search product launched by later this year could increase the company's revenue between 1% and 2%, capturing between 30% and 50% of the market meta-search market, in 2012, according to a Piper Jaffray published note. The firm estimates the online travel meta-search could reach $1 billion globally at that time.

Andreas Pouros, chief operating officer at Greenlight, a SEO and PPC consulting and technology firm in Europe, believes Google's ITA acquisition ushers in the third phase of the Internet. Search engines with the engineers who have the tech skills will purchase companies to acquire the data they lack to build out better search engines. These search engines will respond to conversational strings and visual queries.

Google's Schmidt told reporters and analyst on a conference call Thursday that the company will build out tools to help drive travel search traffic to third-party sites, but Pouros thinks travel Intermediaries like Kayak and Travelsupermarket, which aggregate flight and purchase data to serve up to consumers, "should be very concerned" and should "rethink their business models" during the next few years.

4 comments about "Did Google Signal A Push Into Online Travel Sales?".
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  1. Ron Callari from iOptimize Marketing, July 2, 2010 at 1:28 p.m.

    Hi Laurie, I predicted this 2 months ago - and was told my many in the travel industry - no way! - Now, it looks like attitudes are changing - as the industry is finally see this as an indicator "ubiquitous Google" is dipping its toes into the lucrative online travel revenue stream!

  2. Private Jet, July 2, 2010 at 2:21 p.m.

    There is a huge difference between flying commercial and chartering private jets. It all depends on the style in which you want to travel as well as how often you need to travel. It is good to know that with private jets, the sky is literally the limit!

  3. Mark Anderson from BuzzFactory, July 2, 2010 at 2:37 p.m.

    Welcome to Web 3.0. Smart bots that search the web based on our browsing habits and serve up travel suggestions. Google will now make money on both sides. Gettin' paid twice is what it is all about.

  4. Scott Meadow from MCP LLC, July 2, 2010 at 2:44 p.m.

    The real money in the travel business is in yield management. I think that the big open question is: Does Google, with their acquisition, have the ability to alter the demand side of inventory and how will the suppliers respond?

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