March 26th 2021
A convergence of developments in advertising and aviation paves the way for programmatic inflight advertising.
In July last year, I shared a post around innovation in a crisis and how the time and conditions were right for inflight advertising to finally take off properly. That was relatively early in a pandemic which has stretched far longer than everyone would have hoped and caused so much pain within the aviation industry, so does that piece still stand up?
We believe so.
Digitisation of the cabin
Innovation within the cabin is continuing apace, with many working behind the scenes to ensure a touch-free cabin is a reality – see Qatar’s recent announcement. Onboard retail is likely to continue to move to an e-commerce format, and British Airways’ High Life magazine’s move online suggests the future of the physical inflight magazine is in doubt. With new announcements every month of more sophisticated seatback and Bring-Your-Own-Device inflight entertainment systems rolling out, when we do get back in the air with more regularity, the experience on board will be very different. You may be ordering food and drinks from your own device for a start.
Increased personalisation and improved content, connectivity and e-commerce offerings will no doubt enhance the passenger experience, but so too will a better advertising product. And that is crucial, because in the aviation sector ancillaries will become even more important than before. Thankfully, the benefit of a 21st-century advertising solution will be seen in both the airline’s bottom line and the passenger’s overall experience.
That’s why it is so encouraging to see so many in the Inflight Entertainment and Connectivity (IFEC) space making data-driven and programmatic advertising a priority for their revenue-generating strategies going forward. Make no mistake, it will be table stakes to compete for ad budgets going forward.
That’s the aviation side of things. But the really exciting thing is, if we take a peek over the fence at the advertising industry, there has never been a better time for the aviation industry to get cracking. In January, Valour Consultancy rightly pointed out the huge opportunity for inflight advertising. They predict it to grow from a $200m industry to a $3bn+ industry over the next decade, (London School of Economics goes much bigger) but that is contingent on programmatic becoming commonplace in inflight. Here’s a look at why this growth is becoming more and more likely.
One indisputable effect of the pandemic is just how better digital and programmatic advertising has fared to the detriment of traditional media. In many cases, digital advertising has actually grown throughout the last year. Beyond the obvious reasons of why Out-of-Home has suffered as people have had to stay at home, marketers are increasingly looking at media they can measure and automate. This trend was clearly happening before, and has only accelerated since early 2020.
Some of the biggest recent news has been concerning the death of the third-party cookie. The third-party cookie has been the cornerstone of digital advertising since the 90s, and when Google announced last year that it would phase them out, as Apple had done previously, it sent shockwaves through the advertising industry. More recently, Google’s announcement this month that they will not build or use “alternate identifiers to track individuals” who use Chrome or other Google products, although not altogether surprising, drew a great deal of reaction. While it is not completely clear what Google’s plans are, what is obvious is that media owners with authenticated users and consent-based, first-party data will have a huge opportunity. Airlines and inflight entertainment and connectivity providers are the gatekeepers to highly sought-after audiences. They are in a great position to build extensive advertising businesses if they are smart and go about it in the right way.
Beyond the cookiepocalypse, a selection of other adtech headlines that resonate for inflight advertising are:
· TV Streaming companies are increasing building and acquiring their own adtech stacks to take advantage of the growing CTV market – Disney, Discovery and Viacom CBS all have new programmatic solutions. TV networks are using programmatic to increase their capabilities in automation and expose their audiences to more advertisers, to optimise fill and yield. Importantly, they have little interest in moving towards real-time auctions. This approach is very similar to the way inflight should approach programmatic, and is the Inadvia model.
· Other non-digital-native, bricks-and-mortar companies are building or buying in adtech to build a programmatic solution to grow media revenue. Walmart recently acquired Thunder to add creative automation capabilities to its partnership with the Trade Desk to develop its own Demand Side Platform.
· Overall, we have seen a huge ramp up of M&A activities and IPOs in adtech over the past quarter (Viant, Pubmatic, SpotX etc). Amongst other things, these are a reflection of digital advertising’s robustness and growth during 2020, tailwinds in programmatic advertising, and the rebuilding of a new ecosystem not reliant on third-party cookies. After a challenging few years for the industry, there are exciting times ahead for adtech, particularly those companies that are able to offer something differentiated.
So, what does this all mean?
Since my post in July last year, the situation in both aviation and advertising has crystallised even further. It is now more evident that, for inflight advertising to flourish, it needs to embrace programmatic technology.
The conditions for a successful advertising solution are arriving in the aviation sector. At the same time, the evolution of the wider advertising industry demands a data-rich programmatic advertising solution, and will richly reward it.
Add to that what we know from Inadvia’s recent Attitudes to Inflight Media – Impact of COVID survey: that 82% of media buyers and marketers surveyed believe reaching in-market travellers will be important for their marketing strategies beyond COVID-19.
Never has the opportunity for inflight advertising been so clear.
This article was first published on LinkedIn here.