Hatton of Google on Mobile and ITA

Claire Hatton - Google's Industry lead for Travel, Local and Government in AU/NZ - spoke last week at the Asia Pacific Aviation Outlook Summit. In the speech she had a lot to say about mobile and a little to say about the ITA deal.

On the mobile web Hatton's advice was clear - if you do not have a mobile strategy including an app, then get one. She said (and confirmed via twitter) that "mobile searches on some search terms are higher than on PC for Google in Japan and Indonesia.". In some critical Asian markets half of the internet connections are via mobile. She conceded that iPhone was the largest platform but reminded the audience not to forget about Android. Google are claiming that they are "activating 160k android devices a day".

This has translated into consumers engaging in simultaneous consumption of media. True multi-media. Hatton quoted a Nielsen stat that 49% of Australians are online at the same time as they are watching television.

On the ITA deal she was more circumspect. In her defence, the ink is barely dry on the contract. While she would not say what Google intends to do with the product, she was very clear on Google's rationale for making the acquisition.

"because we believe the flight search experience is not good enough"

Understandably she would not be drawn on what the product would look like but did say that it would improve that qualified nature of click throughs to supplier and intermediary sites. Indicating that the likely pressure will be more on other meta search companies rather than OTAs.

As a side note. Later that day an industry insider told me that Google would not be able to bring the ITA functionality to Asia any time soon. They told me that that ITA product does not have the net fare connectivity to be competitive in air search in Asia.

Google and ITA: deal confirmed, BOOT was right, read what the pundits think

While I was minding my business on a work trip in Taiwan, teams of Google lawyers were dotting i's, crossing t's, cutting cheques and making rich people of out of the founders of flight search software company ITA. Overnight Tnooz carried the story that the deal was done for $700mm. This makes it Google's fourth largest acquisition (behind Admob, Youtube and DoubleClick). At risks of self indulgence, the BOOT first broke the rumour that Google was planning a push into travel meta-search.

With the deal done it is time for the pundits to pontificate analyse. Kevin May at Tnooz central has quickly collected the thoughts and analysis of five (and counting) Tnooz nodes/pundits including me. You can catch all of our thoughts and feelings on this deal over here.

Here is what I had to say at Tnooz

In my view the Google/ITA deal is a response to two challenges Google is facing in search generally and travel search in particular

1. Search is no longer the number one activity online. Social networking is. Part of this is the rise of networking but part of it is that search continues to operate in an environment where one site has the answer. Where you type in a search term and Google points you to the one site with the answer. Search queries are becoming more complex and more open ended. The answer to an open ended search query is unlikely to be found on one site. Google knows this is especially true for travel. It knows that it risks losing travel open ended travel search queries to social networks and meta-search. China is a great example of this trend with social networking planning a greater and greater role in travel search and discovery activity. Google knows they need a means for showing multi-site answers to search queries; and
2. Meta-search is building loyalty. In the early days of meta-search, the business model was almost pure traffic arbitrage (I discussed this back in 2007). Meta companies bought traffic off Google for one price and sold it to suppliers and OTAs for another. Meta-search profitability was determined by their ability to buy clicks from Google cheaper than they could be sold back to OTAs and suppliers. But in the last year or so meta-search has started to built loyalty and alternative marketing channels. To generate direct brand traffic and affiliate partner referrals in particular. I have heard reports from a number of meta's of dramatic increases in customer loyalty and direct traffic. Kayak themselves spoke of this phenomenon to me as early as 2008 just after the sidestep deal. To combat meta's growing loyalty Google clearly felt the pressure to bring pricing and the details of offers one step closer in search results

While the deal may help Google solve these two challenges - in presents Google with two new challenges

1. Competing with customers: Meta and other travel search companies spend a lot of money with Google. So too the suppliers and OTAs. There will be a fear and concern here from all of these Google cheque writers the Google might be planning to go direct and cut out more and more of the intermediary market; and
2. Execution and retention: Travel search technology is very very complicated. This is proved by Google's decision to buy rather than build. But each time a company makes a buy vs build decision they open themselves to the challenge of retention and execution within the acquired company. Once you have made very rich people at the core of the asset that you have bought - you need to work very hard to either keep them engaged or train up your old organisation to know everything there is to know about the new one.

More analysis and commentary over at Tnooz.

[reminder my views are mine alone and not the views of Orbitz or HotelClub]

Google to buy ITA Software (report). If true Google's meta-search march is on!

Back in March care of a reliable source I broke the rumour/story that Google was about to launch a travel meta-search product. Then Tnooz broke the story that the rumour was true and Google was seen inserting pricing and supplier bidding information to google map search results.

The biggest worry that Google has in getting into the travel meta-search space is how to catch up in technology. It is important to realise that each developer that Google diverts away from the core algorithm and ad platform carries a large opportunity cost. Even in a world of twenty percent time, Google is very conscious of the cost of putting developers on the expensive and complicate work involved in specific sector search rather than general search. The biggest question hanging over a travel meta-search play therefore was how would Google find the time and resources to build the product.

Looks like we might have the answer - and it has nothing to do with "building".

Story coming out of BusinessWeek that Google is in talks to buy ITA Software, one of the worlds biggest independent travel booking software makers who count Orbitz (disclosure), Bing, India's cleartrip, Expedia's Hotwire and Kayak as customers. Would certainly provide Google with all the tech they would need to launch a top flight meta-product. And on the entertainment front, would make the relationship between Microsoft and Google even more interesting.

hat tip to Paul Fisher who alerted me to the story via Twitter