David Soskin Internet World
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David SoskinCEOCheapflights.co.uk1st May 2007
Understanding the long tail - Understanding the long tail - why small customers are vital why small customers are vital
to web successto web success
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
Agenda:Agenda:
What is the long tail?
Why vertical and “Web 2.0” search extend the long tail
Outlook for “long tail” – orientated companies
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Acknowledgement to Acknowledgement to Chris AndersonChris Anderson
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
The new growth market: The new growth market: Products you can’t find anywhere but online
Typical
Blockbuster:
3,000 DVDs
Typical
Borders Bookstore:
100,000 books
Source: Chris Anderson
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
Britannica vs.Britannica vs. WikipediaWikipedia
Established: 1768 January 15, 2001
Number of articles* 7,000,00064,900
* Source: www.amazon.com & en.wikipedia.org
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
AggregatorsAggregators
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
The long tail:The long tail: The root calculus
““the lower the costs of selling, the more you can sell. As the lower the costs of selling, the more you can sell. As such, aggregators are a manifestation of the second force, such, aggregators are a manifestation of the second force, democratizing distribution. They all lower the barrier to democratizing distribution. They all lower the barrier to market entry, allowing more and more things to cross that market entry, allowing more and more things to cross that bar and get out there to find their audience.”bar and get out there to find their audience.”
Chris Anderson
Source: The Long Tail
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
Crap vs. choiceCrap vs. choice
Old economy: crap matters
New economy: choice matters
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
Book Sales (USA), 2004Book Sales (USA), 2004
Sales Range Titles Units (Million)
1,000,000 or more 10 17
500,000 to 999,999 22 14
250,000 to 499,999 64 22
100,000 to 249,999 324 47
50,000 to 99,999 767 52
0 to 49,999 1,240,998 513
Total 1,242,185 665 Million+
Source: Book Industry Study Group
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
Google:Google: Ultimate long tail company?
““By going to the bottom with self-service, we were able to By going to the bottom with self-service, we were able to reach advertisers who fell below the threshold of traditional reach advertisers who fell below the threshold of traditional advertising. And by going all the way to the top, we were able advertising. And by going all the way to the top, we were able to capture very large and historically underserved businesses to capture very large and historically underserved businesses as well as a whole new area that never had access to these as well as a whole new area that never had access to these kinds of online services.”kinds of online services.”
Eric Schmidt, CEO Google
Source: The Long Tail
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
But how good is Google search?But how good is Google search?
“The ultimate search engine would basically understand everything in the world, and it would always give you the right thing. And we're a long, long ways from that.”
- Larry Page, Google Co-Founder
“Search as a problem is only about 5% solved”
- Udi Manber, CEO of Amazon’s A9.com search engine
“It's clear there's a lot of room for improvement, there's no inherent ceiling we're hitting up on.”
- Sergey Brin, Google Co-Founder
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
Search can get a lot better…
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
CheapflightsCheapflights
Before …
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
Not much use for Borat …Not much use for Borat …
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UK Cheapflights users seeking deals to UK Cheapflights users seeking deals to KazakhstanKazakhstan
April 2006 – March 2007April 2006 – March 2007
7,117 clicks7,117 clicks
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Internet World, Earls Court, London, 1st May 2007
What appeals to Borat?What appeals to Borat?
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Internet World, Earls Court, London, 1st May 2007
End Result: End Result: Borat is a happy user
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
Long tail of advertisersLong tail of advertisers
Traditional Media Cheapflights
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
Long tail of advertisersLong tail of advertisers
Traditional Media Cheapflights
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
The Cheapflights long tail …The Cheapflights long tail …
Founded 1967
Employees100
Specialize in Greece & Cyprus
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
The Cheapflights long tail …The Cheapflights long tail …
Founded 2004
Employees18
Specialize in Florida; flights,
holidays & cruise
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
The Cheapflights long tail …The Cheapflights long tail …
Founded 1966
Employees 39
Specialize in Bulgaria, Croatia, Montenegro, Slovenia, Serbia and Romania
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Internet World, Earls Court, London, 1st May 2007
The Cheapflights long tailThe Cheapflights long tail
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
Dohop: A global flight plannerDohop: A global flight planner
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
Travel is a natural subject for the long Travel is a natural subject for the long tail – highly fragmentedtail – highly fragmented
Then Now
Travellers Mainly the very rich Everybody
Travel Companies State owned/ monopolistic airlines
Some charters, specialist
Scheduled
Many charters, specialists
Low Cost
Online travel agencies
Destinations Mainly short haul “Everywhere”
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
Long tail and Web 2.0
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
User reviewsUser reviews
Michelin
Rough Guide
Hardens
Frommers
Everyone
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Internet World, Earls Court, London, 1st May 2007
Frommers vs. WAYNFrommers vs. WAYN
HB slide
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
Trusted Places: Trusted Places: example a restaurant in London
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Internet World, Earls Court, London, 1st May 2007
The long tail:The long tail: Social networking
Then
club
local pub street school charity hobby sport
Now
World
Your -
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
Time spent onlineTime spent online
More and more people are using the internet
People now spend an extra 1 hour 16 minutes each month online compared with 2001
16-24 year olds spend even more time online: 11 hours 20 minutes per month on the internet
Source: Ofcom research, April 2006
8hrs 40 mins
9hrs 56 mins
0
2.5
5
7.5
10
2001 2005
Hou
rs
Year
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
How to create a thriving long tail How to create a thriving long tail businessbusiness
“ “ 1) 1) Make everything available.Make everything available.
2) Help me find it.”2) Help me find it.”
Chris Anderson
Source: The Long Tail
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
Long tail of the internetLong tail of the internet
Web 2.0
Reviews
Social networking
Blogging
Vertical search
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www.cheapflights.co.uk www.cheapflights.com
Internet World, Earls Court, London, 1st May 2007
Conclusion:Conclusion:
“Long tail” is suited to the internet
Vertical search is an ideal “long tail” application
Web 2.0 has accelerated the “long tail”
Understanding and using the “long tail” represents a significant and growing business opportunity
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Thank youThank you
Questions,Questions, suggestions, feedback or complaints welcome…suggestions, feedback or complaints welcome…