Case Study-The Power of Streaming Videos as a Motivator to Turn Browsers Into Buyers

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2:00Case Study: The power of streaming videos as a motivator to turn browsersinto buyers

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John Bobel, President and COO,

Travelago.com

What we are going to do is kind of go through the whole, little bit on streaming video, alittle bit on how Travelago enables streaming video to other Web sites and other providersof travel services but I want to use an Atlantic example first. Home town brand CocaCola. It is one of the top ten brands in the entire world. You can go to the Soviet Union,you can go to China, you can go literally anywhere in the known world and you will seethis brand. Anybody here who doesn’t know what this brand is? But what does the brandmean? Does the Coca Cola brand mean, oh, 9.9 ounces of water from somewhere andcaramel color and a little bit of flavoring that is locked in the safe somewhere? No, theCoca Cola brand is what you associate with an experience. It is a coke you had with your kid at the ball game, it is the first coke you had with somebody on a date, it is anexperience and what we want to do in the travel industry is exactly what Coca Cola hasdone with its brand. It has associated its brand with an experience.Travel is all about experiences and what we try to do as marketers is to create a veryfavorable experience, especially for that leisure traveler. What we at Travelago do is weenable Websites, along with our own Website to create an experience, an enhancedexperience, for the travel consumer through streaming video. What we want to do andwhat we have done and what industry studies show is that the power of broadbandstreaming, and the power of video streaming itself, is a travel purchase motivator.Let’s talk a little bit about behavior. Studies show that people spend more timeresearching travel plans, especially vacation, than they do in making any purchase,including a home or a car. They will think about it. Think about it not from your consumer standpoint but think about it from your own standpoint. It is typically January,February, it’s time to plan the family vacation and your spouse says, “you’re the travel professional, you plan the vacation, you make sure that we have a good time, you makesure that the kids have activities, you make sure that I can spend my time on the beach, if there is a little bit of good shopping or good restaurants and the kids have a sitter.” Idon’t know about you, but I now have had the entire weight of the known universe put onmy shoulders and you know what happens if you guess correctly using a travel agent or the Internet or any consulting service, you hit a home run on that vacation and you arehome free; you can glide for at least another six months.You have a problem – I think one of my favorite commercials is the one that Expediadoes where the couple, perhaps on their honeymoon, they look like newlyweds, at leastthey look like newlyweds to me, but they are getting to their destination, they go passedthe beachfront hotel and they go up the causeway and all of a sudden they think, ‘We aregoing to stay at this wonderful beachfront hotel” and all of a sudden they are six blocksaway; they might as well be six miles away from the ocean and she looks at him and helooks at her at it’s “This is not going to be fun.” What we want to do is give the travelconsumer the best tool possible to plan their leisure travel and their business travel.

As we saw yesterday in the keynote, more consumers now use the Internet for travel planning than any other research tool and we know that online travel sales are the fastestgrowing sector on the Internet and travel related revenues are forecast to increase 50%annually for the foreseeable future. What a deal, a tremendous market for all of us tocapitalize on. Now AOL, the largest single presence on the Internet, it is the most lucrative onlinecommercial industry, an estimated spending potential of $410 billion annually but lessthan 10% of it is booked on the Internet, a tremendous opportunity for those of us whoare into Internet e-commerce for travel. The challenge, as again we have seen today inother sessions, a lot of people use the Internet for research but there are significant barriers for them actually booking. We seem to have gotten past the hump of having people booking airline tickets depending on whether they go to Expedia, an airlineWebsite, Priceline, some of even the newer Websites that have just come up the Hotwiresite is up; through any one of those economic models, booking air on the Internet is anaccepted practice. Booking packages, booking rental cars, booking hotels, that is goingto be a challenge but we are going to get over that.Travel video is a motivating factor in a travel purchase decision. The TIA in their studies,the travel consumers are 70% more likely to purchase a travel service if they have seen arelevant video; that is a hotel video, that is a destination video, because what does thatvideo do? It is Coca Cola. What we are doing is we are creating the experience, we areletting them preview the experience of being on that resort, we are showing them thatYes, you have made the right decision because we have shown you that this resort is onthe beach, it is not six blocks away. We can show you, this is what the room looks like,this is what the childcare facility looks like, these are the fifteen pools that you haveavailable, this is the golf course, the tennis court, this is a little bit about the retail. It issomething that streaming video can do, it is the power of television, it is the power of video. It tells a story like no other medium can and that is what we want to do; that ishow we motivate lookers into bookers. We create an experience that motivates them, thatassures them that they have made the right decision and by using the power of theInternet to price it effectively, they can’t say No.Videos work. Videos have worked for, well, ever since engineers were able to create thefirst betamax tape. Videos have been created by the cruise lines, by the resort companies, by hotels and when those service providers are able to get a video into the hands of the potential buyer it is a, can’t say it is a sure thing because as we all know there is nothingthat is a sure thing, but getting a video into somebody’s hands and having them watch it isa strong motivator to purchase; it is a strong motivator to book. But what we have foundis that traditional video distribution channels don’t work. It is very hard to get somebodyto fill out a form, it goes to the hotelier or an intermediary distributor, the video comes, itis ten days later and you know it gets put in with, you know, the dog food samples thatcame in the mail, you have lost them. The future is now with streaming video. Thestreaming video is there, it is available, the technologies continue to get better and better so that when that customer sees the property, sees the cruise, sees the package, they click,

they wait, hopefully not too long, but they see the video right there; they get theexperience, they get the comfort of knowing what’s there. And again, that is a hugemotivator. Now we have also heard at this conference that the streaming video is not quite there yetand I can’t disagree with that. One of the things that we do is that we take a particular clip for a destination and we process it eleven different ways, three different formats, realvideo, windows media and quick-time and four different availabilities of bandwidth low,medium and high and for quick-time there is just three that we are using and the reasonthat we do that is to maximize the users experience. What is coming in our favor is thatmore and more consumers have high-speed Internet access at home and the office. Oneof the things that we have found, for two years we were the streaming provider toTravelocity. Deep down within Travelocity there was a video destination guide and oneof the things that our server logs found was that traffic started to increase at about 11.30in the morning eastern standard time and it would peak about noon and it would stay peaked through about 3.30 in the afternoon eastern standard and it would tail off – lunchtime. Even though you may be at your desk for eight hours a day, you have got a lunch break, people with high-speed Internet access, people in the office, they’re not going outto lunch, they’re researching their vacation, they’re researching their business trip. Theywant to be able to see where they are going before they go, especially if they are notfamiliar with the destination and given the choice between just reading about it andexperience it in streaming video, they will experiment and use the streaming video. Itcreates an experience that nothing else can. Now, just some facts and figures about broadband Internet access. Right now inAmerican homes you have got 3 million cable modems installed, 1.6million DSLinstalled and there are 100 000 satellite Internet points installed, so about 4.6, 4.7 millionhome users that can get high quality broadband access. But let’s not forget about theundiscovered country, no I’m not doing Priceline and Bill Shattner, but undiscovered andto some degree undocumented Internet broadband users are nearly 30 million workerswith that in office Internet access. Not a force to be forgotten. And then there is anundocumented number of educators and students with high speed Internet access that isnot at all constricted. That is another huge market for all of us and it those collegestudents that become the young professionals that have significant discretionary incomeand those are the people who buy travel. Now the leap of fate. The combined cable modem and DSL installation will grow to 7million by 2002 and office broadband use will increase. Now those are very conservativefigures that doesn’t take into account that in the United States and worldwide there isstarting to be a deployment and truly two-way satellite broadband Internet access and weare currently testing, in our offices, a system that will be rolled out by a company calledJellot and that broadband Internet access is truly wireless. It is like another DBS dish onyour roof but it is broadband Internet access to the desktop. Again, it is enabling the power of video to sell your destination product and again another market we cannot denyand we have done research to demonstrate this, that college students with broadbandaccess, after they graduate are some of the most demanding Internet users around.

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