making products, making money
TRANSCRIPT
David Low, November 2015
Making Products, Making Money
• Founded 2003• 800 employees• 11 international offices• 350+ direct airline partnerships• >400 Online Travel Agencies• Flights into Travel: Hotels, Car
Hire, Research & Insight• 80% of revenue outside the UK
Our History
About Skyscanner§
The numbers
50m
Over 50 million unique monthly visitors
Over 35 million app downloads
Over 30 languages and currencies
Over 300 partners use our Affiliate and
Insights products
35m 30 300
Some headline figures
We want to ‘power the travel internet’.
Affiliate schemes have been around since the Internet• “You grow my business, I’ll give you a small share”• Brokers like TradeDoubler and Commission Junction dominate
the market – keeping it all honest• Over the year it’s been hard to use a blog without an array of
buttons littering the screen.• But also over the years these models have got larger and far more
sophisticated as we’ll see later.
Nothing changes (part 1)
The original problem
Subtitle here
Sales Marketing Product
Two sided markets
• Wikipedia defines this as:
“Two distinct user groups that provide each other with network benefits”
• This is the very definition of an affiliate model. Two sides working for some level of mutual benefit – with a platform mediating between them.
The pure defitinion of an affiliate model
App Stores
• Probably the best example of an affiliate / two sided network.
• Apple creates the conditions to build and sell apps; developers create them.
• In return for making a better use case to have iOS devices, Apple pays roughly 60% of sales fees back to the app publisher.
• $42 billion generated in around 7 years - $25 billion of which went to publishers.
iTunes App Store
Google Ads
• Everyone knows what AdWords and AdSense are• Effectively an affiliate model – advertisers and
publishers meeting in the middle, associated by Google who pay out a share.
• Up to 75% of revenue is given out to publishers, in return for enlarging Google’s audience and opening up more data
• $14 billion a year paid out to ‘network partners’
AdSense and AdWords
Affiliate payment models
• The two examples were chosen deliberately as they show the two most common types of affiliate payment.
• CPC (cost-per-click) is one method – you put something in your product, every click is tracked and pays you something back. Google Ads are clearly on this model, although the ‘click’ price is figured out by the two-sided market.
• CPA (cost-per-acquisition) is another – you put something in your product, clicks are tracked but only paid if an action is completed (usually a purchase). Apple is clearly this model.
• CPM (cost per ‘mille’ / thousand) is a model most used in display advertising, but not affiliates.
These two examples are illustrative
Sitting between two-sided markets
Publishers Skyscanner Providers
Skyscanner and Providers
Nothing changes (part 2)
• Going back to Geocities and my original blog 20 years ago, the problem was attracting traffic.
• That’s not such a big problem now, traffic can be acquired for money – but you have to ensure the value generated, exceeds the cost of acquisition.
• Clearly retaining that user for longer, with a ‘lifetime value’, has a greater chance of exceeding the cost.
Acquisition and retention
Doing your marketing for you
• By giving other brands and products access to your data or services, you open up far more users than you might get on your own.
• There’s a good chance you will inherit some of the loyalty shown by those users to their brands.
• In addition those brands might extend the use cases for your product or data, beyond something you had planned or expected.
• We say we want to “power the travel Internet” and this is exactly where it comes in.
• Some good examples of Skyscanner affiliating with other brands…
This is where affiliate marketing comes in
MSN: Additional
Users
FlyBe: Additional revenue
Subtitle here
Coverage: GoEuro
New Ideas: Hitlist
The APIs are lightweight and easy to integrate
with, and it’s our primary monetization
model right now.Gillian Morris, CEO Hitlist
New Tech: Alexa
Create a product suite
The Skyscanner for Business SuiteThe more you open up, the more people can innovate
Think about the whole market
Subtitle here
Sales Marketing Product
Nothing Changes
It’s all about good products on both sides• All the examples above are about good products• Good products on both sides of the market add up to a lot
more• User-facing product owners need to think differently to
acquire and retain users• Affiliate providers need think about the whole market and
innovate to help their clients
Thank you – questions welcome
David [email protected]
@daviddlow
@skyscannertools
Skyscanner for Business, Quartermile One, Lauriston Place, Edinburgh EH3 9EN