Air france case study

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Harvard case study réalisé avec Vincent Gabillet, Claudia Schwägele et Guillaume Foucher.

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Air france case study

  1. 1. Online Advertising Strategy Ecotic Case Study 2013/2014 Vincent Gabillet, Guillaume Foucher, Arthur Marot, Claudia Schwägele
  2. 2. Brief Overview • • • New value proposition for Air France : Book at anytime from anywhere Online advertising : Marketingmix Tools and strategy Key performance indicators and optimization Case study
  3. 3. Industry (traditionally) • Dominated by several big companies: American Airlines as biggest airline SkyTeam Global Alliance main actor in Europe • Not yet profitable (1996-2006) Average airline industry ROIC = 5,9 % Average US industry ROIC = 14.9% • Airline traffic growth > global economic growth • Increase in demand for air travel (+50% between 2000 and 2006)
  4. 4. Competitive Landscape • Low Cost Airlines -> prices decrease -> shift to price or service competition?! • Powerful Suppliers – Aircraft industry: mainly dominated by Boeing and Airbus – Pilots Unions: highly qualified workforce • Intensive lobbying • Government policies • Important barriers to entry => highly competitive Industry
  5. 5. Internet impact on the industry • Internet is an appropriate medium for airline industry – – omnipresent, fast multitude of advertising tools and possibilities • Obsolescence of travel agents -> now Direct Distribution Channel Bargaining power shifts to consumers • Enhanced the development of Low Cost airlines • Emergence of different kinds of online flight sales platforms: travel aggregators and travel booking alternatives (Kayak, Orbitz, Expedia)
  6. 6. Air France Online • • • • • A reassuring place to purchase online Integrated high performing search engine Additional services and information Promotion and discount information of flights Branding and differentiation
  7. 7. Online advertising initiative • • • • • Relatively cheap and accessible Targeting on search Targeting on topic Data analytics Continuous optimization
  8. 8. Search engines market shares US Share of searches August 2007 Source: Nielsen NetRatings
  9. 9. SEO : Visibility on search engines for “free” o Organic search results o Long-term process o Essential marketing tools for web-site SEA : Visibility by buying keywords in order to appear in the paid search results o Allows to reach top of search’s result on very popular keywords o Immediat result o Better target audience and attract "best quality" prospects o Googel’s Adword is a greater PPC market share than 70%
  10. 10. Internet marketing Display : Advertisements appear on web pages in many forms often as banner o Main objective : promotional branding o Easy targeting of the demand and tracking of the campaign performance o Short time campaign using CPM model : Cost Per Mille Affiliate marketing : a performance-based marketing o Create a sustainable network of partners over the time o Buyer commission’s program on sales o Prospects : pay per form receive - CPA (Cost per Action)
  11. 11. • Online advertising• • Fantastic tool to increase the ticket sales Online sales represent more than 50% of overall sales Airline market is optimal for online advertising • • • • • ticket printing already built system to communicate with travel agents Qualified and optimize advertising cost with a great return Decreasing prices Customers can book everywhere & anytime
  12. 12. Air France web-marketing campaign • • • • • In 2007 online ticket revenues continues to grow Due to succes of affiliation campaign The competition in Search Engine advertising is increasingly strong o $9,4 billion expenses in the SEM channel in 2006 Efficiency optimization in using more effective mix of tactics Had to analyze the SEA campaign results to optimize future campaign performance
  13. 13. Key Performance Indicators • • • • • Click Through Rate Conversion Rate ROA (Return on advertising) Average revenue per booking Probability of booking => Comparison of different tools and geographic zones in order to determine the online marketing tool portfolio
  14. 14. Search advertising campaign In 2007 : 4500 keywords 24 campaigns 4 platforms
  15. 15. Investment for each publisher - Most of the budget is spent on Google Adwords - The agency allocated a weak budget on Yahoo despite of an excellent conversion rate - Overture has a low cost per click and a ridiculous probability of booking - MSN has the highest cost per click in the US
  16. 16. Efficiency for each publisher - Overture: a wide traffic which is not qualified - MSN: a good conversion rate and a good potential - Google: great visibility and colossal audience - Yahoo: by far, the best performance in proportion of investment
  17. 17. Efficiency for each campaign Branded exact keywords are the most profitable (ex: “airfrance”) Branded keywords with destination are profitable (ex: “airfrance to paris”) Geo-targeted and generic terms are not profitable (ex: search from NYC)
  18. 18. SEA recommendations • • • Air France must invest more on MSN and Yahoo due to the weak competition on these Air France must maintain strong investment in branding, less in generic keywords (ex: “cheap flight”) Air France must improve his website features and price policies in cities with larger airports
  19. 19. Key Facts • Internet made substantial changes in the industry • Online Marketing is a valuable tool for Air France but requires specific know-how and important investments over the time • Optimization of search of Air France
  20. 20. Changes and Outlook • Airline industry today: – Air travel in emerging countries is rapidly growing – Luxury airlines are rising – Low Cost Airlines are upgrading • Air France today: – Increasing importance of affiliation via booking platforms – “New” Marketing tools : SMM, Retargeting, RTB, etc. – Big Data – Increased competition
  21. 21. Thank you for your attention! We hope you enjoyed our presentation and we would be delighted to welcome you on board of our next Air France flight!

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