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The long tail

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					Understanding the long tail -
why small customers are vital
to web success

David Soskin
CEO
Cheapflights.co.uk
1st May 2007
Agenda:



  What                     is the long tail?

  Why                   vertical and “Web 2.0” search extend the long tail

  Outlook                             for “long tail” – orientated companies




                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
Acknowledgement to
  Chris Anderson
 The new growth market: Products you
 can’t find anywhere but online

                                                     Netflix                                                                    Amazon
                                  Total inventory: 55,000 DVD titiles                                               Total inventory: 3.7 million book titles



60,000                                                                                 4,000,000



                                                                                       3,500,000
 50,000

                                                                                       3,000,000

 40,000
                                                                                       2,500,000



 30,000                                                                                    2,000,000

                                                        Typical
                                                                                           1,500,000
                                                                                                                                          Typical
  20,000                                                Blockbuster:
                                                                                                                                          Borders Bookstore:
                                                        3,000 DVDs                         1,000,000
                                                                                                                                          100,000 books
  10,000
                                                                                                500,000


          0                                                                                            0


                                             sales                                                                          sales




                                                                                                                                                               Source: Chris Anderson

                                                                  www.cheapflights.co.uk    l    www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 Britannica vs. Wikipedia




  Established:                                                    1768                                      January 15, 2001

 Number of articles*                                              64,900                                      7,000,000




                                                                                                               * Source: www.amazon.com & en.wikipedia.org

                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 Aggregators




                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 The long tail: The root calculus



     “the lower the costs of selling, the more you can sell. As
      such, aggregators are a manifestation of the second force,
      democratizing distribution. They all lower the barrier to
      market entry, allowing more and more things to cross that
      bar and get out there to find their audience.”

                                                                                                            Chris Anderson




                                                                                                                    Source: The Long Tail

                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 Crap vs. choice




                                 Old economy: crap matters

                          New economy: choice matters


                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 Book 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

                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 Google: Ultimate long tail company?



 “By going to the bottom with self-service, we were able to
  reach advertisers who fell below the threshold of traditional
  advertising. And by going all the way to the top, we were able
  to capture very large and historically underserved businesses
  as well as a whole new area that never had access to these
  kinds of online services.”

                                                                                                       Eric Schmidt, CEO Google




                                                                                                                       Source: The Long Tail

                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 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


                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 Search can get a lot better…




                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 Cheapflights

       Before …




                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 Not much use for Borat …




                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
UK Cheapflights users seeking deals to Kazakhstan


April 2006 – March 2007

             7,117 clicks
 What appeals to Borat?




                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 End Result: Borat is a happy user




                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 Long tail of advertisers

                         Traditional Media                                                             Cheapflights




                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 Long tail of advertisers

                         Traditional Media                                                             Cheapflights




                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 The Cheapflights long tail …




                                                 Founded 1967

                                                 Employees100

                                                 Specialize in Greece & Cyprus


                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 The Cheapflights long tail …




                                                 Founded 2004

                                                 Employees18

                                                 Specialize in Florida; flights,
                                                  holidays & cruise

                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 The Cheapflights long tail …




                                                   Founded 1966

                                                   Employees 39

                                                   Specialize in Bulgaria, Croatia,
                                                    Montenegro, Slovenia, Serbia
                                                    and Romania
                                                         www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 The Cheapflights long tail




                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 Dohop: A global flight planner




                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 Travel is a natural subject for the long
 tail – highly fragmented

                                                                   Then                                         Now
 Travellers                                             Mainly the very rich                       Everybody




 Travel Companies                                       State owned/                               Scheduled
                                                        monopolistic airlines                      Many charters, specialists
                                                        Some charters,                             Low Cost
                                                        specialist                                 Online travel agencies
 Destinations                                           Mainly short haul                          “Everywhere”




                                                            www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 Long tail and Web 2.0




                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 User reviews




                Michelin                                                                                  Everyone

                Rough Guide

                Hardens

                Frommers




                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 Frommers vs. WAYN

        HB slide




                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 Trusted Places: example a restaurant in
 London




                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 The long tail: Social networking

                                Then                                                               Now

   Your -
                               club                                                              World
                               local pub
                               street
                               school
                               charity
                               hobby
                               sport



                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
Time spent online

    More and more people are
                                                                                                                               9hrs 56
     using the internet                                                               10                                        mins

                                                                                                     8hrs 40
                                                                                                      mins

    People now spend an extra                                                       7.5
     1 hour 16 minutes each
     month online compared




                                                                                 Hours
     with 2001                                                                           5


    16-24 year olds spend                                                           2.5
     even more time online:
     11 hours 20 minutes per
     month on the internet                                                               0
                                                                                                    2001                       2005
                                                                                                                    Year

                                                                                                        Source: Ofcom research, April 2006

                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 How to create a thriving long tail
 business




      “ 1) Make everything available.

             2) Help me find it.”

                                                                                                            Chris Anderson


                                                                                                                   Source: The Long Tail

                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
 Long tail of the internet




                                                                                                       Web 2.0

                                                                                                            Reviews

                                                                                               Social networking

                                                                                                        Blogging

                                                                                                  Vertical search
                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
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


                                                        www.cheapflights.co.uk   l   www.cheapflights.com
Internet World, Earls Court, London,   1st   May 2007
               Thank you

Questions, suggestions, feedback or complaints welcome…




             david.soskin@cheapflights.com

				
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