Verticals are in

Interesting Wired article and Read/Write Web summary post on News Corps general internet and specific MySpace strategy. Note focus on mini-portals or “aggressive vertical categories” in lieu of Yahoo/MSN style mega-portal. Also, their belief that moving fast with M&A is the way to get there, which relates to two former posts of mine: Old school will by travel start-ups and Travel Search acquisitions near?

Here are excerpts from the Wired article summarized by Read/Write Web:

"Over two months in spring 2005, [Ross] Levinsohn and a handpicked team hammered out an 80-page strategy document. A Yahoo- or MSN-style portal was out, they determined: Fast connections and search engines made aggregating content superfluous. Broadband-ready “aggressive vertical categories” were in, pegged to sports, news, and entertainment – areas where News Corp. had mountains of content, standout stars, and demographic expertise. Above all, the report concluded, speed was critical. M&A, not the company’s customary homegrown approach, was the fastest path forward."

"Levinsohn, for his part, thinks one way to make the site more ad-friendly is to introduce miniportals focused on MySpace core interests – music, movies, and comedy so far – that offer advertisers “clean” (that is, professionally designed and managed) pages. Smart stuff – but again, tidy the place up enough to make American Express happy, and it won’t be MySpace anymore."

Kayak.com a household name?

Check out the above Kayak.com ad submitted by Kayak CEO and co-founder Steve Hafner. The destination is Dallas, home of Travelocity and the image is Travelocity's CEO Michelle Peluso and the roaming gnome. Hmmm... could this be revenge for Michelle's "Skipper" comment at last year's PCW Executive Conference? (The Skipper moniker comes from the harsh Forbes.com article titled Struggling Upstream.) Kayak is certainly not struggling as of late. Since that article, they hired a top marketing executive (Dean Harris), raised another significant round of funding, and have now launched an innovative, and highly viral-worthy, ad campaign.

Brian Smith at VerticalSearch.net interviewed the Kayak.com marketing team, lead by Dean Harris, and asked about the new campaign . Some of the nuggets from the interview that I found interesting:

Brian: Why did you decide to commit to TV advertising?
Kellie: We’re all [the travel search engines] lagging behind the online travel agents (OTAs). How do we compete? We hired a CMO, and let him decide. It wasn’t that we wanted TV, it was that we wanted to be a household name.

Brian: Who is the campaign targeting?
Dean: Adults 25-54 who are self directed travelers. $60K+ in household income.

Brian: How will you measure success?
Dean: We’ll look at the number of users, look at search volume, look at how other factors are increased as a result of offline spending. Search results will get greater conversion.

Brian: Does a big flashy campaign just mean that we’re in another bubble?
Dean: I don’t think this campaign is big or flashy. And I think that we at Kayak think this is an important and necessary investment. I do believe advertising works and large brands have built their businesses on advertising. I don’t think we’re following a bubble as we’re spending efficiently and with impact. We do a lot of online marketing, and we have an enduring commitment to online. Search is very efficient way to reach people. But cost for online advertising has gone up dramatically. Because of the way we’re buying [the air time for the commercials], we can do this more efficiently offline as opposed to online.

Brian: The ads seem to have been created with an online viral strategy in mind?
Dean: You’ll see the ads on YouTube and MySpace. The ads will appear on affiliate sites as streaming videos. This was a contingency for the campaign. Shorter length videos tend to do better on the web. One of the reasons we did 15-seconds is that we knew it would translate better to web use.

Brian also has a post titled "My Take on Kayak Spending $10M". My very general, high-level take on the campaign is that it's hard to do much with $10M in online travel when you are up against the multi-$100 million budgets of the OTAs. At least Kayak, with their innovative approach, has the possibility of turning that $10M into $100M of value - if it really takes off virally. And, if that happens, perhaps it might have a chance at becoming a household name.

(Oh yeah, and Brian, thanks for the Farecast mention: "The creatives the Brooklyn Brothers did for Kayak look like they belong on Farecast (with it’s bright, welcoming colors), not Kayak.")

Old school will buy start-ups

Katie Fehrenbacher, a new staff reporter at GigaOM, wrote an interesting post on online travel recently titled: Online Travel: Out With Old, In With Next Web. The general message is that the established online travel players "are seeing slowed growth, largely because of a new found aggressiveness by both airlines and hotels that are getting web-savvy and the next generation of online travel aggregators".

Specifically, the "out with the old" crowd is missing earnings and revising (down) estimates:

"Cendant’s Travelport division, which owns Orbitz and Cheaptickets saw lowered earnings last year, and Expedia, the number one site in the U.S., saw its stock drop dramatically, after the company slowed its growth and missed its earnings predictions."

And the "in with the next web" crowd are providing competition by:

"creating meta-search sites that find fares more quickly and easily than there older cousins" and "... combine social networking, blogging and community-based travel."

Sites mentioned as innovators were: Sidestep, Mobissimo, Kayak, and Farecast.

Here is the additional blurb on Farecast: "Farecast's site predicts how airline tickets will fluctuate, helping the buyer purchase when the ticket is cheapest. The site went out of beta last week, though for now only operates for the Boston and Seattle areas."

Katie's bottomline is that "The old school online travel sites could become the likely buyers of newly funded start-ups, and their fancy services."