David Soskin CEO Cheapflights.co.uk 1st May 2007 Understanding the long tail - why small customers are vital to web success David Soskin CEO Cheapflights.co.uk 1st May 2007

Why vertical and “Web 2.0” search extend the long tail Agenda: What is the long tail? Why vertical and “Web 2.0” search extend the long tail Outlook for “long tail” – orientated companies Internet World, Earls Court, London, 1st May 2007

Acknowledgement to Chris Anderson

The new growth market: Products you can’t find anywhere but online Typical Blockbuster: 3,000 DVDs Borders Bookstore: 100,000 books Source: Chris Anderson 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 Internet World, Earls Court, London, 1st May 2007

Aggregators Communities/ user generated content Advertising services Transactional Digital goods Information 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 Internet World, Earls Court, London, 1st May 2007

Old economy: crap matters New economy: choice matters Crap vs. choice Old economy: crap matters New economy: choice matters 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 64 100,000 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 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 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 Internet World, Earls Court, London, 1st May 2007

Search can get a lot better… Horizontal Search Vertical Search Internet World, Earls Court, London, 1st May 2007

Cheapflights Before … Internet World, Earls Court, London, 1st May 2007

Not much use for Borat … 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? Internet World, Earls Court, London, 1st May 2007

End Result: Borat is a happy user Internet World, Earls Court, London, 1st May 2007

Long tail of advertisers Traditional Media Cheapflights Internet World, Earls Court, London, 1st May 2007

Long tail of advertisers Traditional Media Cheapflights Internet World, Earls Court, London, 1st May 2007

The Cheapflights long tail … Founded 1967 Employees100 Specialize in Greece & Cyprus Internet World, Earls Court, London, 1st May 2007

The Cheapflights long tail … Founded 2004 Employees18 Specialize in Florida; flights, holidays & cruise 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 Internet World, Earls Court, London, 1st May 2007

The Cheapflights long tail Internet World, Earls Court, London, 1st May 2007

Dohop: A global flight planner 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/ monopolistic airlines Some charters, specialist Scheduled Many charters, specialists Low Cost Online travel agencies Destinations Mainly short haul “Everywhere” Internet World, Earls Court, London, 1st May 2007

Long tail and Web 2.0 Search User Reviews Social Networking Internet World, Earls Court, London, 1st May 2007

Then Now User reviews Michelin Rough Guide Hardens Frommers Everyone Internet World, Earls Court, London, 1st May 2007

Frommers vs. WAYN HB slide Internet World, Earls Court, London, 1st May 2007

Trusted Places: example a restaurant in London Internet World, Earls Court, London, 1st May 2007

The long tail: Social networking Then club local pub street school charity hobby sport Now World Your - Internet World, Earls Court, London, 1st May 2007

Source: Ofcom research, April 2006 Time spent online More and more people are using the internet People now spend an extra 1 hour 16 minutes each month online compared with 2001 16-24 year olds spend even more time online: 11 hours 20 minutes per month on the internet Source: Ofcom research, April 2006 Hours Year 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 Internet World, Earls Court, London, 1st May 2007

Long tail of the internet 2002 2007 Web 2.0 Reviews Social networking Blogging Vertical search Internet World, Earls Court, London, 1st May 2007

“Long tail” is suited to the internet 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 Internet World, Earls Court, London, 1st May 2007

Thank you Questions, suggestions, feedback or complaints welcome… david.soskin@cheapflights.com