How the iPhone Changed Kayak's Business


A mobile app needs to be more accessible than a web site, that’s for sure. But it doesn’t necessarily need to be simpler and dumber, as travel search service Kayak learned this year. Now, the company is changing its overall business strategy to address user needs that it only became aware of from seeing how they use the Kayak iPhone app.

Kayak CMO Robert Birge and Chief Architect Bill O'Donnell

When Kayak went to build its first iPhone (s AAPL) app earlier this year, Chief Architect Bill O’Donnell told us during a visit this week to GigaOM HQ, it stripped down its travel search functionality to the bare essentials. O’Donnell’s thinking was that the prototypical mobile user was one who just had a flight canceled and needed a replacement reservation to get home, stat. No need for non-urgent and complicated queries, like flexible date search. That strategy worked well enough; the Kayak iPhone app has had 600,000 downloads since February, and currently 5 percent of Kayak’s total search volume takes place on the iPhone, with mobile Safari the site’s third-most popular browser after IE and Firefox. (Kayak also has a BlackBerry app with 4,500 downloads; an Android app was released last week and apps for Windows Mobile and Symbian are coming.)

But users complained loud and clear that they wanted the ability to do everything they could on Kayak’s web site on their phones, so O’Donnell went back to the drawing board to amp up the app’s functionality while maintaining a simple, finger-friendly interface.

As he dug deeper to figure out how to display oversized and dynamic data such as calendar dates for version 2.0 of the iPhone app (which was just released), O’Donnell started to think about the mobile travel experience more holistically. Meanwhile, the business side of the company, according to Kayak CMO Robert Birge, was taking a hard look at the iPhone’s fast-growing user numbers.

Now that those stars have aligned, the company’s next major strategy initiative is actually coming from the iPhone. Kayak has always been a search site; its sole purpose is to help people search across vendor and aggregator sites to get the best travel deals. It makes money from referral fees and ads. But as O’Donnell explained, the leap from a friendly iPhone app interface to travel web sites in order to make reservations is an awful experience. Users have to contend with tiny, virtually unreadable text, Flash sites that don’t load, and squished pages formatted horizontally for a PC.

So starting next year, Kayak plans to offer an iPhone-friendly booking experience. The company is building a wallet system to allow users to book travel using their Kayak accounts. They’ll be able to use their saved credit card, frequent flier numbers and flight preferences, and Kayak will then go enter that data into the providers’ sites and send users an alert when everything has gone through. It’s a major new initiative for the company that should extend back to the web site as well.

It’s also a big change from Kayak’s history as a straightforward search engine that’s careful not to pressure users to even register. O’Donnell and Birge said their business model is still ads and referrals, though, and that any airlines or other vendors that feel uncomfortable with the new system can always opt out.

Still, as the iPhone helps Kayak redefine itself and how it addresses its customers, it shouldn’t stop with concierge services that address the design and usability constraints of a small touchscreen. The company could make itself even more useful by figuring out how to offer a mobile travel experience that incorporates the best and most relevant features of a phone, like real-time access, location awareness and push notifications.


Arve S

I think most of you are missing the point.

The article does not claim that the 5 % iPhone users are changing Kayak’s business, but that “the company’s next major strategy initiative is actually coming from the iPhone”. There is a difference!

The strategy initiative is to take the typical Travel Search redirect url one step furher. So instead of unloading the user into some unknown user interface, where they have no control of the end user experience, they are building functionality to let the end user complete the booking with any supplier, without even looking at their website.

This can, if done well, significantly reduce the drop-off rate from clickers to buyers. For travel search engines, this can be anything from 80 to 98 %! So, if successful, this will no doubt be implemented for the standard website Kayak as well.

Correct me if I’m wrong, billo.


Am a bit confused here. Are we debating if a purpose-built app can do a better job than a one-size-fits-all browser rendering (for argument’s sake) a reformatted webpage?

Or, are we trying to infer that a rich, PC experience cannot be achieved on a small-screen with no modifications to the web content (laid out for normal PCs) per se?

In any case, the title looks a bit futuristic (putting it mildly and optimistically). iPhone is affecting Kayak’s development plans, but I don’t know (nor does the article indicate how) if it is changing their business, yet. Note that the word “business” for most folk, means revenues, market share, and a whole lot of other things that spell “dollars”, here and now. I’d be careful with catchy headlines.


Thanks Liz for the great post.

One minor point: our app is location aware, and has been since 1.0. On the search location fields there is the little target icon that fills in nearest airport or city.

(posting this comment from Virgin America flight 350. Loving the WiFi)

Oli Gibson

Interesting Idea, I agree that the iPhone doesn’t contribute much traffic yet but I use the iPhone app rather than kayak on my desktop or in the browser. Until kayak came to the iPhone I didn’t use it at all.

Also an app is more accessible than a mobile site in a browser and if your companies app is on someone’s iPhone that person see’s your name and logo everyday, not bad marketing eh.

Liz Gannes

The 5% traffic stat came with zero promotion and a pretty dumbed down app, so the thinking is that as they improve it and add the wallet functionality it’s a big growth opportunity.


Don’t understand how it changed their business? Seems like they should focus on BlackBerry a bit more as well.

Liz Gannes

@Rohan – I agree about BlackBerry’s importance but it is harder to get traction with an app there. The Kayak guys said they do have one but people don’t just find it and install it like they do on the iPhone. You have to think RIM will improve their app platform, and soon.


“Wait up- let’s see: iPhone app is 5% of Kayak’s traffic, tiny compared to browser traffic and now the “iPhone helps Kayak redefine itself”?

It’s about the relative growth and opportunity, I guess. Suppose the iPhone traffic doubles every 3 months and the browser traffic’s growing at 25% per year. Where do you put your effort?

Also, every iPhone user converted to Kayak will be loyal if the experience is easy and powerful. Great mobile and browser apps can be very ‘sticky’.


Why are they focussing on it? Well, not too outrageous an assumption that ARPU for users of E2E search/booking product on mobile device would be through the roof. That, and straightforward innovation.


Wait up- let’s see: iPhone app is 5% of Kayak’s traffic, tiny compared to browser traffic and now the “iPhone helps Kayak redefine itself”? Really, how did the iPhone changed Kayak’s business? Instead of putting such effort on the app, how about Kayak improve the company’s mobile site? Surely, it would be a better use of the company’s resources to develop functionality usable on alot of phone browsers.

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