From crisis to opportunity
Airport advertising has evolved substantially over recent years but, like many sectors, has been significantly affected by the COVID-19 pandemic. Philip Weake, Managing Director of specialist consultancy Compass International Media, reviews some of the trends that prevailed before the pandemic and looks at how the industry can rebuild.
Often seen as the pinnacle of out-of-home advertising, airport media can help brands to implement their long-term strategy, deliver tactical messages and even drive retail penetration.
Some of the most striking and effective out-of-home advertising sites and media in the world are at airports, connecting global brands with some of the hardest-to-reach groups, and often in the most spectacular environments. For airports, it is an important source of direct and indirect revenue, takes little space and can positively affect the passenger experience.
Like airport retail, the COVID-19 crisis has stopped the airport advertising industry in its tracks. In fact, advertisers don’t really buy sites, they buy audiences; that means if the audience disappears, new sales are going to be impossible and existing advertisers are going to ask for relief.
Philip Weake: Urges breaking down of silos and a reevaluation of industry relationships
A question of communication
The rise of mobile technology has transformed the way consumers use the internet and the way brands communicate with consumers, with internet-based advertising now accounting for around 50% of global advertising spend.
Even before the pandemic, the majority of traditional advertising formats including broadcast TV, magazine and newspaper advertising were in decline. However, out-of-home advertising was the most dynamic traditional media, adding more growth to global ad spend than any other traditional media. This growth has been driven largely by investments in digital screens and audience data, with the advent of programmatic buying also beginning to gain real traction.
As a result, airport advertising operators have invested heavily in research and data. In June 2018, JCDecaux launched VIOOH, a global independent platform designed to accelerate the growth of digital advertising and connect the industry to the programmatic digital ecosystem, all with full transparency. In March 2019, they launched the first international audience measurement system for the airport industry, AAM (Airport Audience Measurement).
Similarly, oOh!media has invested substantially in research and data to understand who, when and how many people it is targeting to really understand the value to an advertiser.
Standout small-format digital and omnichannel campaigns
Small-format digital packages are a highly effective way of reaching target audiences. Networks of screens can deliver dynamic and time-specific advertising to target passenger groups.
One of the most sophisticated campaigns delivered by oOh!media in Australia brought Google Search and Google Maps together. The creative displayed how Google Search could help connect people with local food and drink options based on their current location. Popular search terms were linked with the corresponding map displaying relevant search results within close proximity, showing how connecting technology and data to a location can deliver a relevant and innovative customer experience.
An innovative oOh!media campaign brought Google Search and Google Maps together at Australian airports
Mobile phones have gone from being a communication accessory to an integral part of the travel experience, with an average of over 75% of passengers using their phones or tablets while travelling through airports. Small-format digital networks can now be coordinated with mobile technology to great effect. At Singapore Changi Airport, Martel’s Beacon and Smart Content campaign through JCDecaux combined dynamic brand advertising with information on the distance to the duty free shop and a WeChat prompt to download a specific offer. The objective of the 2017 campaign was to drive traffic to store and also provide specific time to departure information for target passenger flights.
Through its partnership with Qantas, oOh!media has created a unique ‘end-to-end’ value proposition. This has made airport and airline audiences easy to understand throughout their entire journey: as they approach the airport, through the terminal, in premium airport lounges, on inflight entertainment and then at their arrival airport and beyond.
Iconic digital sites
One of the most iconic digital advertising installations in the world is the seven-screen immersive environmental media system in the Tom Bradley International Terminal at Los Angeles Airport, with its Time Tower centrepiece. Conceived and capitalised primarily as a passenger experience, it now provides leading brands with a platform for highly creative advertising. Production costs alone are not for the faint hearted, but the effect can be stunning.
Stunning impact: The Hennessy-branded Digital Time Tower at LAX Tom Bradley International Terminal (above) and a spectacular Hermès installation (below)
For sheer impact, it would be hard to beat oOh!media’s new digital installation at Brisbane Airport. At 400sq m, it is the largest digital airport billboard in the Southern Hemisphere and reaches nearly 24 million travellers per year.
Extended reach: Brisbane Airport’s digital drive-by billboard
A number of iconic digital installations are located at Chinese airports, including JCDecaux’s Immersion Tunnel at Guangzhou Baiyun and the Infinity Digital Pillars at Shanghai Pudong’s new Satellite Terminal.
Colour coding: Tiffany-branded Infinity Digital Pillars at the Shanghai Pudong Satellite Terminal
Colour coding: Tiffany-branded Infinity Digital Pillars at the Shanghai Pudong Satellite Terminal
Promotions & exhibitions
The largest and most spectacular exhibition site in the world is surely the MAC Forum in Munich Airport, which is used by some of Germany’s leading brands, particularly in the automotive industry. The airport’s advertising team is also able to complement these promotions with a range of other promotions at the airport, such as integrating F&B and hotel facilities and accommodation into brand agreements.
The eye-catching Audi Exhibition in the public space between Munich Airport terminals 1 and 2
Sponsorships & brand partnerships
One of the most successful airport advertising campaigns of recent years is HSBC’s sponsorship of jet bridges; the campaign is a constant reminder to passengers that the bank is truly global. Most importantly, the creative on the interior of the bridges changes regularly and keeps the campaign fresh, even to regular travellers.
HSBC has made jetbridge sponsorship a cornerstone of its travel campaigns; pictured are London Heathrow and DXB (bottom)
Samsung’s rebranding of Heathrow Airport’s Terminal 5 is another example of a successful recent promotional collaboration. For just two weeks and to launch its latest phone, signage throughout the terminal was re-branded ‘Welcome to Terminal Samsung Galaxy S5’ – including the entrance and drop-off points, lounges, security, gates, baggage reclaim and on all 172 digital panels within the main terminal. The sponsorship was seen by over a million passengers, reached 23 million on Twitter, featured on global news channels and was covered in both consumer press and trade articles around the globe. It is still recognised as one of Samsung’s most successful campaigns.
From Heathrow to the Galaxy: The Samsung showcase at Terminal 5
At Amsterdam Schiphol, brands sponsor the VIP and Privium lounges. These are flexible to fit the sponsor and provide relevant services to VIP and lounge passengers. Audi provided transportation for VIP passengers with electric limousines to and from the aircraft, while Tesla exhibited their high-end models in one of the Privium lounges. Another sponsor, Travelex, provided special rate ATM services to passengers in the lounges, which are also covered by the airport’s B2B digital network.
Tesla drives into the airport, with Privium Lounge sponsorship at Amsterdam Schiphol
For some time, Toronto Pearson has developed partnership programmes with brands such as Genesis Motor and CIBC, alongside a conventional advertising programme sold by Bell Media. Aimed at domestic travellers, the Genesis agreement provides a fully manned retail showroom from which cars can be customised and ordered. The package also has Genesis cars displayed on promotional stands at some of the airport’s high-traffic points, sponsorship of Pearson’s valet parking service and even a dynamic hologram display seen by drivers entering and exiting the main car park serving Terminal 1.
Genesis has developed a powerful brand partnership at Toronto Pearson
Through my work with airports worldwide, I am probably asked about the large-format wrap around the airside lifts in Heathrow Airport Terminal 5 more often than any other site. Booked long-term by Estée Lauder, this is a powerful reminder that, with regular changes of outstanding creative, a site does not need to be digital to engage passengers and have a huge impact. In fact, digital in this location would almost certainly be overbearing and distract from the retail offer.
Stunning impact: The Estée Lauder wrap at London Heathrow T5
Stunning impact: The Estée Lauder wrap at London Heathrow T5
Amsterdam Schiphol is highly adept at advertising and promoting brands sold at the airport. The partnership between its in-house advertising, retail & F&B teams allows direct contact with over 200 brands and focuses on optimising overall revenues to the airport. Schiphol Media Director Maarten van Maaren explains that, for example, the launch of a new gin brand could involve omnichannel advertising to reach the traveller before and during their journey to Schiphol, together with advertising sites at the airport plus special promotions and offers in the duty free shop, as well as in the bars and the restaurants.
Many brands recognise increasingly that airports are valuable showcases for their products, as well as sales outlets, and Schiphol Media regularly sells space to capitalise on this dual function. The stunning IWC store at the airport is actually a media spot, whose primary function is to showcase the brand, its story and its watches, with on-airport sales actually a secondary purpose.
Grabbing audience attention: The IWC media spot by the watch store at Amsterdam Schiphol
Samsung also has a dual-function and fully-staffed pop-up space at Schiphol. This is due to reopen imminently allowing passengers to view, experience and ask questions about the latest Galaxy phones and accessories, as well as buy them.
Van Maaren uses the phrase “the future of travel retail is media” and sees the open nature of pop-up spaces as being particularly attractive to passengers for as long as we still have the threat of COVID-19.
Elsewhere, Munich Airport’s in-house advertising team enjoys close cooperation with duty free operator Eurotrade, also a subsidiary of the airport, with which they create campaigns to drive retail penetration.
Meanwhile JCDecaux has signed an innovative partnership with Dubai Duty Free, on top of its contract with Dubai Airports, for the launch of a new drive-to-store offer at DXB. It is designed to create a new ecosystem based on advertising, airport and travel retail data to deliver an optimised advertising scheduling system and boost campaign effectiveness.
The Samsung pop-up in the heart of Lounge 2 at Amsterdam Schiphol
There is no doubt that global advertising expenditure will fall significantly in 2020 due to COVID-19. The Interpublic Group of Companies (IPG) forecasts 2020 showed a -16% year-on-year decline in traditional advertising sales (TV, print, radio, out-of-home & cinema), mitigated by a +1% growth in internet advertising. Out-of-home, the most dynamic traditional media channel before the crisis, is expected to decline by -22%, with the transit segment, including airports, experiencing even deeper decreases.
Turning the crisis into an opportunity
So, the biggest unknown is probably how fast international traffic will recover.
oOh!media Chief Commercial and Product Officer Robbie Dery is also optimistic about domestic travel, saying: “We are anticipating a fairly rapid recovery once restrictions are eased”. On business and international travel and older passenger groups, he adds: “We are anticipating travellers will be more cautious particularly the more elderly, however our offering skews heavily to business travel, so we will be keeping a close eye on how it bounces back. International travel will be impacted for some time yet, well into 2021 and beyond.”
In a reflection of the wider continent, Munich Airport says it is seeing a gradual rise in domestic and European traffic. However, the airport says traffic is still on a very low level compared to 2019 and feels it is still too early to predict when this will reach pre-crisis levels.
It does seem as though the recovery will differ significantly by region of the world and type of travel, and have mixed impacts on aviation commercial stakeholders. There is some consensus that domestic travel is recovering first. As JCDecaux Marketing & Business Development Director - Transport Division Jérôme Lepage states: “We can’t predict what the final impact will be but we know that the recovery will come and has already started for domestic flights in China. It’s a hopeful sign knowing that domestic markets are real growth drivers for brands in countries like China”
Airport advertising is, therefore, facing a smaller advertising market and will probably be delivering fewer passenger numbers until at least 2022. It’s also hard not to expect significant behavioural change in terms of both personal and business travel. The fact that so much business has been able to continue via video conferencing during the pandemic suggests that business travel may be impacted, and business travellers are often the main target group for airport advertising.
The forecast is slightly better for 2021 as the global economy recovers, with real GDP expected to grow +5.8% according to the IMF, and major sports events fuelling a recovery in marketing budgets and advertising expenditure. IPG predicts global ad spend will grow by +6.1%, but the overall marketplace will still be US$9 billion smaller than its pre-crisis level.
On the upside, we know that larger companies will almost certainly continue to advertise brands that have been around for decades, as they don’t want to risk losing market share in a recession. During the 2008 financial crisis, Procter & Gamble, together with many other world leading companies, actually kept advertising constant.
On 15 June, Institute of Economic Affairs Director General Mark Littlewood wrote in The Times newspaper: “Despite coronavirus, I’m sticking to my prediction that the 2020s will be great. The likelihood remains that this coming decade will bear witness to more prosperity, less poverty and greater human flourishing than any previous one.”
Hopefully, world economics and overall advertising expenditure will recover to pre-coronavirus levels before too long. However, while the rate of recovery in actual passenger numbers is impossible to forecast with any real accuracy at this point, what is certain is that the market will change and airport advertising will need to evolve in order to be able to thrive in the changed aviation and advertising markets that the pandemic will throw up. If necessity is the mother of invention, we in the industry now need to be inventive if we are going to help grow overall revenues for airports and to lead the way in global out-of-home innovation.
We now have the opportunity to assess carefully how the industry can best respond to these changing aviation and advertising markets.
Looking forward, the main challenges and opportunities for airport advertising are firstly, maintaining and increasing relevance for its traditional off-airport brand advertisers and secondly, developing on-airport brand advertising.
In my view, we in the sector will need to:
- Gather more data and information about passenger profiles and flows.
- Increase the focus on who is seeing airport advertising. This will also enable more targeted advertising to be developed.
- Invest in progressively improving the quality of advertising at airports to be able to compete with other media, and to enable brands to deliver content that engages and is relevant to passengers to both maximise sales potential and add to the passenger experience.
- Further develop omnichannel campaigns, including mobile, that allow brands to reach passengers before and throughout their journeys.
The two drivers for increasing on-airport brand advertising are:
- With the rise in ecommerce, there is a progressive blurring of lines between retail and advertising, and this was evident even pre-pandemic, with some airport retail space becoming showcases as much as transactional stores, as described at Amsterdam Schiphol above. In January 2020, Unibail-Rodamco-Westfield, which runs shopping malls worldwide, including seven airport stores in the US, released results of a study into shopper behaviour around the world. The key finding was that the entire retail model and peoples’ shopping habits will turn on its head by 2025. According to the report, 59% of shoppers expect over half of retail space to be dominated by experience rather than product within the next 5 years. Airports will obviously continue to sell products, but it is evident that retail is in a transition.
- Advertising has proven potential to increase on-airport retail penetration and overall retail sales. We also know that there is a rise in pre-planned shopping, with over 50% of Chinese travellers already planning purchases before their journey. Increased omnichannel advertising can reach travellers even as they plan journeys will become normal.
Sending love: A message of solidarity to travellers in Melbourne (in partnership with oOh!media)
Historically, in-house advertising teams have had a natural advantage in terms of developing on-airport brand advertising. However, with a new approach, there is no reason why more advertising operators can’t develop and exploit dynamic relationships with brands and retailers, as well as with other media sales companies.
The majority of airport advertising operator agreements are based on high minimum annual guarantee (MAG) commitments and do not facilitate easy cooperation with airport retail and other commercial partners. Neither do they encourage trialling and testing of new ideas and developing omnichannel advertising solutions with other media sales channels.
I believe that a new way of thinking and type of advertising operator agreement, with far less focus on MAG, would enable many airports to maximise direct and indirect income and benefits from advertising going forward based on four key principles:
- True partnership between airports and advertising operators, sharing risk and a mutual commitment to excellence.
- A breaking down of silos and a re-evaluation of relationships with other commercial stakeholders to produce both higher retail penetration and a more customer-driven offer.
- The ability to be flexible and agile in creating innovative solutions for advertisers.
- Recognition that advertisers are important – and valuable – airport partners.
Dery from oOh!media comments: “My simple view is ultimately the market will decide what is the best model based on the value of audience it delivers at a reasonable price. It’s not simply a case of build sites and advertisers will come. I would argue that airports need to have a much stronger understanding of the underlying drivers of media revenue and the market.
“The investment required from media businesses to secure and grow revenue has increased substantially, pushing operating costs up. Any responsible board has to consider this changed landscape with caution. Data, content and technology are significant investments and without them, there will be genuine risk placed on future revenues.
“If airports choose to ignore that the cost of business has changed, and continue to demand high MAGs, the risk/reward ratio for a media business will become unattractive. This will result in media businesses, particularly the good ones that have invested to future-proof revenue, potentially exiting the sector to achieve higher margins elsewhere. The risk for airports, is that those media businesses who have robust audience data sets, could ultimately be the media businesses competing for revenue against the airport environment.”
JCDecaux’s Lepage adds: “The industry is at a turning point and to succeed, airports should foster new common initiatives between non-aeronautical operators by adjusting their financial model according to the new reality and providing even greater flexibility.”
New business models and agreements could incentivise advertising operators to invest in and trial new ideas, as well as to drive retail & F&B penetration and sales. It is easy to say it can’t be done, but with a little imagination, who knows what is possible?
There is no single model or solution that will work best for all airports going forward, and success can be achieved through a range of different business models, from advertising concessions to agency agreements to joint ventures. However, what is certain is that the most successful agreements between airports and advertising operators will be based on strong partnerships.
About Compass International Media
Compass is a specialist airport and transportation advertising consultancy. It works with airports and landlords directly and also provides specialist input to many of the industry’s leading commercial consultancies, designers and architects.
Headed by Philip Weake, Compass has carried out over 80 assignments worldwide. Current and recent projects include those for Berlin, Malta, Toronto, Bermuda, Dubai and Navi Mumbai International airports plus Washington Metropolitan Area Transit Authority.
Compass and associates Triagonal Information Design have pioneered coordination of wayfinding and advertising planning. Fewer, better advertising sites coordinated with highly effective wayfinding using the latest technologies results in a vastly improved passenger experience and higher advertising revenues, says Compass.
Alongside planning, Compass advises on all aspects of advertising commercialisation including sales and revenue potential forecasting, assessing the most advantageous business model for each airport and optimising advertising tenders.
The Moodie Davitt eZine
Issue 281 | 16 July 2020
The Moodie Davitt eZine is published 12 times per year by The Moodie Davitt Report (Moodie International Ltd). © All material is copyright and cannot be reproduced without the permission of the Publisher. To find out more visit www.moodiedavittreport.com and to subscribe, please e-mail firstname.lastname@example.org