Vertical Travel Search Engine Kayak CEO Steve Hafner (Part 7)

SM: What is your read on some of the other travel and ad network players out there? There are some vertical travel ad networks which have been reasonably successful so far.

SH: There are three things you need to do to have a viable vertical ad network. You need to get a set of publishers, you need to get an audience, and you need to match them with technology. It is my observation that travel ad networks have a network of publishers and they are distributing display ads. They do not have the technology yet. It is primarily an outsourced sales effort for display ads. I don’t think that approach works long term.

SM: Most of the vertical ad networks out there work like that right now.

SH: Which is not sustainable unless you have a technology that scales. The difference with our approach is we are building the platform and the technology to allow our advertisers to manage their own campaign and determine where their search results show up.

SM: So far what you have talked about is specific to flights and hotels. There is a lot of publisher inventory out there that is not transactional focused such as travel guides.

SH: Absolutely. It is a less targeted business and as a result the CPMs are much lower. I believe the most valuable consumers are the ones at the point of purchase. If we get that piece right it is much easier for us to go up the food chain into the consumers research cycle than it is for a publisher to come down into our space.

SM: What do you think of Mobissimo?

SH: Not much. I think Beatrice is a great person and a pretty good CEO but they are undercapitalized, their technology does not scale, and they have not gotten any traction over the past three years. I would say Mobissimo is an example of a travel search company which built a product with a small team, got it out there, and received a little bit of press coverage. They don’t have the capability to turn that into a mass market product.

SM: What else do you see out there in terms of travel related sites?

SH: There is still a lot of innovation going on. The social networking sites are interesting but they do not monetize well in the travel space. There is room for someone to tell consumers where the best rooms are in hotels. There is a lot to be done on reducing friction in the check-in and check-out process. There is plenty of room for better utilization of mash-ups.

SM: My main problem with the travel category is that it is still a fragmented experience. I have to hop from site to site. You don’t solve that problem.

SH: We don’t even solve cross-shopping on rates yet. What Kayak has been able to do is reduce the number of sites you have to visit when shopping for fares.

SM: Are you going to try to get content in context eventually?

SH: We will have to do that to become the number one travel site world-wide and fill consumers comprehensive needs. Those are our goals. It is a question of prioritization and time.

SM: The next big thing for Kayak is the vertical ad network and getting international business to ramp. Is that going to be mostly organic? I don’t think there is a lot to acquire outside of Mobissimo.

SH: They do not have an audience. Their audience is really limited to cheap international flights. There are very few companies that have an audience. We are going to have to build our solutions from scratch.

SM: I don’t think there is a vertical ad network available to acquire.

SH: The beauty of a vertical ad network is if you get the right launch partners and you have 8 – 10 of the largest advertisers to buy coming out of the gates you have a very vibrant ecosystem within a month of launching.

SM: I think the technology is the critical piece. You are already selling ads to them.

SH: We have been working on the technology for about 2 years now. The toughest part is the fraud control and I think we have that figured out. I will know a lot more in July.

SM: Is there anything else I should have asked you that I didn’t?

SH: No, this has been a fun interview. I really did enjoy the article you posted. I thought it was very insightful and spot on with what we are trying to do.

This segment is part 7 in the series : Vertical Travel Search Engine Kayak CEO Steve Hafner
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