“If you had 6 million bookings, chances are you probably had near 6 million paths to get the booking. But marketers tend to say, ‘Well there are 6 personas and they fall into these 15 segments.’ And when they do that, they’re totally wrong. There are 6 million paths and they’re trying to fit them into all those 15 segments.” – Koddi Co-founder/President Nicholas Ward
When consumers want to book air travel or a hotel, an online search of prices and availability is often the first part of the trip plan. But for travel brands, mastering that part of the journey is still a challenge, even with all the search optimization tools used by every major marketing.
Fort Worth, Texas-based Koddi, an ad tech platform focused specifically on travel, has been working on helping hotels better match their marketing and bookings to those searchers. In June, Koddi began partnering with Sabre with the promise of driving more of that hotel booking revenue to clients using the Sabre SynXis platform.
“Metasearch is arguably the most important channel for driving demand for hoteliers,” said Nicholas Ward, Koddi’s president and co-founder. “To effectively compete, hotels must win when it comes to optimization for Google, TripAdvisor, Trivago, Kayak and more.”
While Koddi’s Sabre deal is solely about hotels, as Ward told Kambr Media in a conversation at Skift’s Tech Forum in San Francisco, marketing for airline bookings share a similar pain point that hotel brands do: predicting consumer behavior and optimization search marketing with that knowledge in hand.
Kambr Media: What is Koddi and how did you come to co-found it?
Nicholas Ward: Koddi – the word – is Icelandic for “pillow.” The reason for the name is that we wanted to have some connection to the original space that we started in: hotel marketing. So “heads in beds” was the hotel marketing term, and it felt like a good fit and it's served us really well.
As for describing the company now, we're a revenue optimization platform for travel. We started on the marketing side and that's our key core focus area. We found that we got really good at optimizing marketing, we could then connect into deeper parts of the systems of major travel advertisers that we work with. We had the opportunity to start doing things like forecasting business better, presenting opportunities, and then really spending money in places that are most strategic for the business.
When you talk about “optimizing marketing,” what are the specifics behind that set of actions?
Most people in this space know us as a metasearch optimization platform. So Google, TripAdvisor, Trivago, Kayak, etc. – all kinds of different partners where you get the experience of a hotel being displayed with multiple rates. We help the advertisers determine where they should show up, how much they should spend, how much they should pay per user, how different users are valued, and ultimately we get them more revenue and profit out of every dollar that they spend on those channels. So we get them more bookings, while generating more efficiency in their marketing.
Koddi started off focusing on hotels before moving to airlines and the cruise ship industry. Was there a particular pain point for hotels that made you begin there?
Back in 2013, we saw hotel price ads, Google’s product as it was known then, as a channel that had a lot of problems. It was very, very small at that time. But, George and I both had the experience of seeing that play out on the retail side with Google's product listing ads (PLAs), which eventually became Google Shopping, and carried on from there.
When we saw this in 2013 we thought, "Man, you know, we got to participate, we've got great experience building technology for PLAs and other retail programs. But really unifying that and building to a vision on the travel side seemed like an exciting opportunity. We believed in Google, but we also knew we had to add on other channels as well, so we just started with the small little piece we could get. We had to go and convince people to actually spend money on hotel price ads at the time, which seems funny in hindsight.
The program was, quite frankly, difficult for advertisers to manage when we started. But we saw the path that things were going. We called Google's growth and ultimately that put us in a position to be able to build a platform up to what it is today, which is why we're Google's largest partner on that front. We have the most sophisticated platform in the world for brands that are advertising on those types of channels.
Who are Koddi’s typical hotel clients? Is it only major global chains?
We're lucky to work across the industry. So we work with big online travel agencies, we work with regional OTAs, we work with big brands, we work with small brands, and we also work with individual properties.
We do that in different ways. We have three different major product sets. One's really built for OTAs, one's really built for suppliers, and then one's really built for properties individually. Those three big products allow us to operate across that space.
What we really figured out early on, was that, while our initial clients had some concerns about the competitive threat, being on the same platform as an OTA, for instance. What we have been able to do is actually find areas of common ground and areas of unique value between those types of advertisers and even connect them in some ways. For some, more meaningful ways. Making the properties spend more efficiently on an OTA, for instance. Making brands and properties people work together better and helping OTAs create more buyer-friendly products at the end of the day.
What’s the relationship Koddi has to Google?
The value proposition exists on both sides. What we do for Google is, say, "We will help advertisers interface better with you. We understand your business really, really well technically. And we can help build to that, so that then you can take that feedback and that insight and that input, and build products that better service them."
When they build those products that better service them, it adds that complexity.
But complexity's not necessarily a bad thing if it allows us to achieve a better end. I always like to remind people that there's a significant difference between complexity, being complex, and being complicated. Just because it's complex doesn't mean it has to be complicated.
What we do is take that complication out by understanding both sides of the market well enough that we can say, "Okay. Google, you need to add this feature. And ‘Brand,’ you need to give us this data, so that then we can use this new feature to optimize this outcome that's good for your business. That allows you to drive more revenue for your properties or in your properties."
What’s the nature of the recent partnership between Koddi and Sabre?
It’s a really exciting partnership, in that it allows us to service more hotels through a partner like Sabre that's perfectly geared for taking care of them and bringing them up to scale.
We’re offering hotels a number of things that have become really valuable for them as customers of Sabre's platform. We each get to focus on the things we're particularly good at and we just naturally invest in. So it creates an upside, I think, on both sides.
There's no airline services component with Sabre in this partnership. Is there a chance that airlines could eventually be included in the alliance with Sabre?
I can say that it's very early in that relationship, but I think we see the opportunity to build a lot of really exciting and impactful things together. So for us, we primarily do a lot of work in hotels. We do a little bit of work in air. We do a little bit of work in cruises. We do a little bit of work in experiences and alternative accommodations. Those are very small things for us. They're early investments, I think, from our perspective.
Is it fair to say that the plan is to grow, to travel, and not just be heavily focused just on hotels?
Yeah. We love travel. I think the opportunity we see in how our business is changing.
Historically, we have thought about things from the perspective of, “What happens when somebody searches for something and then how do we get them to book?” That's just such a small part of the process, right?
And now, the things we think of are along the lines of “What did they do right before they searched? What did they do that made them search? What did they do that even introduced that idea to them? And then, after they booked, what happens? What happened between the booking and the stay? What happened in terms of the other itineraries that they thought about? What happens on site? What happens after this site?”
We in travel tend to simplify this into the traveler lifecycle, or the travel purchase path which is always very linear. But look at my behavior, your behavior, it's not linear at all. It’s all over the place, it’s all zig-zag.
Given all the change in the intersection of travel and technology, where do you think Koddi will be in 3-5 years?
There are really two big themes that come up for us. One is that we envision a world where people are not pressing the buttons anymore. That path that we talked about, that zig-zag? Whatever type of travel you are, if you had 6 million bookings, chances are you probably had near 6 million paths to get the booking. But marketers tend to say, "Well there are 6 personas and they fall into these 15 segments." And when they do that, they’re totally wrong. There are 6 million paths and they’re trying to fit them into all those fifteen segments.
Our goal is to enable marketers and advertisers to be able to respond to each of those individual paths as effectively as they possibly can and create great experiences. And the second is, remembering that the booking doesn't stop once your credit card is entered, and the confirmation email is sent. That's really just the start of a whole new phase, and the opportunity to engage in a really meaningful way with customers. And then the customer experience really goes through that whole. It's not a circle, it's not a path, it's more of like a cloud in a way.
Those two things, that's really the world that we're aiming for. Where we can take care of data, not only in terms of this hotel booking, but then make sure you have an optimal experience the whole way through.
Looking at Koddi's identity as a travel-based marketing optimization provider, are there any important similarities among travel verticals from hotels to cruise ships to airlines that you feel especially equipped to solve?
There are certainly important differences. I think it can be particularly hazardous to treat air like hotels, or hotels like cruise ships.
I want to be clear about that. However, there are some really interesting commonalities around the way that you think about optimizing revenue for seats in a plane versus rooms in a hotel.
But there are some of these ways to think about it which are that, once you start to extract some of those problems they become prediction problems, they become optimization problems. They become problems of economics and quantity, elasticity and things like that. Those are the areas where we're keen to continue to invest in and understand because, while we may not ever take the path to try to optimize revenue in a different vertical within travel, we certainly are interested in how we interface with other companies that are doing similar things and create better outcomes. Not only for the traveler on one side of the equation, but also the advertisers, the brand.