Christopher Columbus may be rolling over in his grave: At this year's PhoCusWright Conference , Expedia, one of the largest online travel agencies, described the firm's approach to "creating a flat world" once again. While this comment has a bit of a "back-to-the-future feel," it also directly underscores an important and potentially profitable shift taking place in the travel marketplace. It also directly addresses the subject of this year's edgy PhoCusWright Conference in Orlando, FL (Nov. 12-15): the Long Tail of travel.

From the new SMX Travel@PhoCusWright search marketing event, workshops covering topics from start-ups to private equity, and drilling "talkback" questions addressed to keynote speakers, The PhoCusWright Conference centered on "Braving the Long Tail." Originally coined by Wired magazine's editor, Chris Anderson, the Long Tail concept isn't new in marketing, but it is new in travel. The Long Tail counters the old 80/20 rule (aka the Pareto Principle) and refers to mining and servicing smaller niche markets and selling more lower-volume products, often by leveraging obscure key search words or distributing through "under-the-radar" channels. This shift in focus is pivotal because, via the Internet, these niches cumulatively outnumber, out-profit, out-convert and outweigh the higher-volume travel products and services. So while the Tail may be flat, the incremental margin of opportunity certainly isn't.

Monetizing the Long Tail becomes particularly important in light of a weakening economy, recent stock market volatility, declining savings as a percent of household income, sluggish same-store sales and the growing need to boost consumer confidence when purchasing travel online (trends highlighted by Karl Peterson of TPG Capital L.P. and Travelocity's Michelle Peluso). Capitalizing on the Long Tail requires progressive Web site technology that facilitates the purchase of niche products, differentiates the value of each purchase channel, ensures more meaningful and relevant content and drives true market segmentation to create brands based on lifestyles (as does Eos Airlines), not just low prices. So in its purest sense, Long Tail success is all about marketing. It requires delivering the right offer (relevant product or incremental sale) at the right time (before booking, after booking, during the trip or just before departure) through the right channel (mobile, community Web site or travel agent) to the right buyer (family reunion attendee, ski enthusiast or business traveler). Rearden Commerce, Priceline, Farecast, Google and several other presenters at the conference are great examples of the travel Long Tail in action.

But in a market where half of travel is being sold online (PhoCusWright's U.S. Online Travel Overview Seventh Edition), social networks are influencing what and where travel is purchased ( The PhoCusWright Consumer Travel Trends Survey Ninth Edition ), and per transaction revenue is declining. Both suppliers and buyers are placing greater stock in one other factor: the opinions, reviews and referrals of fellow travelers. These "honest brokers" (e.g., TripAdvisor) represent a more objective and trustworthy source than the suppliers themselves and have spawned a richer and more social experience, new business models based on brand impressions (e.g., Expedia), and social advertising programs (e.g., Facebook). They have also created what PhoCusWright now refers to as 1:1:1 marketing—companies recruiting customer referrals to woo other potential customers.

Time for the travel industry to brave the new world of the Long Tail!

Read PhoCusWright president and CEO Philip Wolf's opening monologue.