Phocuswright Conference: More than 1,300 delegates from the global online Continued from page 96 “TripAdvisor gets a lot of
direct traffic but it’s SEO [search engine optimisation] where they are making 100% of profits. As a result, they got lulled into over- investing and hiring people.” Hafner added: “We never
thought it [Google] would be a provider of free traffic for us. We operated leanly, we built great products, we did not hire too many people, and we invested in brand marketing when others did not.” TripAdvisor chief executive
Steve Kaufer said Google is a “challenge for many, many travel companies and a whole load of companies in other verticals”. “When we look at how they
are stepping forward to say anyone on Google essentially stays on Google, that’s a challenge for the entire ecosystem, period. “The competitive landscape,
when it gets concentrated like this, becomes a burden on innovation everywhere. “What can TripAdvisor do
about it? We have to build better products and deliver a value propo- sition to travellers, so when people next want to plan a trip they come direct and not via a search engine.” Mark Okerstrom, Expedia’s
chief executive, said being SEO dependent is a problem as Google “goes deeper into travel”. But he added: “Any business,
over time, develops a certain amount of organic traffic. We have been working on diversifying sources of traffic to build more direct.” Glenn Fogel, chief executive
and president of Booking Holdings, described the Google issue as a “small headwind”. “It’s a smaller channel for us.
We do not see anything we want to call out at all. We believe the best way to make sure we have a strong future is to get people to come to us direct.”
‘If your business is not unique, you’re in a bad situation’
Travel firms reliant on Google will continue to suffer the longer it takes the search engine to figure out what comes next after 20 years of domination. Venture capitalist and Virgin
Galactic backer Chamath Palihapitiya told the Phocuswright conference that Google had been “fabulous” for investors. As a monopoly, it has pricing
Chamath Palihapitiya
power, meaningful networking effects, control over consumers and reliable and predictable revenues, he said. But he added as Google nears the
end of its first 20 years, the equity and public markets are looking for
it to “figure out what its next act is”. Palihapitiya said this could be
seen in how Google is being run. “The first thing they do is separate the core search business (effectively Google) from everything else. “The second thing to buy
themselves more time, is they turn up the heat on the core search business to make more money.” Palihapitiya added this means
that every firm that feeds off Google will see their profitability erode, while Google’s remains stable. “If you have not figured out how
to be unique, you are in a very bad situation. I see this playing out with TripAdvisor and Expedia.”
‘Google stifles innovation and market is suffering’
Google’s increasing dominance is stifling innovation, distorting the market and is bad for consumers, according to Europe’s biggest OTA. Guillaume Teissonnière, eDreams
Odigeo’s general counsel, said regulation was likely, particularly in Europe and the US, but in the meantime travel firms were suffering online. “We all know we have an elephant
in the room, it just happens to be sitting in the middle of the business – the search engine results pages. “This elephant is still growing and
our room is shrinking due to mobile shift, and may even disappear with voice-based search. “You have the ads first and then
you have the Google Travel unit. Generic results are not visible at first sight. They are below the fold. “It means today our consumers
on the internet are overwhelmed by advertising. This is changing the market structure. This is changing consumer behaviour.”
94 28 NOVEMBER 2019 Our consumers
are overwhelmed by [online] advertising. This is changing the market structure
Teissonnière said 55% of searches
end in no click, which means a high percentage are either remaining on Google or have not found what they want. And he said this is an increasing
trend as Google “acts like a vortex, sucking up all the online traffic”. “The problem is this creates
barriers to entry,” Teissonnière added. “How can a young entrepreneur make their business visible on the web? “When innovation is blocked, the
markets suffer, then the consumers ultimately suffer. The economics are very clear on that.” Teissonnière said this leads to a worse consumer experience, less
Guillaume Teissonnière, eDreams Odigeo
privacy and fewer relevant results. He said when firms do look to
innovate, the Google bias means they are forced into doing what the dominant platform benefits from. He added that investors back firms that are trying to solve problems Google has in the hope that it will result in those firms being bought by the search giant.
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