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Eyeblaster Research Note Airline Advertising

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  • 1. Eyeblaster Research Note March 2010 Digital Advertising for Airlines Book Every Seat – Even the Middle Ones! retweet this
  • 2. Highlights • Rich Media doubles airlines’ traffic and conversions, as compared to Standard Banners. • For every conversion generated after a click, 6.7 conversions are generated after an impression but without a click. • For Standard Banners, the optimal direct response frequency for airlines is ~4 impressions, which makes 82% of users underexposed. • Homepages, news, travel and finance are the most effective placements for direct response in terms of Conversion Rate. • News, travel, finance, and instant messaging are the most effective placements for branding in terms of Dwell Rate. • Online marketing spend on Travel will double by 2014.
  • 3. Airline Advertising: Prepare Your Online Media for Takeoff Online Spending: Upwards Trajectory While the business of operating an airline has remained directly from airlines, or sitting side by side through metadata more or less the same in the last decade, the business of engines such as Kayak, passengers can make sure that they selling airline tickets and filling up the seats has changed receive the best value. With this information overflow, airlines dramatically. Of the many industries affected by the need to make sure that they have enough share of voice, in proliferation of the Internet, few industries have been as order not to be left behind. impacted as the travel industry – and airlines in particular. In a survey by Ad-ology Research, 34% of US internet users In the past, travel agents typically acted as intermediaries indicated that they used the Internet to research airfares. between passengers and airlines. Nowadays, many ‘in the According to the survey, this is the most popular travel flesh’ travel agents have been replaced by browsers, online related research done online1. PhoCusWright study indicates travel agents and airline websites. Furthermore, online that 2007 was the first year in which online spending on competition for passengers has increased significantly, travel in the US has exceeded offline spending2. as information on flights and airfares became easily When travelers spend most of their dollars online, marketers accessible. Prospective passengers have the perfect follow suit. This explains the rapid growth in online marketing amount of information to commoditize the airline industry. spending in the Travel vertical. Forrester Research projects With a combination of information about price, destinations, that the spending on online marketing in the Travel vertical schedules, amenities and even remaining seats coming will more than double in the next five years. Chart 1: US Online Marketing Spending – Travel Note: Includes online display advertising, search, e-mail, social media and mobile marketing. Source: Forrester Research, Interactive Advertising Forecasts, October 2009. Cited from eMarketer. 1 Ad-ology Research. Travel & Vacation Services-Summer 2009. Cited from eMarketer. 2 PhoCusWright. Consumer Travel Trends Survey. Cited from eMarketer. 3 EyEBlASTER RESEARCH NOTE
  • 4. Airline Advertising: Prepare Your Online Media for Takeoff Furthermore, Forrester expects the shape of the growth curve an empty seat for a flight that is about to take off at nearly to be exponential, such that growth will actually accelerate any price makes business sense. Many airlines responded from one year to the next. Based on this projection, Travel by building space-age mathematical models for their yield is expected to be the third largest vertical in terms of online management systems to adjust prices for each passenger marketing spending by 2014, outspent only by Retail and according to supply and demand for seats. These models Wholesale Trade and Financial Services3. At Eyeblaster, the slash prices for empty flights and increase them for flights airline industry is the largest segment in the Travel vertical, with only a few empty seats. accounting for 28% of impressions. In addition to adjusting the price, airlines generate demand Chart 2: Travel Segments by soliciting as many prospective passengers as possible. As so many passengers start their journey by researching flights online, online display advertising plays a significant role in targeting these prospects. There are two major Tourism Boards Transport avenues that airlines follow to drive tickets sales: • Direct response: These campaigns are typically designed to drive traffic and reservations to the airline’s Hotels Other website, or their loyalty programs. Many direct response campaigns note prices on the ad itself. Airlines • Branding: Such campaigns have three main objectives. First, to promote new routes and service classes. Second, to position the airlines such that passengers will be willing to pay a premium for convenience or service. last, to elevate awareness of the airline and perhaps keep it top of mind when passengers are planning their next journey. Note: Share of Impressions. Direct response campaigns are particularly appealing for Source: Eyeblaster Research. Data: Q4 2008 to Q3 2009, Worldwide. airlines, as they allow them to drive demand for flights where the supply of empty seats is high. Direct response display Sale of travel services and airline tickets in particular is advertising has the advantage that ads can be changed with a good fit for online, as it does not require any physical a short lead time to accommodate any changes in supply exchange of goods. Passengers can simply print an e-ticket and demand. at home. Online retail has also made it easier for airlines to Another reason for the popularity of direct response control seat inventory. Airlines can use the internet for yield campaigns is that it is easy to measure their results. management by adjusting two important variables – ticket Conversion tags embedded on the airline’s website can price and demand generation through advertising and indicate how many users have responded to the ad and promotion. have taken an action. Actions tracked by conversion tags The dominance of online airline ticket sales has significantly may differ, but airlines can assign a monetary value to them increased price competition between airlines. In the past, and calculate overall campaign ROI. agents chose which flight to solicit to their clients based on, Considering the economics of airlines, it makes a great deal among other things, the commission that they were earning. of sense to use advertising to help demand meet supply on Comparing prices between agents required significant empty flights. Online advertising has the ability to change legwork. Today, comparing airfare between airlines is prices quickly and easily on the ad. Eyeblaster’s Smart instantaneous. If the schedule and connection factors Versioning is an easy-to-use tool for both media and creative are largely the same, passengers are likely to opt for the pros to quickly produce the perfect ad creative to optimize cheapest option. and boost relevancy. Airlines can dynamically change ads The industry is notorious for its brutal economics. Once to promote empty flights and generate demand instantly. a flight is scheduled to takeoff, the variable cost of filling a Smart Versioning allows swapping assets on live ads without seat may be reduced to the cost of a soft drink and a bag of re-trafficking. It handles any image resource, audio, video, peanuts (for those airlines that still serve them). Thus, selling language, branded font, character set and other features. 3 Forrester Research, Interactive Advertising Forecasts, October 2009. Cited from eMarketer. 4 EyEBlASTER RESEARCH NOTE
  • 5. Airline Advertising: Prepare Your Online Media for Takeoff Sequencing, serving ads in a particular sequence to the same user, can also help usher users through the purchase Direct Response Campaign funnel, by delivering messages as a story to the user, or just Performance altering between messages, rather than repeating the same message again and again. Sequencing allows advertisers to Throughout this analysis, Eyeblaster Research uses two serve different ads every time the campaign is served, and try metrics to analyze the performance of direct response different messages on users that have not responded to the campaigns – Click Through Rate and Conversion Rate. first message – if you do not want to go to San Francisco, Click Through Rate (CTR) measures how many impressions then how about Miami? The advantage is that advertisers can were clicked on out of total impressions served. solicit different destinations and push a range of their offering to users, taking the maximum advantage of every exposure. Conversion Rate measures the total number of conversions from the advertiser’s website, divided by the number of impressions served. Conversions are not necessarily Talking Business at a monetary transaction, but signify an action that the advertiser would like users to take, such as downloading Emirates brochures, submitting forms, as well as completing the purchase of an airline ticket. Conversion Rate may vary between advertisers based on the placement of the Emirates were looking to promote their special business class conversion tags on the airline’s website. fares and encourage bookings with an exclusive one week offer. The aim of the campaign was to raise awareness to its Conversion Rate can be further divided into two types of business class in an offer that would increase accessibility, conversions. The first type is Post Click Conversion Rate, but would not compromise the business class experience. which measures the conversions following a click on the ad divided by total served impressions. The second is Post The main challenge was that the creative team had only Impression Conversion Rate, which measures conversions eight days to execute the campaign, which included after viewing the ad without a click, divided by total dozens of different options to promote reduced business impressions. The sum of both is the Conversion Rate4. class rates. Emirates needed a solution that would enable them the flexibility to change ads and promotions on the fly. Enter Smart Versioning, Eyeblaster’s solution for rapid modification of ads, for increased relevance. Using an editable template, the agency could easily change the price, takeoff and destination cities to reflect the airfare specials. Without Smart Versioning, the agency would have had to build and upload dozens of different ads – a time- consuming, costly and painful process. Want to know more? Click here for the full case study. 4 Conversions are attributed to an impression up to 30 days after serving. 5 EyEBlASTER RESEARCH NOTE
  • 6. Airline Advertising: Prepare Your Online Media for Takeoff Travel sites are looking beyond CTR Chart 3: Click Through Rate by Placement – Airlines Source: Eyeblaster Research. Data: Q4 2008 to Q3 2009, Worldwide. lifestyle, homepages, instant messaging, weather and is a clear example where CTR and Post Click Conversion travel have average or above average CTR performance. Rate is relatively low, while Post Impression Conversion Rate News and homepages also have higher than average Post is relatively high. Thus, clicks and post click conversions Click Conversion Rate (see chart 4). However, CTR and underestimate the actual contribution of ads in travel to the Post Click Conversions provide only a partial picture of the actual success in terms of driving sales. Users are arriving effect of an ad. While many users do not click on an ad, at the airline’s website without clicking – just by browsing or they are browsing to the advertisers’ website by typing the after conducting additional research. URl, using search or methods other than clicking. In fact, for every conversion generated after a click, 6.7 conversions are generated by browsing to the advertiser’s website after viewing the ad without clicking. Chart 4 demonstrates why CTR is only a partial indicator of performance. The travel placement, which includes both sites dedicated to travel and travel sections of general sites, retweet this 6 EyEBlASTER RESEARCH NOTE
  • 7. Airline Advertising: Prepare Your Online Media for Takeoff Chart 4: Conversion Rate by Placement – Airlines Post Impression Conversion Rate Source: Eyeblaster Research. Data: Q4 2008 to Q3 2009, Worldwide. Optimal Frequency: You Again? Homepages and news placements are located in the upper Beyond the richness of the creative and the environment right quartile of chart 4, and are high on both post click in which it is placed, users are influenced by the average conversions and on post impression conversions. Finance number of times that they see the creative. Theories in the has a Post Click Conversion Rate similar to the travel field of marketing assert that individuals require multiple environment, but a higher Post Impression Conversion Rate. exposures to the marketing message in order to retain the The travel environment does produce a high conversion message and act on it. rate when combining the effects of post click and post The optimal frequency of a campaign depends on many impression conversion, but the Post Click Conversion Rate campaign specific variables. Such variables may include prior component is lower than average. familiarity with the brand, exposure to off-line advertising, Travel placements tend to draw a very high proportion of vertical, country, level of interest and many others. Therefore, travel and airline related advertisements. Thus, the number any attempt to calculate an optimal frequency should be of travel and airline related ads per page increases, and the regarded as a rule of thumb rather than a silver bullet. relevant share of voice for each advertiser decreases. A best To analyze the optimal frequency of Standard Banners, we practice here would be to use synched ads – two or more calculated the average CTR at every exposure for airline ads on the same page with a synchronized creative that campaigns. A summary of this is presented in chart 5. For elevates the marketing message above the clutter. Synched example, at the first exposure to an ad from a campaign, the ads have Dwell Rate of 9.33%, as compared to 6.05% for CTR will be 0.18%, at the second exposure to an ad from other Rich Media – an increase of 54%5. the same campaign the CTR will be 0.20%. 5 Eyeblaster Research. Data Q4 2008 to Q3 2009, all verticals, worldwide. Dwell Rate measure the proportion of impressions that were engaged with by touch, interaction or click. 7 EyEBlASTER RESEARCH NOTE
  • 8. Airline Advertising: Prepare Your Online Media for Takeoff The aim of the model presented here is to find the optimal frequency that will increase the campaign’s overall CTR. In order to do that, the frequency should increase up to the point in which the expected CTR from adding one additional exposure is higher or equal to the average CTR. In other words, as long as the expected benefit from adding another exposure is higher than the average CTR, it makes sense to add that exposure. Additional exposures should not be added when the expected CTR from those additional exposures is lower than the average CTR. Chart 5: Airline Click Through Rate by Frequency – Standard Banners Optimal Frequency Source: Eyeblaster Research. Data: Q4 2008 to Q3 2009, Standard Banners, Worldwide. For campaigns with Standard Banners, the average CTR Chart 6: Average Frequency in Airline Campaigns for airlines is 0.15%. The expected CTR from frequency by Cookie Data – Standard Banners 1, 2 and 3 is higher than the average CTR. However, the expected CTR from frequency 5 is 0.13%, which is lower than the average. Therefore, four exposures is the optimal 3 4 frequency for campaigns with Standard Banners in the 2 5 or More airline industry. Although four is the average optimal frequency, 61% of users (as represented by cookies shown in Chart 6) receive 1 only one exposure, and 82% receive three exposures or less. This analysis shows that airlines could benefit from increasing the size of their campaigns in order to elevate exposures towards the optimal frequency, or further limit their target demographics. Airline advertising campaigns are still just scratching the surface of the possible messaging potential to each user. Source: Eyeblaster Research. Data: Q4 2008 to Q3 2009, Standard Banners, Worldwide. 8 EyEBlASTER RESEARCH NOTE
  • 9. Airline Advertising: Prepare Your Online Media for Takeoff Rich Media Doubles Effectiveness Both Click Through Rate and Conversion Rate are higher for Rich Media as compared to Standard Banners. In particular, Click Through Rate is 2.7 times higher for Rich Media as compared to Standard Banners, and Conversion Rate for Rich Media is double that of Standard Banners. Chart 7a & 7b: Performance of Rich Media vs. Standard Banner - Airlines Source: Eyeblaster Research. Data: Q4 2008 to Q3 2009, Worldwide. This finding makes it easy for advertisers to improve campaign performance. Switching from Standard Banners to Rich Media may double a campaign’s expected direct response performance. This elevated performance has a few explanations. Rich Media outperforms Standard Banners by alluring users’ eyes from the publishers’ content to the ad. Furthermore, by enabling users to interact with the marketing message, Rich Media also increases recall. Rich creative also has the ability to feed data dynamically and increase relevancy. When all of these effects are combined, the result is an increase in clicks and conversions, as compared to Standard Banners. 9 EyEBlASTER RESEARCH NOTE
  • 10. Airline Advertising: Prepare Your Online Media for Takeoff Geographic Differences The Airline industry is an international business, and as such this research leveraged Eyeblaster’s international presence to conduct this analysis with worldwide data. However, there are striking differences between the regional markets. Chart 8: Click Through Rate by Market Source: Eyeblaster Research. Data: Q4 2008 to Q3 2009, Worldwide. North America has the lowest CTR, while Europe and Australia and New Zealand have the highest. Some of these differences may be explained by the lower tendency to click in some markets as compared to others, and by increased use of Rich Media ads with airlines, particularly in Europe. retweet this 10 EyEBlASTER RESEARCH NOTE
  • 11. Airline Advertising: Prepare Your Online Media for Takeoff Branding and Campaign Performance A smaller portion of airline campaigns is not designed to generate immediate sales traffic, but for branding. These campaigns let passengers know about new routes, business classes, lounges, higher standards of service and in many cases are directed towards the most profitable passengers – business and first class. To measure the effectiveness of branding we use two metrics: Dwell Rate and Average Dwell Time. Dwell Rate measures the proportion of impressions that were engaged with by touch, interaction or click. Average Dwell Time measures the duration of a Dwell. In both cases, unintentional Dwell lasting less than one second is excluded. Chart 9: Dwell by Placement – Airlines Average Dwell Time (sec) Source: Eyeblaster Research. Data: Q4 2008 to Q3 2009, Worldwide. Data in chart 9 shows that online airline branding ads spend ample time on each webpage reading in-depth work particularly well in the news, finance, and lifestyle content, and thus also spend time engaging with display ads. placements. The performance of ads in the travel Travel placements have relatively high breakthrough, placements is high in terms of Dwell Rate, but is slightly following their high Dwell Rate, but users spend a relatively lower than average in terms of Dwell Time. low amount of time with ads. Travel placements tend to have This works well for airlines that look for a more affluent a lot of travel related content and ads. Therefore, while users crowd, and may find them on the news, and particularly do engage with the ads, as evidenced by the higher Dwell on the finance, placements. News and finance tend to Rate, they are drawn back to the content relatively quickly as outperform generally in branding, as Eyeblaster Research evidenced by the lower than average Dwell Time. have found in previous studies. In these placements, people 11 EyEBlASTER RESEARCH NOTE
  • 12. Airline Advertising: Prepare Your Online Media for Takeoff Future Trends: Prepare to be Mobile As presented in the beginning of this research, the transformation in the marketing practices of the airline industry in the last decade is staggering. Half of the travel spending in the US is done online, and airfare is the most popular travel related online research. While traditional marketing avenues such as display and search advertising are about to grow, another fast runner is mobile. In a survey of airline IT executives worldwide, 8% indicated that they are already targeting passengers with promotions on their mobile, 10% are planning to do so by 2010, and 19% by 20126. Chart 10: Airline Promotion by Mobile No plans 2009 2012 2010 SITA and Airline Business. The Airline IT Trends Survey 2009. Cited from eMarketer. Mobile provides an additional opportunity for advertisers for yield management and reaching passengers. 78% of executives in the same survey indicated that they plan to optimize their website for mobile browsing by 2012. This opens the door for passengers to buy airline tickets directly from their mobile phones. As the competition for passengers spreads to the mobile world, airlines will need to allocate more budgets to this channel as well. As mobile phones and particularly the iPhone are equipped with an enhanced browsing capability, users spend more of their time accessing the web by mobile. The enhanced browsing capabilities also mean enhanced advertising capabilities. Banners that not long ago were limited to static images are soon to transform to Rich Media. 6 SITA and Airline Business. The Airline IT Trends Survey 2009. Cited from eMarketer. 12 EyEBlASTER RESEARCH NOTE
  • 13. Airline Advertising: Prepare Your Online Media for Takeoff Summary The economics and underlying industry factors of airlines make it an excellent fit for online advertising. Airlines are responding quickly and are expected to double their spending on online marketing from $2.5 billion to over $5.0 billion in five years. The majority of airline campaigns focus on direct response, while branding is less frequent. Using Rich Media more than doubles the direct response effectiveness of airline campaigns, both in terms of CTR and in Conversion Rate. Homepage, travel, news and finance have the best performance in terms of conversion rate. When designing a direct response campaign, adjusting the frequency for four exposures per user is expected to increase CTR. For branding campaigns, news, travel, finance, and instant messaging are the best performing environments in terms of Dwell Rate. This is good news for airlines, as news, finance and particularly travel tend to draw more affluent crowds. Regardless of the aim of the campaigns or the formats and placements, online display advertising offers an indispensable strategic advantage for Airlines. Display advertising is a flexible tool to generate instant demand for yield management. It is easy to align ads and messaging with empty flights, even at the last minute. With the economics of airlines, occupying an empty seat in a flight that is about to take off contributes directly to the bottom line. With this in mind, online display advertising can bring ROI to new heights. 13 EyEBlASTER RESEARCH NOTE
  • 14. Airline Advertising: Prepare Your Online Media for Takeoff Airline Advertising Best Practices • Use Rich Media to drive traffic and conversions. • Adjust reach and frequency to activate underexposed users. Media • Use both post click and post impression conversions to measure success. • Expand media placements to non-travel sites with proven performance for airlines. • Use synched ads to increase attention. • Travel sites have high breakthrough, in terms of Dwell Rate. • Integrate with the airline’s yield management systems, matching location, price, and Creative inventory. • Use Smart Versioning to increase message relevancy and easily change rates and destinations. retweet this © 2010 Eyeblaster Inc. All rights reserved l www.eyeblaster.com l Email: info@eyeblaster.com
  • 15. 15  EyEBlASTER RESEARCH NOTE        Airline Advertising:                                      Prepare Your Online Media for Takeoff                                  
  • 16. 16      EyEBlASTER RESEARCH NOTE                                  Airline Advertising:                                                                                                                         Prepare Your Online Media for Takeoff                                                                                                                                                  
  • 17. 17      EyEBlASTER RESEARCH NOTE                                               Airline Advertising:                                                                                                     Prepare Your Online Media for Takeoff                                                                           
  • 18. 18             EyEBlASTER RESEARCH NOTE                                                                 Airline Advertising:                                                                                         Prepare Your Online Media for Takeoff