January 30, 2011
Posted by Martin Collings under Airlines
Comments Off on Eye for Travel Atlanta – Day 2
I’m now back in Chicago (for the weekend, at least) after a productive few days in Atlanta at the Eye for Travel, Customer Centric Strategies in Travel conference. One thing I forgot to mention when writing up day 1 of the conference was the focus on email marketing. It wasn’t that long ago people were saying email was dying, but more recently I referenced here some research showing email marketing outperforming social media marketing. There was even some good discussion on direct mail, so this really was a conference about substance over hype and results over ranting.
In the day one wrap up I also omitted mentioning the presentation from Rob Borden of Carnival Cruise Lines, even though it was full of insight. The methodical approach these guys have to regular customer contact over the 24 month average gap between cruise purchases, plus the induction path for new members to the email opt-in program seemed to hit the right note. A lot of airlines I know immediately add new email sign-ups to the general distribution list, but at Carnival you get around 5 special welcome emails at set intervals with customized landing pages on click through for each; it is not until 27 days after sign-up that you enter the regular stream of email marketing with all the existing addresses on their database. If your airline is not doing something similar to this, take it as an action item to investigate whether you should.
On Day 2, Jessica Rodbell who is Head of Travel, Southeast, at Google, kicked off with a good presentation, although it relied heavily on a report that uses a research methodology I am typically not in favor of when it comes to really getting an insight into how travelers actually behave online. The research done in conjunction with OTX is (I believe) the same research report covered in this 40 minute webinar from 2009. Some of the questions at the end of the webinar highlight limitations in the study.
But if you want to spend around 40 minutes on a Google webinar, the one below is probably a better use of your time.
Although if you really want to make productive use of your time, forget both webinars, and head over to the Google UK report done in conjunction with Nielsen that I previously called the best piece of market research I’d seen in the past 12 months.
I spoke to Jessica Rodbell after her presentation and there is no doubt that in her six months working in travel (previous Google experience was in financial services and some time spent in China) she has managed to get a good grasp on the key issues impacting advertisers in the industry. I mentioned to her, and I’ll say it again here, if Google in the US commission a report on US consumers similar to one done in the UK, then I’ll be near the front of the queue waiting to give it a good write up.
When Jessica was up on stage she received the obligatory question on the ITA acquisition which she nicely deflected with a “we have no intention of creating the booking” type of answer. One other interesting comment she made was that 1 in 3 searches on a mobile device have a local intent. I’m not sure that is too relevant to airlines, but for hoteliers and destination content providers it has huge relevance.
Plenty of other good presenters on day 2 that I don’t have time to cover here. My own presentation was an interesting personal experience as I was supposed to be doing a double act with Max Starkov of Hospitality eBusiness Solutions, but he got caught in the horrible New York weather and missed the conference. Nothing like a last minute change of plans to keep me on my toes, so I kept the same slides but turned a 15 minute presentation into half an hour by adding much more interactivity. John Burns of Hospitality Technology Consulting did a great job as moderator over the full 90 minutes of the session by getting plenty of audience questions after my presentation was over.
Most memorable comment from the audience during my session came from Ryan Gosdin of Alliance Hospitality Management with his story of a Facebook campaign he ran that cost under $200 in advertising, but which returned many multiples of that amount in profit on incremental hotel bookings. Someone else in the audience then chipped in with a similarly positive Facebook advertising story. I mentioned how when I was at the Phocuswright conference last November someone whose company facilitates key word bidding and related advertising for multiple clients and millions of dollars in ad spend told me that Facebook as an advertising platform was woeful in delivering results. Even with that in mind, there is no doubt that some great copy aimed a very targeted segment at the right time (eg. Ryan’s example of sports fans of a particular team attending a particular game at a particular time and linking a hotel offer into that) will always overcome any more macro concerns on the effectiveness of Facebook as a large scale advertising platform.
That said, I’m starting to see a lot more research claiming Facebook advertising effectiveness overall is improving, but I don’t have any hard data (especially airline data) to really know which side is winning the argument.
January 26, 2011
Posted by Martin Collings under Airlines
Comments Off on Eye for Travel Atlanta – Day 1
The afternoon sessions of day 1 may have been well received, such as the presentation by Iain Pringle of The Mileage Company (British Airways Miles), but in this post I’m going to focus exclusively on the morning sessions from the first day of the Customer Centric Strategies in Travel conference.
Angela Schwartz of Travelport got the ball rolling this morning with a heavy emphasis on using adaptive business rules analysis and business analytic services to pull various sources of data into something meaningful that can be used to personalize the customer experience. A lot of the general themes she was giving are similar to what I will be presenting tomorrow, but the biggest difference was where she simplified the importance of the presentation layer with a single arrow on a diagram titled Tailored experiences and offers across multiple touchpoints such as mobile: my main focus will be on the increasing importance of the presentation layer in a world of points of presence proliferation.
Kristen Manion Taylor from Delta gave a good presentation, but it was in the questions following her presentation where the discussion really got interesting, and she gave some great answers. One delegate who had flown Delta from LAX to ATL asked about signups for the Amex Skymiles co-branded credit card and how whilst at the airport and then on the plane there was a more concerted effort to get signups than she had ever seen before. I spoke to the woman asking the question later in the afternoon about her experience and it was impressive to hear one sales professional really praising the flight attendant for getting 20 credit card applications completed on the four hour flight, even standing over people and helping people as they completed the application forms. It turns out flight attendants are paid $50 for each application (I assume sucessful application) and Delta even gets the more sucessful flight attendants to share their secrets with other employees. EasyJet might be finding ancillary revenue harder to come by these days, but Delta appear to be doing something right.
In the past I’ve been critical of companies making research driven claims based upon dubious foundatations, and praised others producing great market research offering real insight, so it was refreshing to see Edward Nevraumont from Expedia presenting as he was backing up most of his claims with real evidence on what has and hasn’t worked with what he claimed is the biggest non spam email program in the world – Expedia has around 15 million email addresses they can market to. I’m the first person to give credit to Expedia and their email marketing credentials, so I was impressed with the iconoclastic attitude of Edward when it came to dismissing CRM at a CRM conference – kind of like my proposed approach to the slavish embracing of everything social if I ever get invited to present at a social media conference!
Edward Nevraumont gave some great data on one control group compared to another group where email marketing was used employing heavy use of CRM, and then comparing both to the profitability of no CRM and just sending special offers. There is no doubt he was a big fan of Groupon (I’m less enamoured with the sustainability of that business model) but discounts and offers clearly work, as even after adjusting for the cost of the offer, that method was 10% more profitable than the control group with no email marketing, and the CRM approach to email marketing only produced a 7% increase in profitablity when compared to the no emails control group. His most memorable quote was about the merits of moving from a transaction model to a subscription model – I suspect this is where the Groupon admiration was coming from. At least it was a break from many earlier speakers overusing the Best Buy analogy and claiming all sorts of various insight into why Best Buy won over Circut City.
One day to to go, and tomorrow I’m most looking forward to hearing from Renato Ramos of Brazilian airline TAM, and Jessica Myers Rodbell from Google.
January 19, 2011
Posted by Martin Collings under Airlines
I spent some time on the phone this morning with Marcos Issac who is Director, Travel Services Business Group at Amadeus. He was promoting a new report that has been commissioned from Forrester called Cross-Sell You Way to Profit: How travel suppliers are using third party ancillary services to drive new revenues and enhance their travelers’ experiences. I used to sit near Marcos when I first worked in Madrid, and we ocassionally had lunch together, so I’ll try to be as objective as possible given we both work for the same company and know each other reasonably well.
In the press release, Marcos is quoted as saying
Today the industry is focused on the opportunity à la carte’ ancillary services offer, but this study spotlights the growing and significant contribution of third-party sales.
That is interesting, as when I started this blog the focus was intended to be all about third party ancillary revenue for airlines, but over the course of 2009 and 2010 the industry focus really moved much more towards an interest in a la carte services, AKA unbundling. Maybe Marcos is right that now is the time to move the balance back a bit the other way. When we spoke Marcos was keen to point out his key takeaway being the prediction in the report of a 30% growth in third party revenues over the next five years. Personally I’m even more bullish than that on the growth potential of this category.
Readers of this blog may recall an old topic that I illustrated once using the ME Barelona Hotel as an example:
Today we always think of air as the initial point at which the commitment is first made and the payment is first taken, but is it too wild a thought to imagine this model being flipped on its head? If the airline websites do not adapt from their current transactional focus, then for a reasonable percentage of the leisure market, could air actually be the ancillary product sold in future? It happens today with cruise, so maybe this idea is not so crazy after all.
I was surprised to see on page 14 of the report that maybe this was a leap too far for most hotels and other non air travel content suppliers. I remember in the early days of airlines selling hotels and cars some people dismissing the idea and claiming that people would only ever want to buy air segments from an airline. It may not be easy, but the prize is huge if some suppliers traditionally thought of as “ancillary” can somehow turn the model on its head and become the “prime” or the “core” purchase and relegate air (or rail) to being the ancillary component.
Mentioning rail beings me to one interesting topic Marcos brought up. High speed rail is growing at a rapid rate in many parts of the word, and the example was used of SNCF.com being able to sell not only rail, but also add ferry content as ancillary revenue. Apparently high speed rail is moving fast into the ancillary revenue game, but when I asked if airlines could learn anything from the best rail companies in this regard, it appears that rail is more looking to air and their longer history with ancillary revenue generation to learn what products and services make the most sense for rail travelers.
I was amazed to see that 11 out of 12 airlines websites in the survey had implemented insurance as my question was “who is the 12th?” To me insurance is a no brainer for any airline website as the margins are great and there is no inventory or availability issues to worry about. Marcos made the good point that whilst insurance is very easy to plug into a website, it is locally regulated and sometime this can cause delays in getting it sold online.
One of the predictions coming out of the report is that in future “Airlines becomes digitial marketing and media firms.” This is the so called media model – OTAs have gone down this path, and some airlines are starting to think in this direction but will the airline website of the future be plastered with third party ads? I had an enjoyable lunch today with Brad Bailor and Patrick Fisher from Sojern and the topic of airlines and the media model was a large part of the conversation. I learnt that Sojern have raised additional funds from investors and are using this to move well beyond their original business of printing ads on airline boarding passes. The business now is something much more interesting to me, as they appear to be investing in helping airlines generate a revenue stream from moving to a media model, including unlocking the value of customer intent data. Does anyone deny that making profitable use of travel data is crucially important? Everyone may agree when asked, but so few are really doing it well.
The Forrester report comes up with a number of predictions for what the ancillary revenue sources of the future might be, but what is more interesting to me is the whole process of how revolutionary ideas are generated. I’ve written on XPlane before, so I was interested to have Stephen Bartlett Bragg tell me recently that not only is he hosting the Headshift / Dachis Group Social Business Summit again this year, not only are Virgin Blue and XPlane on the bill (at least the Sydney event), but that once again it looks like I will unfortunately miss being able to attend!
The Summit is also being held in Austin, London and Singapore, so if you work for an airline and are interested in this topic, definitely try and get yourself invited. The video below is a lecture by Dave Gray of XPlane on his theme of Gamestorming being the new brainstorming – he’s even written a book on Gamestorming. He makes some really valid points in the lecture below, so if you can’t make it to the Social Business Summit, at least look at the reference to brain cell regeneration just after the four minute mark – are we all really just lab rats working in an office cubicle?
I’m taking a few days off work, so the next post should be written from the Eye for Travel: Customer Centric Strategies for Travel conference in Atlanta next week. Come to think of it, it looks like part of my vacation will be brushing up my presentation for the second day of that conference!
January 18, 2011
Posted by Martin Collings under Airlines
Hat tip to Steven Frischling for alerting me to an interesting story on Ryanair in the Spanish courts.
It was only a matter of time before Ryanair’s fees for boarding passes were challenged in court … and they were by Dan Miro Garcia, a Spanish lawyer specializing in Aeronautical Law and consumer defense against airlines. Mr. Miro Garcia took legal action against Ryanair after he was charged €40 for his boarding pass at Barcelona Girona Airport (GRO), flying to Alghero-Fertilla Airport (AHO), in May of 2010.
The decision went against Ryanair but they have promised to appeal and if they lose that, they have threatened to remove the airport check-in option altogether! I’ve actually been quite supportive of the Ryanair model regarding ancillary revenue in the past, including their online check-in – it is much more honest than those dreaded resort fees.
Whilst on the topic of hidden charges, here is a cautionary tale for airline website managers
State carrier Caribbean Airlines (CAL) has been fined US$40,000 for what the United States Department of Transportation described as unfair and deceptive advertising. But an order served by the department in Washington, DC to CAL on December 2 instructed the airline to pay only US$20,000 within 30 days of the issue of the order and a further US$20,000 if it made a similar violation within 12 months. The report sent to the Express indicated that foreign air carriers, including CAL, are subject to the advertising requirements of the department’s rules. The false advertising is said to have occurred on the airline’s website.
Finally, best wishes to Gillian Gibson in her new role as Chief Marketing Officer for Travelport. I didn’t know Gillian that well when she worked at Amadeus, but in the little involvement I did have with her I found her to be extremely professional and good to work with. Others who knew her better than me typically speak of her in a similar light, so I’m sure she will do well in the new job.
January 17, 2011
Posted by Martin Collings under Airlines
Interesting story on Bloomberg Businessweek a few weeks ago.
Facebook is ramping up efforts to entice companies such as Delta Air Lines (DAL) and J.C. Penney (JCP) to sell wares on its pages and convert more of its 500 million users into online shoppers. Managers at the Palo Alto (Calif.)-based social network have met in the past month with more than 20 companies, said David Fisch, who runs a newly formed commerce partnerships group at Facebook. The aim is to help retailers set up shop on its pages and build tools that let Web users interact while buying.
In the comments I saw the term “f-commerce” for the first time, and I actually used the term in this blog when I first read the article; but I’m hearing very different views from various people in travel on whether or not it really will become a significant source of bookings.
I’m still sitting on the fence, but leaning towards the camp thinking it is better as a marketing and communication tool rather than an actual transaction platform when it comes to travel – but I was late to the party on bookings via mobile, so maybe I’ll be wrong on this one as well.
All I know is that if you are thinking of Facebook as a true e-commerce channel, then you had better be set up to be a truly social business. Embracing social in name only is not a good place to be.
I’m still surprised that so few companies seem to realize the good PR that can come out of a proper apology – as an example of how to do it right, take a look below at the apology I just saw from Groupon CEO Andrew Mason over a recent Japan promotion that went wrong. You just can’t buy this type of positive impact on the brand (the apology, not the screw up), and it really highlights a true social business versus one that is social in name only.
Update: An hour after hitting the Publish button on this post I saw that Daniele Beccari had just written a story on Groupon and travel for Tnooz, and in it he references another good piece from Stephen Joyce on Groupon that is travel specific and which I also had not seen previously.
January 13, 2011
Posted by Martin Collings under Airlines
Comments Off on Does email marketing really outperform social media marketing?
After writing a mammoth post yesterday trying to understand how new advertising models in an internet TV environment are applicable to airlines wanting to make an impact in the travel inspiration space, today I’m going with something a bit shorter.
One post that gets a fair amount of search engine traffic here is where I used empirical evidence from an airline customer (with their permission of course) to measure various success rates of an email marketing campaign sent to people at three different points of sale. It must because there really doesn’t seem to be that much good data on email marketing, so my small effort gets a disproportionate amount of attention.
I was very impressed this week to see an even better piece of analysis (and even containing one airline analogy) appearing on Search Engine Land. All the claims there are backed up by empirical data, and there is one headline grabbing claim that email marketing outperformed social media marketing in their test. I’ve always suspected that despite many stories in the past year about how airlines with the most Twitter followers are fantastic, the opt-in email distribution list an airline holds is probably a much more valuable asset.
Search Engine Land is a great site, but something happened to me about 10 hours ago that is unforgivable, and should be a warning to any airline using website analytics. The page was calling all sorts of third party sites as I could URLs flickering in a status bar at the bottom of my Firefox browser, but then during page load it froze for 3-5 seconds with the message “waiting for Omniture” – only a blue background page appeared, with no text visible. As an airline, if your site refuses to load because of a potential problem with Omniture or any third party, then redesigning the site must be a priority – otherwise revenue will go walking, and it will walk elsewhere.
Email marketing might be great, with a growing body of data to back up the positive ROI assertions, but unfortunately for the guys at Virgin Blue in Australia, the email marketing story hasn’t quite been such good news for them recently; they agreed to pay a penalty of AUD $110,000 for making it too difficult for people to opt out. I suppose that is one good thing about Twitter, to unfollow someone is pretty straightforward.
January 12, 2011
Posted by Martin Collings under Innovation
Comments Off on The relationship between internet TV and travel inspiration
In my last post I was talking about internet TV, how I am convinced this is the future of home entertainment, and how in my next post I was going to try and tie this into ways it may eventually impact online travel. But first, I had thought I was ahead of the curve by having my Blackberry as my TV remote control, but then I saw this app from the Consumer Electronics Show in Las Vegas (can’t wait to talk to the one airline exec who I know was there, as I wasn’t attending). The Unify4Life app seems to do all that my phone can, plus it lets you view the TV guide on the small screen whilst you watch a program on the big screen, and you can even activate it prior to getting into your car / motorbike so that when your phone is within range of your home, the garage door automatically opens.
That is the type of technology that when you use it once, you are likely to be hooked, especially the TV guide browsing and remote control aspect – maybe not so much the garage door part. As I wrote in the last post, this is my personal experience from internet TV (ie. I’m hooked), and so now that I am convinced it will go mainstream (for me, 2010 was the year of NOT jumping on all hyped up technology), I am thinking a lot about what implications that might have for the airlines I talk to and their direct sales business.
One of the initial implications I am pondering is for airlines looking at more of a presence on the left of the Bow Tie Model in the travel inspiration space. Last year we spoke a lot about the future of travel search, whether the new travel search and inspiration were one in the same, and really analyzed in detail what travel inspiration actually meant. But we never looked at the impact of internet TV, so today I’m throwing one more variable into the mix.
I saw this week that VFM Leonardo were expanding a business unit that has a heavy focus in online video for hotel chains, and I’ve heard a lot of people saying 2011 is the year of online video – my take on it is that online video on the PC or mobile or tablet is a very different medium to online video via internet TV. The website hosting the video may be identical, but the frame of mind of the consumer is very different, and therefore the way an airline can benefit from this trend is also very different.
TV is unique in that it is often a shared experience, whereas PC, phone and tablet are typically running sessions unique to one person. For someone planning to travel alone the difference may be irrelevant, but for anyone traveling in a party of more than one, it could be significant.
Most of my recent learning in this area is coming from Hulu.com and how I am experiencing the ads they serve to me whilst watching TV. In short, they offer shows with less advertising than normal, but sometime I have to actively choose which one of three ads I want to watch, and other times they give me a choice to fill out one survey and watch the rest of the show ad free. The one of three ads concept is the one that has most caught my attention due to its great appeal for influencing undecided travelers.
I did some more research, and it appears Hulu is far from the only one embracing this advertising model; the actual team behind the technology appear to be from VivaKi who are connected to Publicis. The video below featuring Curt Hecht, President of VivaKi Nerve Center is interesting to get a more in depth understanding of who is behind this and how it all works. I don’t normally cover marketing here, but this video is quite interesting if you have an interest in marketing and especially advertising.
Internet TV is only going to go more mainstream as the user experience improves – just look at the seamless experience of switching between the iPad and Apple TV today. But understanding whether the ads are being shown via a TV in a multi-person household and a PC with a single user may be a challenge the people like VivaKi are yet to address – I don’t really know. But follow me as I develop an idea for what is possible.
Today on a multi-person journey, one adult usually has to convince one or more adults on the preferred destination, and all adults (and even teenagers!) are consuming different information at different times and then have to somehow convey what they have learnt to influence others in the prospective traveling party.
If two or more are sitting in front of a TV and the first ad they see shows three different types of holiday in three different destinations, then the three options probably leads to some initial discussion around which advertisement they want to watch. As internet TV is often going to see people watching 30 – 60 minute shows (we all know how annoying channel surfing is when you yourself don’t hold the remote control) this gives the advertiser an amazing chance to develop a story using advertising during the entire program. You can’t do it effectively on a PC if someone is flicking between different sites, but by watching one TV show on one site, a travel supplier using a Hulu type choice model of advertising has the ability to turn each ad break into a new chapter in a choose you own adventure storybook.
By the end of the TV show everyone watching has had an input into working towards a possible holiday destination through discussions of which travel ad to select at each break, with each ad narrowing down the choices and building on intelligence derived from previous ads selected and skipped. This has to be so much more powerful than just saying 2011 is the year of online video – the real power is actually due to interent TV, the group dynamic and a longer session on one website – advertising actually becomes a powerful storytelling experience where the storyteller adapts the story to the feedback of the audience in the room. This is perfect for travel inspiration.
What I’ve written here is really just a starter to get you thinking about how this could be used to support an airline wanting to change the way consumers think about travel inspiration and try to reclaim ground from generic search, meta search, OTAs and standalone trip planning sites in this space. The airline is in a unique position to be present in more parts of the entire trip process, and the ability to turn TV program ad breaks into a choose your own adventure story unique to each and every lounge room, and then even send reminders or extra info post program if the user is logged in (as I typically am when on Hulu or Clicker) is nothing short of revolutionary.
That last point of the user being logged in leads into another key theme for this year – having a consistent and personalized experience for the customer regardless of which device he chooses to use when accessing your content. I’ll be covering some of that point in my appearance at the Eye For Travel event in Atlanta on January 27th, but for now, hopefully I’ve given you enough food for thought to generate a bit of water cooler conversation in the office today.
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