December 20th, 2005

Advertisers Find A Captive Audience: Travelers on Planes

By Brian Steinberg and Melanie Trottman
Wall Street Journal

Talk about an ideal audience for an advertiser: The target customers are strapped in—literally. They’re paying attention. They’re actually grateful for your presence. And they’re a good demographic.

MasterCard International is providing complimentary snacks, movie headphones and puzzles and games aboard nearly 600 flights of AMR Corp.’s American Airlines during the holiday-travel season. The expectation is that more than 85,000 travelers will benefit from this largesse, which is publicized onboard by the flight attendants.

Given the state of flying coach these days, MasterCard ought to come off like Santa Claus. Airlines, some of them under bankruptcy-court protection, are so eager to shave costs that once-automatic amenities such as free meals, blankets and pillows are swiftly vanishing. American Eagle recently announced that it is “testing” charging $1 for soda, juice and cashews on six routes out of Los Angeles International Airport. A pillow/blanket set can be bought for $5. American is now selling snack boxes for $3 after a test-run that began last year.

“You’ve got a captive audience that can’t just get up and leave. You’ve got between an hour and nine hours to make a complete statement about your product and service,” says Joey Reiman, chief executive of BrightHouse, an Atlanta marketing consultancy that has worked with Delta Air Lines.

American isn’t the only carrier to work with corporate sponsors. Southwest Airlines, Continental Airlines and US Airways Group Inc. have tried varying tactics. For MasterCard, the idea is a way to remind fliers about its services without knocking them over the head with hard-sell tactics, says Elizabeth Ward, who oversees MasterCard’s global travel and entertainment business.

Indeed Madison Avenue must step gingerly into the cabin. Airlines have been worried about taking on ad partners because they’ve had a difficult time nurturing their own fragile brands: Ad executives have long joked that a traveler boarding most planes blindfolded could remove the blindfold and not know which carrier they were on. Weak branding is one of the things ad executives cite for lack of passenger loyalty, and Southwest and JetBlue Airways’ branding successes have been the envy of the industry.

So airlines worry that allowing too many advertisers might blur their own message. Southwest and Continental already participate in onboard co-branding, or “product placement” as Continental calls it, but they tend to limit such arrangements to companies with which they already have partnerships. Southwest, for example, already carried products by Kraft Foods Inc. and Coca-Cola Co. on flights as part of its snack and beverage service. But as part of additional co-branding deals, the vendors’ logos appear on Southwest’s beverage cups or snack boxes in exchange for the vendor paying part of the packaging costs, the airline says.

“We don’t want to be a Nascar race car,” says Richard Sweet, Southwest’s senior director of marketing and sales. “The integrity of our brand is what you see in flight and we really want that to be a Southwest Airlines experience as opposed to a commercial opportunity.”

A Continental marketing manager concurred. “Our corporate culture has been not to inundate our customers. It’s too damaging to our brand,” says Kent Craver, Continental’s manager of onboard product marketing and research.

Logistics are another factor. Continental, which still serves meals in coach, will sometimes substitute a standard candy bar with a different one provided by an advertiser. The benefit to Continental is that it saves money because the advertiser pays for the substitute. But it can create additional labor for already-stretched employees. What’s more, passengers on connecting flights would get the product twice, making it redundant for those travelers. Carrying promotional items onboard can also take up valuable space on the aircraft or add weight at a time when fuel costs are wrenching.

When American decided to yank pillows off its planes, saving money on cleaning and restocking wasn’t the only reason. The airline said the move would allow staff to clean the planes more quickly. And when the airline began selling meals onboard, it paid commissions to flight attendants, whose union had complained the sales could create extra labor.

“There are a lot of people who would love to advertise to our customers, but the cost to us is too high, whether it be in our brand image issues or just the physical cost of doing it,” says Mr. Craver of Continental.

Still, American believes teaming up with advertisers can help drive customer loyalty at a time when low-cost airlines are intensely competitive. “There is really an untapped potential,” says Roger Frizzell, American’s vice president of corporate communications and advertising.

Some artfulness is required, though, because bombarding consumers with ads as they sit in the crowded coach section might cause a backlash, says David Melanšon, president, North America, for Interpublic Group of Cos.’ FutureBrand. “It’s an opportunity that is fraught with peril,” he says, adding that advertisers can avoid passengers’ ill feelings by sticking to products or gifts that provide comfort or entertainment.

Yet there’s also an opportunity to make money. “As the margin per passenger seat erodes, airlines will have to look for other sources of revenue with low or no marginal cost. Selling cross-branded products may provide such an opportunity for airlines to generate additional revenue,” says Tridib Mazumdar, chair of the marketing department at Syracuse University’s Whitman School of Management.

American already has a relationship with Ford Motor Co.’s Lincoln division: last month certain American passengers were given a complimentary dinner and a movie onboard, courtesy of the new Lincoln Zephyr, as part of a larger marketing alliance. Passengers at some airports received complimentary neck and shoulder massages—paid for by Lincoln.

Before its September merger with US Airways, America West began posting ads from a variety of companies on the backs of trays that passengers can stare at as they fly. The merged airline, called US Airways, says it will expand that profitable venture now that it’s a much bigger company. Last summer America West passed out gift certificates for the Cold Stone Creamery ice cream chain. Flight attendants told passengers: “You’re on a Cold Stone Creamery flight today and you’re all winners.”


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