The travel industry is one vertical that seems to be seeing a lot of disruption at the moment — ranging from social media startups changing how we plan and book our journeys, to those who are re-examining how companies in the business are going to make money in the future. One of the startups working in the latter space, Sojern, today announced that it has raised a round of $7.5 million.
This round, Sojern’s third, was led by new investor Industry Ventures, with existing investors Focus Ventures, Norwest Venture Partners and Trident Capital all also participating.
Sojern started four years ago with a business focused around advertising on boarding cards. But it has more recently expanded to also offer a product it calls the Sojern Media Platform — essentially, an audience re-targeting service aimed specifically at the travel sector, relying on some 50 million pieces of anonymized travel data amassed by Sojern, as well as algorithms and other technology. The idea is to serve more targeted ads to travelers either as they are planning their trip, or while they are on it, with Sojern’s network touching “hundreds” of publishers, CEO Mark Rabe says.
(And, as a noteworthy side note, it’s telling that Sojern hired Rabe of all people, to lead the company last year: the guy has a lot of online advertising expertise. He is one of the (many) executives that have departed Yahoo in recent times; his most recent job at the Internet company was leading its business in the UK and Ireland.)
While Sojern does not break out revenues, Rabe notes that it is seeing the most growth from its newer line of business, the media platform was only introduced late last year.
Rabe says that the company has actually booked more revenue in the first three months of this year than it did for all of 2011. That points to the media platform potentially overtaking the boarding pass business in terms of importance for the company in the longer run.
Like many who work in the travel space, Rabe believes that the market is ripe for change. “Travel is really going through a revolution, one mostly focused on distribution,” he explains. “The focus is on marketing to people and taking advantage of the data available to them, and really changing how they go to market.”
One fact that spells opportunity for a startup like Sojern is that there are actually a lot of companies, such as airlines, that are not in the best state of financial health at the moment. That means they are on the lookout for new revenue opportunities, whether that is in the form of upselling their customers on their own services, or potentially linking up with others in co-marketing deals.
At the moment, there are several airlines and other companies that are strategic partners of Sojern’s with some holding equity stakes of undisclosed amounts. They include Alaska Airlines, American Airlines, Carlson Wagonlit, Delta Air Lines, Hawaiian Airlines, Kayak, Travelport, United Airlines and US Airways. (Their relationship stems back to the founding of the company, and part of what airlines, for example, receive is a cut on the advertising revenues that appear on their boarding passes.)
Rabe says that the funding announced today is mainly being used to grow the company’s business in the U.S., which alone accounts for 50 percent of all air travel worldwide. Sojern, he says, has been mainly active “at the top of the purchase waterfall” — that is, around buying air travel — but in the data world, Sojern can potentially follow and monetize users as they continue along with the rest of their journey planning, whether it is to book hotels, rent cars or reserve seats in restaurants.
A further step down the line will be international expansion, although Rabe says that this could prove more challenging, given how fragmented the market is with smaller and more regional airlines almost more common than major global players.