A little bit more meat on the bones of Kayak’s news yesterday that it will be launching a significant new proposition in 2010 with booking functionality for users of its iPhone application.
Reaction yesterday concentrated on a number of key themes, most of which chief marketing officer Robert Birge was happy to answer on a call today.
One of the significant points raised yesterday is now Kayak’s strategic difference from other metasearch players – or relative closeness to an online travel agency – given that it will be taking the credit cards details of customers and buying the product on their behalf.
Birge is adamant that Kayak is still a metasearch engine (“media company”, as he calls it) first and foremost and the addition of what seems to some is a fundamentally and strategically different proposition is just an obvious way to tackle the “friction” users experience when searching and then booking on a mobile device.
“We are providing them [users] a tool for them to have booking as a service on their mobiles,” he says.
Given chief executive Steve Hafner’s comments over the years about online travel agencies, some might argue that the messaging with regards to this change, at least from an industry perspective, is probably quite important and ironic.
Despite the denial of a move toward OTAland – the semantics of the development will no doubt be debated for months ahead – the realisation that handling user credit card information creates lots of issues.
PCI compliance, as mentioned yesterday, is a key area that needs to be tackled long before the new functionality (it’s officially called Wallet) appears on the app itself – scheduled for a Q1 launch in 2010.
Birge, however, admits that the finer details of how this will be addressed are still be finalised, adding briefly: “We of course understand that it’s something that we need to handle – and also handle it well.”
In terms of the rollout of the service and business logistics of launch, Birge says the app will be available across all markets “where we have a meaningful business”, primarily meaning North America and some European markets such as the UK.
However, Kayak is hoping the new app will reinvigorate its somewhat stuttering presence in Europe over the years, where it lags behind a number of significant players such as EasyVoyage, Travelsupermarket, Skyscanner amongst others.
Birge says the need to do some innovative and interesting things in mobile was demonstrated by the realisation that  iPhone was Kayak’s third largest browser behind Internet Explorer and Firefox, and accounts for roughly 5% of all search volumes.
This is expected to increase as more users adopt 3G handsets.
[Interestingly, Kayak's research found there is no difference at all in how people search for flights or hotels in terms of time scale, countering the argument that mobile search is more likely on those looking for last-minute fares or rooms.]
Kayak currently has online display and text advertising running across its site, accounting for a significant amount of its overall revenues, anything up to a 60-40 split in favour of revenues from referrals versus advertising.
Although users of the mobile apps (600,000 downloads of the iPhone version, plus 50,000 Blackerry and some Android) are mostly new customers (“we have not cannibalised the website”), Kayak will eventually put advertising on the mobile apps to counteract any tail-off from users no longer clicking on the web ads.
Finally, Birge recognises that frequent flyer functionality is an important part of any air booking facility, and stresses its importance emphatically if without much detail.
“That’s obviously critical functionality, so that will be handled out of the gate.”
Meanwhile, Kayak’s controversial TV ads may well have an addition to their ranks to support the Wallet tool on the new app. TBC, Birge says.
Related posts:
- Kayak sort of turns into an online travel agency to capture mobile market
- Kayak liftoff: First traffic report from new TV ad campaign
- Kayak sets sights on TripIt-Dopplr clan with its own trip planner
- Kayak gets trendy – nothing to do with fashion
- Sign of the Times for Kayak as it braces itself for branding WIN or marketing FAIL
Good post, Kevin, really enjoyed seeing the stats and am looking forward to seeing how this is rolled out next year.
One thing though – I wonder if the 5% of search volume is for Safari overall or Safari on iPhones specifically. Seems incredible that a phone browser would be responsible for a higher % of searches than the same browser’s web version.
Excellent follow-up, Kevin. Thanks.
Interesting comments from Mr. Birge, though I wonder if the angle on simply tackling “friction” users experience and “providing them a tool as a service” is a bit of exec-speak.
Does the way they’re handling credit cards now enable mobile penetration strategy while giving them time to work out transactional issues with suppliers – possibly via direct-connect?
Could they then bring cashflow forward via transactions while also avoiding any dependency on GDS incentives?
Fascinating that most of the 650k app downloaders are new customers, too. I think it’s been demonstrated that a huge majority of users stop downloading after they get 5 apps. We might then infer that those 650k people are very unlikely to download an app from Expedia, Orbitz, etc.
It’s also great off-deck penetration that might smooth the way to some on-deck deals with carriers.
Fascinating.
We really don’t have a clue what we’re doing yet. But these comments sure help.
To learn more about how Kayak develops its services, feel free to read the blog post below.
http://www.kayak.com/news/untold-story-of-the-new-kayak-iphone-app.bd.html