Not a dirty word: why media is good for airlines
Why is media good for airlines? There are several benefits. Revenue certainly isn’t the sole benefit. Ads are also an issue of user experience (UX). If most users on a site are cross-shopping then the best UX for them is one that serves cross-shopping. Media can provide an elegant solution, without having to introduce competition – while adding to an airline’s bottom line, of course.
The need to keep pace
In 2018, Expedia Group reported over $1 billion in revenue from advertising and media according to its publicly available financial results for 2018. That bears spelling out: a full 11% of Expedia’s total revenue comes from ads. Of course, Expedia has large traffic and tech resources to draw on, but the figures show the scale of the opportunity available for any business. The revenue figure is roughly equal to the value of Qantas’s Frequent Flyer program, the envy of the industry by many standards. The numbers are stark; the OTAs are already claiming their piece of the action – it’s up to airlines to catch up soon or be left behind altogether.
Gaining ground on Big Tech
There’s also the strategic advantage. Google, continues to dominate media while constantly making inroads into the travel sector, whether through its Flights, Hotel Search or Trips products. By building a digital retail environment with a complete media offering, travel businesses have an opportunity to respond in kind.
Aside from the outright commercial opportunity, the chance to claim a significant piece of the media landscape so heavily dominated by Big Tech should be an attractive strategic proposition to airline CMOs.
And Google itself knows that other publishers are coming to claim their piece of the action. It’s no coincidence that over the last decade Google has increased the share of total revenue it makes from non-advertising business lines from just 3.2% to 15% to lessen its reliance on media.
Becoming a digital travel marketplace
Many online retailers, airlines included, are squeamish about joining the fray. It’s understandable – media maven Lisa Bradner describes retailers’ aversion to display ads as a fear of “tattooing their baby.” But this misses the point, and risks missing the opportunity.
Properly targeted media – even advertising a direct competitor – doesn’t have to be “competition” for a publisher. Advertisers need publishers, and no one wants to rely on a single provider. Airlines command a big enough portion of web traffic that could allow them to become real digital travel marketplaces. But for any given airline.com to do that, it needs to be more than “the place to book flights with airline X.”
Adding other travel products (hotels, transportation, activities) into your airline portfolio is nothing new. Airlines have been cross-selling these services for a long time. However, becoming a true travel marketplace and a true digital travel agent is a different thing.
– Iztok Franko, Diggin Travel
The scale is there. Just look at a handful of sites worldwide: AirAsia has one of Asia’s biggest ecommerce websites, while Delta, Southwest and American all see over 40 million visits per month. These are prime conditions for becoming a genuine digital media force.
Not just ad exchanges: Why selectivity is key
The model that will see airlines truly capitalize on the retail media revolution is based on selectivity and sophistication – a far cry from indiscriminately cashing in on ad exchanges where placement goes to the highest bidder. It comes back to that crucial understanding: all your visitors are valuable. Once you make this principle part of your strategy, it’s a short step to optimizing for non-converting visitors. You have processes in place to optimize conversion rate – it makes sense to apply the same rigor to monetizing non-converting traffic. The next step for airline.com is using intelligent tech to understand visitors, then choosing the right advertising partners. In short, choosing whose ads to display and – most important – to whom.
The next step is using intelligent tech to understand visitors, then choosing the right advertising partners.