Wasting Time or Improving the User Experience? September 18, 2011
Posted by Jussi Huotari in : business,startup,web2 , add a comment
I’ve become a fan of cohort analysis! Cohorts provide a great way to focus on product development and the effect our RnD is having on customers. Cohort analysis tells us if we’re making the product better or just adding clutter and obsolete features.
Often it would be the best to “simply” focus on the existing features and make them even better. And as often, in my experience, we tend to consider the existing features done and want to make new exciting stuff that the customers are bound to adore and enjoy.
Eric Ries puts this well in the context of web startups on Techcrunch:
Most product teams don’t know if they are making their product better or worse; that’s why customers feel a twinge of fear every time they have to update or upgrade. Despite this, those same companies may be having extremely fast growth because even though the product is getting worse, other things are going right: network effects are kicking in, the company is being lauded in the press, or they are surfing on a general wave of growth in their industry.
So instead measuring just the averages, we want to utilize cohort analysis. A “cohort” may be the set of people who signed up during a specific month. For example: Do the people who signed up this month convert to buyers at a higher rate than those who signed up last month? If the conversion rate remains the same, we just wasted a month of RnD effort!
How is this different from measuring the overall conversion rate?
The difference is that using cohorts, you will know which feature or addition got your audience’s attention. This is like utilizing A/B testing in product development. And you will be able to track customer life-cycle events. Ash Maurya writes about this in his post 3 Rules to Actionable Metrics in a Lean Startup. By checking the cohort analysis table you can see if the customer retention is going the right direction. Here’s an example table by Ash:
I can’t wait to find out our numbers. Lot’s of SQL:ing to do…
Right Timing for Email Marketing February 14, 2011
Posted by Jussi Huotari in : business , 1 comment so farYou’d better send your marketing emails weekly on Saturday mornings. Then it will get the most clicks and least unsubscribes. That is what the statistics tell us.
MailChimp, the email-marketing service, scanned through 10 billion emails as part of their Email Genome Project. Their findings were surprising. Dan Zarrella of HubSpot put together an interesting webinar from the data (see his slides embedded below). In my opinion the main points – or as Dan would probably say: The super-duper-DUPER-important key takeaways are:
- Click-through rates spike on weekend. Marketing emails will get more share of mind when people have less work to attend to. Or is it just because very few companies send their messages on weekends, and those who do will get noticed?
- The unsubscribe rates are highest on Mon and Tue. Don’t send your messages in the beginning of the week! It is the busiest time of week for so many people.
- The actual time of day is not that important. But sending email early morning (around 7am) is slightly better than other times.
- If you want people to click a link on your email, you’d better have a LOTS of links. More links equals higher overall click through rate. Dan’s rationale is that the more links there are, the more ways you have to convince the reader. All of the links may of course point to the same url.
- High frequency is not a bad thing. The unsubscribe rate is at highest if you send email only once or twice a month. Sending daily is no worse than sending weekly (in terms of unsubscribe rate). Thus high frequency outweighs any decline in click rates.
A Groupon Deal Analysis January 18, 2011
Posted by Jussi Huotari in : business,startup,travel , 1 comment so far
Stephen Joyce wrote a great post on how Groupon advertising works. He offers insight into Groupon’s impact on sales and profitability from a local small business’s perspective. The bottom line is: you’re gonna lose!
Groupon is the 2-year-old group buying service that has received a great amount of attention (and a billion $ in venture capital) because of its huge growth. Groupon partners with local businesses, agrees on a heavy discount on the local business’s service, and sends a daily coupon by email to the local members.
It is geographically targeted risk-free advertising: the local business pays only if a certain amount of the discount coupons are bought, i.e. there are interested customers. There’s no upfront cost.
The customer pays Groupon for the coupon and Groupon splits the revenue with the local business. Let’s say there’s a 50% discount: a €100 product would be sold for €50 of which the local business gets half, i.e. €25. Now, a 75% discount sounds like a no-go even with healthy profit margins, don’t you think?
Groupon has inspired hundreds of clones. In Finland the most prominent is CityDeal that is currently running an overwhelming advertising campaign on Adsense and other ad networks. Today, for example, CityDeal.fi is offering a Spa treatment in Helsinki at a 53% discount. Groupon bought CityDeal last May and will rebrand it and maybe then we’ll have Groupon.fi…
Another interesting clone in these parts of the world is the Estonian Cherry.ee. They made a deal with Estonian Air to sell travel vouchers at a 40% discount last December. Their coupons were sold at such a pace that Estonian Air had to stop the deal! The travel voucher’s face value was 1000EEK and they sold 6500 of them at 600EEK. If Estonian Air gets 50% of the proceeds, that adds up to 50% x 600EEK x 6500 = 1.950.000EEK, i.e. 4.550.000EEK less revenue than at the retail price. Four and a half a million EEK is about €290.000… Quite a marketing stunt for a small airline.
99,9% of Display Ads Are Not Clicked January 1, 2011
Posted by Jussi Huotari in : business,web2 , 1 comment so far
Are the websites relying on display ads doomed to fail? Only 0,1% of banners get clicks. Most people downright ignore banners altogether. Compare this with search-related ads’ 35x higher click rate and it becomes obvious why so many online media are resorting to gigantic panorama banners and other desperate measures in order to increase their click rates.
BUT: Measuring the click rate is wrong!
comScore’s Gian Fulgoni wrote an interesting post on display ad’s efficiency. He refers to comScore’s research that followed the purchase process all the way to the actual offline in-store buying. The most interesting points are:
- There was 16% lift in sales among people who were exposed to display ads only. Even if the click rate was only 0,1%. Display ads support search ads very well.
- There are only a limited number of people searching for a product. Display ads reach much wider audience. Thus the total dollar sales gained from display ads may be much larger than from search ads. According to comScore: the sales volume lift index for search ads is 100 and for display ads 198. Interesting and totally unexpected.
Another comScore research done in Europe reveals that Internet users exposed to a banner campaign are 94% more likely to conduct a trademark search on the advertiser’s brand.
comScore’s numbers sound reliable. Display ads seem to be much more efficient than I thought. Combine this with personalization and targeting (as in TripSay) and you’ll get a money-making machine like TripAdvisor. 
High Margin = Poor End User Experience November 13, 2010
Posted by Jussi Huotari in : business,travel , 1 comment so far
Tripadvisor really knows how to monetize travel. And according to a post on Techcrunch: “It’s more or less the worst experience in the world for an end user.”
The worst end user experience somehow generates spectacular growth: Tripadvisor’s revenue for Q3/2010 grew by 40% from 2009 (.pdf). It means their revenue for 2010 will be around $495 million with margins “well north of 50%”.
$250 million yearly profit!? And what does it mean to the 40 million unique monthly visitors? According to TC:
You’re greeted at the top by a banner ad. Below that, you get 10 sponsored links. To the right of that, affiliate links. Below that, hundreds more affiliate links. And more banner ads. There is not a single piece of actual content on this page. It’s one giant ad. And there are 76 pages of this.
Right. 
Here’s their page that is the 1st hit on Google: Paris Vacation. In all fairness: it’s not Tripadvisor’s main page for Paris. The main page is better, but I still prefer Tripsay’s version of showing information about Paris, France.
Social Media in Russia November 1, 2010
Posted by Jussi Huotari in : business,travel , add a commentRussia is big in social media. According to Natalya Koroleva from Редкая марка (a marketing agency in Moscow):
Russia ranks first in the world in social networks involvement
Huh? 1st? Don’t know if that can be true. But after Natalya’s presentation I’m convinced that the russian Internet or Runet is worth a closer look. It’s a parallel universe with its own Facebook, LinkedIn and Youtube clones (Vkontakte.ru, Moikrug.ru and Rutube.ru, respectively). The localized versions are typically much more attractive for the 50M russian Internet users than their western counterparts. приятно познокомиться!
In general, the rules for marketing and PR sounded the same than what we’ve learned in the States and Canada: Be personal and interesting, and that achieving results require long term planning. Nothing new.
Natalya showed us some interesting travel PR cases. My favorites were the Insipired by Iceland campaign because the video soundtrack is by Emiliana Torrini, and the Keep Exploring campaign by Canadian Tourism Commission. The Keep Exploring campaign launched interactive “Twitter Walls” displaying tweets about Canada travel. Looks interesting.
Google Follows Microsoft’s Lead? May 27, 2010
Posted by Jussi Huotari in : business,travel , add a commentGoogle has been reported to be in talks to pay $1 billion to acquire ITA Software – a software company specialized in travel industry. ITA’s customers include Kayak, Tripadvisor, and a number of major airlines. The acquisition would enable Google to become the metasearch for travel information such as flights and accommodation.
Considering Google’s vast audience, this would be bad news for the existing metasearch engines. How much room does it leave for sites like Kayak or Skyscanner or any of the other numerous metasearches? Google already has a greap set of tools for travelers: a map, calendar, docs, etc. And it began showing hotel information (with prices) on the map in March. Searching for flights would be kind of a logical next step.
Microsoft already provides hotels and flights search as a part of its Bing Travel. They got a kick start about two years ago (April 2008), when they acquired Farecast. Farecast had an interesting value prop: they tell you when is the best time to buy flights for your selected route.
Now it looks like Google is following Microsoft’s path and buying it’s way to travel search space.
How would this shake the travel industry? ITA has developed technology for MS’s Bing as well. Yahoo! Travel (ex-Farechase) is playing on the same field. Kayak is supposedly trying to move from a ‘mere’ metasearch to a booking site.
Hijacking a Brand Name February 18, 2010
Posted by Jussi Huotari in : business,startup,web2 , add a comment
Not long ago all you had to do to protect your brand online was to acquire the domain name. Just getting the .com domain was good. If you wanted to be on the safe side, you acquired also .net and .org etc.
A bit longer ago some people paid millions of dollars to purchase the domain name they wanted. Incomprehensible. But supposedly Nokia had to stack up quite a bit of dollars to get Ovi.com.
But that’s history, what’s up now?
Brand names in social media.
Acquiring the relevant domain names isn’t enough any more. You may want to secure the relevant social media channels, groups and fan pages as well. Here’s an interesting article by Michael Werch about how he hijacked Heinz’s brand on Twitter.
And so, on Dec. 1, 2009, I took it upon myself to create and brand a Twitter page under the username @HJ_Heinz. I posted Heinz ketchup bottles in the profile background, a link to the company’s corporate website, and a brief bio: “News, recipe ideas & fun facts for all things Heinz.”
The comments are also worth reading. I found it especially thought-provoking that the commenters consider hiring a person for tweeting a “nominal investment”. Or that you’re a dinosaur if you don’t see how a Twitter account with a few hundreds of followers will help Heinz in engaging their customers in a way that will show on the bottom line.
I hope this doesn’t lead into situation that we’ve seen with domain names. For example: some “entrepreneurial” characters in China had acquired our domain with a .cn suffix and wanted to discuss selling it with a good price. Will the next mail be about selling me a Twitter or Google Buzz account for our brand?
Battle of the Online Travel Giants April 1, 2009
Posted by Jussi Huotari in : business,travel,web2 , add a commentI thought these things happen only in books. What we have here is a battle between two very interesting travel businesses! I’ve read many business strategy books about how companies innovate to beat their competition and update their strategy according to market changes and apply game theory to best utilize their competencies and so on. But how does it look like in reality?
The Players:
- TripAdvisor, a hotel review site with the most User Generated Content. TA is owned by Expedia Inc., an OTA that has the biggest market share in the States.
- TravelPost, a hotel review site that has been idle for a couple of years. Kayak.com got their hands on TP when they accuired Sidestep in early 2008. Kayak.com is a relatively new flight meta search engine that has gained a lot of traffic and has become one of the most popular travel websites.
Ric Garrido writes about the amounts of UGC that TA and TP have, see his blog post.
Playfield: the online travel market. Travel is huge online market with internet sales in Europe and USA adding up to $160bn. The online travel is growing quickly in both USA and Europe. Expect a double digit growth rate for year 2009 in Europe [Marcussen 2009]! Thus we have a lucrative market but the margins are falling. Commissions from airlines are very small and the common “truth” is that hotel bookings are the only way to make money in online travel…
Round 1: TripAdvisor launched a flight meta search on Feb 27th. In the past TA has focused on hotel bookings but now they are going after Kayak’s domain. TripAdvisor announced that their new service “Brings Needed Clarity to Airline Pricing and Provides Most Flight Options and Best Deals Available Online“. They go further:
(TA’s) Dynamic Fees Estimator, the first and only online product to help travelers understand the true cost of a flight in a single display.
TripAdvisor now provides more flight choices than any other online flight search engine for the world’s top airlines.
Round 2: On March 11, TripAdvisor’s parent company Expedia announces that they’ll “waive booking fees on all flights”. Expedia is attacking Kayak’s position as the best place to look for flights. Is this linked with TripAdvisor’s announcement? Kevin May offers some insight, see here…
Round 3: Kayak strikes back. On March 24 they announce a launch of “World’s Largest Hotel Information Site“, i.e. TravelPost.com. TravelPost supposedly aggregates reviews and ratings from a huge number of sources and provides all these without pop-ups or clutter. And further:
For the first time, consumers can visit one website for all the information needed to make an informed decision on their hotel booking.
“Consumers and hoteliers are woefully underserved by websites like TripAdvisor.com, who appear to care more about their bottom lines than providing relevant content and a seamless experience,” said Steve Hafner, CEO and co-founder, Kayak.com.
What’s up next? Can’t wait to see Round 4!
Sam Shank (TravelPost founder and ex-CEO) posted an interesting analysis on the strengths and vulnerabilities of TA and Kayak.
Travel Trend: City Breaks Down, Southern Hemisphere Up March 11, 2009
Posted by Jussi Huotari in : business,travel , add a comment
Opodo(*) made a study of their bookings of January 2009. Comparing with the same period last year, it’s apparent that short city breaks in the eurozone are not this year’s things. The trend is that people are traveling to the southern hemisphere and that people are taking one longer holiday instead of a few short breaks.
Sounds like people want to make the most use of their tight budget by visiting destinations that provide good exchange rates for Euro and English pound. While the European hotspots, such as Paris and Florence, experience a fall in interest, long haul destinations have seen higher bookings.
The top-3 destinations with the biggest growth (source Opodo):
- Melbourne, Australia (up 400%)
- Singapore (up 219%)
- Delhi, India (up 165%)
(*) Opodo is an European online travel agency founded in 2001. The company is owned by a consortium of European airlines and Amadeus. Opodo operates sites in e.g. Germany, UK, France, Spain, etc. They plan to continue double digit growth in 2009.