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- 1. Generating Ancillary Revenue THROUGHOUT THE ENTIRE JOURNEY EXPERIENCERaymond GirardPresident, Spafax InteractiveMay 12, 2010
- 2. Generating Ancillary Revenue THROUGHOUT THE ENTIRE JOURNEY EXPERIENCEAgenda Brand connections
- 3.
- 4. How airlinescan deliver on those expectations
- 5. A fewexamples of best practicesAncillary revenueBRAND CONNECTIONS This isn’t a presentation about generating revenue by charging for access to the WC.
- 6. Ancillary revenueBRAND CONNECTIONSIt’s about connecting brands with your customers – and having those brands pay for the privilege.
- 7. Brand connections …BUTWHY WOULD YOU LISTEN TO ME? We’ve been making connections between brands and airlines for 25 years – and have generated over $300m USD in the process
- 8.
- 9. Brands / advertisersTHEMEDIA WORLD IS CHANGING… proliferation of new media platformsAddressablePortableSearchableSocialInteractiveTransactionalEverywhere
- 10. Brands / advertisers…ANDADVERTISERS HAVE HIGH EXPECTATIONS audience speed rich media ROI – return on investment ROE – return on engagement
- 11. Brands / advertisersTHEAUDIENCE THEY EXPECT targeted
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- 13.
- 14. segmentedBrands /advertisersTHEY WANT SPEED time to market
- 15.
- 16. streamlined processBrands/ advertisersTHEY WANT PROOF OF RETURN ON INVESTMENT research
- 17.
- 18. proof ofperformanceONLINEBrands / advertisersTHEY WANT ENGAGEMENTPROMOTIONAMBIENT content
- 19.
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- 21. Brands / advertisersAREGETTING WHAT THEY WANT?Media are happy to indulge them.
- 22. THE BILLION YUANQUESTION
- 23. Brands / advertisersWHATDO THEY GET FROM AIRLINES? audience
- 24. rich mediaenvironment
- 25.
- 26. …the transumer (consumer in transit)Brands / advertisersWHAT DON’T THEY GET FROM AIRLINES:
- 27. What is theairline advantage with advertisers? THE AIRLINE JOURNEY CYCLETM
- 28. What is theairline advantage with advertisers? THE AIRLINE JOURNEY CYCLESafety and boarding videosInflight distribution, sampling and merchandisingGUI design and interactive developmentIFE guidesInflight magazinesCommercialisation of loungesin-flightpre-flightpost-flight & researchtrip prepdecisionElectronic publishing, website management IFE portals and social mediaFrequent flyer e-zines
- 29. Do airlines facilitatebrand connections? DEAL BREAKERS: limited inventory
- 30. process /red tape / bureaucracy
- 31.
- 32. no proofof ROIMAKING CONNECTIONS
- 33. Facilitating brand connectionsADOPTING“TERRESTRIAL MEDIA” BEST PRACTICES compete with terrestrial media (less process)
- 34. a singlepoint of contact at the airline
- 35. senior managementsupport
- 36. adopt a“hub and spoke” approach to media salesMEDIA OWNERSTRANSUMERAIRLINEAGENCIESBRANDS
- 37. Facilitating brand connectionsADOPTING“TERRESTRIAL MEDIA” BEST PRACTICES adopt a “hub and spoke” approach to media salesSUCCESS
- 38. 175+ touchpointsthrouhgout theairline journeyAIR CANADA MEDIASafety and boarding videosInflight distribution, sampling and merchandisingGUI design and interactive developmentIFE guidesInflight magazinesCommercialisation of loungesin-flightpre-flightpost-flight & researchtrip prepdecisionElectronic publishing, website management IFE portals and social mediaFrequent flyer e-zines
Editor's Notes
- #2 Hello – it’s me again. I’m going to talk to you about GENERATING ANCILLARY REVENUE AT EVERY CUSTOMER TOUCHPOINT – THROUGHOUT THE ENTIRE JOURNEY THE CUSTOMER HAS WITH YOUR AIRLINE BRANDAnd as Chairman, I now have the unfortunate task of keeping myself on time! If I end up talking for hours, please come drag me off the stage (it’s been known to happen!)
- #3 WE’LL LOOK AT: How brands can connect with the airline customer – and PAY THE AIRLINE FOR THE PRIVELEGEWhat do these brands – these advertisers – expect from MEDIA IN GENERALHow YOU AS AIRLINES can deliver on the brand / advertiser expectationsAnd we’ll see what a couple of other airlines have managed to do TO HELP BRANDS CONNECT WITH THEIR CUSTOMERS
- #4 Aha! There’s our friend Mr. O’Leary again!This isn’t a presentation about generating revenue by charging for access to the WC – or from selling anything else in the cabin for that matter. And it’s not about BUNDLING or UNBUNDLING products and services. Oh and I forgot to mention that Michael pays me 1$ every time I mention his name ($2 if I show his photo). It’s my own little ancillary revenue scam. Call it Raymond Air. Today I’ve made $3, not bad for so little work!
- #5 This preserntation is about a more subtle YET HIGHLY LUCRATIVE way of generating ancillary revenue – one that connects BRANDS / ADVERTISERS with your passengers. And having those brands PAY for that privelege. It’s about putting in place the PROCESSES that make this happen. It IS about avoiding the negative connotations of selling to the customer directly. And athough this image is of a Jaguar auto on the roof of Virgin Atlantic’s Club House Lounge at Heathrow Terminal 3, all the concepts I’ll expand upon are suited to both LCC’s and to full-service “legacy” carriers.By the way, I’ve always said – if you can put a car on an airport rooftop, you can do just about campaign. Although advertisers HATE red tape - this was 6 months of negotiations with the airport authority that really paid off – VA not only got handsome revenues for partnering with Jaguar on the launch of the new car – they got mountains of free publicity from the British press who reported on the sheer audacity of this undertaking. If there’s one thing Virgin does well, that would be getting free publicity! So this is ancillary revenue that generates attention!
- #6 We’ve been making connections between brands and airlines for 25 years – and have generated over $300m USD in the process. That number rises to over $1bn when you factor in the non-cash value (goods, services, cost savings to the airlines) of our campaigns
- #7 Before I tell you how you’re going to tap into the budgets of major brands who are anxious to connect with your customers, we need to understand a few essential things about these brands / advertisers: WHO they are what is their psycology how do they work what are they looking forThe last point is very important. After all they want to connect with your customers for a commercial reason – this is a transaction to them. There has to be something in it for them.
- #8 Simply put, the world of media is changing as fast, if not faster, than the airline industry. Technology is helping deliver holistic media experiences that are: Addressable… you can now personalize messages to a group or to an individualPortable… you can take your content – and an ad – wherever you go. And an advertiser can reach you wherever you are!Searchable… you can find whatever you want whenever you wantSocial… communities built around content aren’t a new phenomenon – but they’re now ubiquitousInteractive… you can even become part of the storyTransactional… want it? Buy it!And everwhere… and consumers are increasingly getting used to thatNew media platforms are launching every day – it seems – and lasting a few weeks before being replaced by other new media. Twitter and Facebook today… what tomorrow?
- #9 …AND ADVERTISERS HAVE HIGH EXPECTATIONSIf you’re an advertiser, it’s a buyers market out there. And our friends the advertisers are used to being treated like kings! They want – and get: -an increasingly targeted audience -speed (you can put a campaign on facebook in an hour)… and you can do it yourself-rich media (that incorporates video and has active links)-immediate proof of ROI -and a measurable return on engagementLET’S LOOK AT THESE EXPECTATIONS IN MORE DETAIL:
- #10 Advertisers are finding increasingly creative ways of targeting CONNECTED PMEB’s (which are also known, in some markets, as ABC 1s) who they can segment into neat budgetary packages ($300,000 of my budget goes to under 25year old aspiring professionals, $1.2m for female business executives, and so on)
- #11 They want speed – products that are fast to market, flexible and above all, easy to EXECUTE. Coke had hundreds of thousands of Facebook fans within hours of launching – and the entire “campaign” took 24 hours from idea to execution! Did your message change overnight? No problem – there are dozens of social media platforms that can accommodate rapidly changing messages.
- #12 Advertisers want to know how well their campaigns have performed in REAL TIME. Everyone has a website now – and we get these traffic reports regularly. This has become the expectiation - Knowing what impact you have AS IT HAPPENS
- #13 Nobody really wants a :30 second video ad anymore – they want CONTENT. They want to be part of a narrative. They want to tell an engaging story about their brands and products. And they want that story to exist on multiple platforms simultaneously.
- #14 Media are bending over backwards to give them what they want. This is an example of an ad that appeared on the New Yorker website. Highly creative – it’s actually 5:00 minute long free samples of the best business audio-books.
- #15 Actually, a couple of questions;DO You, AS AIRLINES, want the money? Ancilliary revenue generated this way yields anywhere from 50% to 85% profit margins so yes, I think many of you do. Is IT worth it? I guess that depends on how much money “IT” represents! And bear in mind that in order to get some of this money, you’re going to have to change internal processes – SOMETIMES RADICALLY- so only you can really answer the question of whether it’s worth it to youANd if the answer is yes to both questions, then what are you going to have to do – what are you going to have to CHANGE – to start getting more of it?
- #16 You also have to ask yourselves – what are advertisers CURRENTLY getting from airlines? they’re getting a great, large and targeted rich audienceThey’re getting an environment that’s increasingly “rich” as well. AVOD / audio video on demand systems – are getting as good as any at-home interactive entertainment experienceThey’re getting engagement – just look at the amount of screens on this LAN interior!And they’re getting what we at Spafax call THE CONSUMER IN TRANSIT. And when people travel, they’re in a special MORE RECEPTIVE mindset. Have you ever noticed that there are movies you enjoy at 17,000 metres – things you would never watch at home? I think it’s the lack of oxygen that changes our level of taste on a plane!
- #17 AND almost as important as what they’re getting is what they’re NOT getting from airlines. The inside of the plane is a refuge from “the end of the world as we know it”! What major brand wouldn’t want to exhibit their message within the controled positive environments you’ve painstakingly created onboard your aircraft?
- #18 But the biggest advantage- as far as I’m conerned – is that they’re getting the possibility of communicating their message throughout the ENTIRE JOURNEY CYCLE –not just on the plane – but from the first time the passenger makes contact with your brand
- #19 And some full service carriers manage to do this with very POSITIVE impact on the customer experience. Air Canada actively commercializes over 175 customer touchpoints – throught the entire brand experience – and generates more revenue from ‘Advertising” on a per-passenger basis than any other airline. I’ll get into a little bit more detail on this in a few slides.
- #20 Here’s another question for you. Do you facilitate those brand connections? Or do you suffer from what I call “advertiser deal breakers”? Those are: limited inventory (almost nothing to sell) process / red tape / bureaucracy (well if you want to give us free chocolates for business class, I have to get the J manager involved, the international manager, the catering manager, the inflight services manager, the provisions, …). Don’t get me wrong, it’s good that you get these people involved –you’re an airline after all, you have to! But the advertiser just can’t know it and it can’t take 3 months. do you overvalue your media with a high CPM (are you pricing it compeitively – or pricing it out of the market?) Do you provideproof of ROI (or no cmaipaign feedback at all?
- #21 You already make connections every day – it’s in your DNA!Here’s how we think you can help make connections between brands and your customers.
- #22 Simply put, how do you make it easy for brands to spend money with you? You have to apply that “hub and spoke” airline model not just to your route networks, but to your media: -a single point of contact, for the advertiser - at the airline is essential senior management support and buy in is essential as well
- #23 There are also partners in the market who specialize in helping you make these connections
- #24 A few airlines have adopted this thinking and really stand out. I’ll show you some examples of campaigns that have genrated significant revenue AND enhanced the customer experience
- #25 From the minute you start researching your flight – to getting to the airport – to the lounge – to the entertainment – and then back home– Air Canada provides advertisers over 175 ways to connect with their csutomers… in ways that add value and enrich not just the airline – but the csutomer as well. They were also one of the first airlines to publish an online monthly loyalty magazine that leads the industry in open rate, drives purchase – and is financed by advertising sales within it. Advertising within their ezine is allowing them to increase not just the frequency but the QUALITY of communication with the customer.
- #26 It’s MULTIMEDIA as well. Here’s a good example: On the AVOD entertainment system, an informative program about pairing wine with different kinds of food is presented in the same environment as the rest of the entertainment. On the ground – an iPhone app that you can download for free – co-branded between Air Canada and the wine company – which gives great value to the traveler looking for a restaurante in a city he doesn’t know. And of course, the wine served in the first class lounges. Provided free as part of the relationship.Again, these are products and services – customized to the airline – that the airline woulnd’t have the budget to execute on their own.
- #27 …product launches are very popular due to the demographic nature of the customer. This is a canadiantelco pre-launching a new blackberry prototype with a “trial station” set up in the first class lounge – and supported by pages in the inflight magazine. The airline is able to say “you saw it here first”!We’ve done a similar deal with Palms new PRE phone some months ago – prelaunching it in the lounge.
- #28 We saw yesterday that Air Canada are leaders in product bundling, etc. – and use their website accordingly. However, they do allow 3rd party advertising if the products being commumnicated enhance the joureny / customer experience –or supports partner activity.
- #29 Likewise, the processing page “place holders” altnernately sell “bundles” and 3rd party ads. Same criteria apply.
- #30 Virgin Atlantic are leaders in providing their passengers with branded products that they couldn’t otherwise afford to provide. Here’s a partial list of some brand associations that they’ve created.
- #31 Land Rover paid good money to provide passengers with a “test drive” experience through the interactive entertainment system. There was an invaluable feedback form – Land Rober told us this was the best response they had had to any campaign – ever. And the csutomers loved it – it was a game, not an ad. CONTNET.
- #32 A few years ago, Virgin were able to provide Economy lass passngers with an emenities kit – branded (and paid for!) to coincide with the premiere of Lord of the Rings. This lasted for 6 months.
- #33 Although smaller, LAN Airlines in South America are very dynamic on the media front. We created this product in response to 2 criteria: The airline thought that handing out loose customs cards wasn’t very elegantthey also wanted to provide customers in all classes with a destination city mapIn came movistar – a South American cell phone company – with a desire to communicate roaming charges and processes to foreign visitors. So the immigration document holder was born – with a handy map, subtle advertiser branding – and movistar roaming instructions. WIN WIN!
- #34 I hope those projects insprie you as much as we were insprired working on them!In closing, I’d like to tell you a bit more about Spafax.
- #35 We’re a wholly owned subsidiary of WPP Group PLC - - - One of the world's largest collections of top-notch advertising and communications agenciesWe work with thousands of media buyers, planners and creative specialists worldwide. And speaking of WPP, I stronlgy recommend this book published by Ogilvy China called “CHINA BEYOND” to all of you in the audience from outside China. It’s a fascinating read – and will demolish just about every modern cliché we believe about this great country.
- #36 In closing – what does all this mean for China’s airlines? I think you have a HUGE opportunity. You operate in a market where there are hundreds of brands about to hit the world stage – wanting to expand their presence and their reach. You have the opportunity to help China’s brands communicate their strenghts to the larger world. You can, in effect, become brand ambassadors together. Thank you – and please stopy by our booth for a chat. We’d love to see you.