Selling shovels
There’s one thing that unites travel search engine (TSE) companies and Google. I wish it was the turnover. It’s not, but at least it’s the business model, and that’s something.
[pause for effect]
Both companies are selling shovels.
Business through search engine advertising currently shows very attractive ROMI figures, it’s still pretty new and fresh and helps managers perform Management - “We must be on Google”. It’s an easy phrase to remember, and it sounds cool in meetings.
So, it’s the Klondyke gold rush all over again, and the gold-diggers are lining up.
Googles advertisers are gold-diggers. So is a TSE’s. Some prove very successful, some moderately so, and some absolutely not at all.
And yet we’re selling the shovels for the same price to all of them. Or in the case of Google - selling the shovels to whoever pays the most. Regardless of the details, we really don’t care how good each individual buyer is at digging gold. we should, however, care a great deal about how good the buyer collective is at digging gold, because we live in symbiosis.
And that’s the thing of the thing. Although we are depending on our buyers’ success, we still don’t move in and try to be extra nice to a particular client. Why? Becaue we’re shovel peddlers and this is what differentiates us from being consultant gold-diggers, or rent-a-gold-digger’s. This is what we must not sway from, if we want to be successful in the long run.
A gold-digger should be able to make rational assumptions about the market space, and regard our service as neutral and unbiased - any gold-digger’s money is worth as much as the next one’s, and everyone get’s the same kind of shovel and the same kind of warranty. Without this, we are invevitably starting to take sides, and we are no longer selling shovels, but helping to dig.
So how do we figure out if the shovel-peddler & gold-digger setup is going to be a sustainable setup ?
First, there must actually be enough gold around, for enough gold-diggers to live and tell their success stories. As long as the barrier of entry is low, and gold is abundant, gold-diggers with pocket calculators will do their math and figure out up to what point it makes sense to enter the shovel store. We will have more and more gold-diggers lining up to buy shovels.
Second, there must be enough shovels (if you haven’t figured it out yet, a shovel in this analogy is a click or a visit to a website - but, nota bene, not orders. A shovel is not gold, it’s what you dig with to find gold) and the shovels must be effective tools for gold-digging.
For a TSE, the analysis consists of trying to determine conversion rates and profit margins at airlines, online travel agencies, hotel chains, and other types of companies (gold-diggers). A blinding flash of the obvious is we need to have a solid idea of at what price our customers break-even when buying an incremental visit to their sites. We need to estimate the total market size and growth potential, and figure out the quality of our traffic. We can’t do much about the market, but we can focus on improving both quality and volume of traffic.
We need to be skilled gold-diggers but dedicated to staying in the store.
Tags: google, marketing, meta search, TSE