(Last updated on: 07/04/2020)
Ancillary revenue is big business amongst airlines. Over the past few weeks I have published a series of blog posts explaining just how airlines make additional revenue through ancillary revenue products and services. Today I will cover the last of the four types of ancillary products, advertising.
Airline marketing versus ancillary marketing
If you read through my related posts on ancillary revenue management (see suggested links at the bottom of this article), you will see that ancillary revenue is made through selling a product or service other than the seat. If you have clearly understood this, then you should understand the concept of advertising as an ancillary product…
Every airlines will undertake significant marketing efforts to advertise their business. They might have TV adverts, adverts on the Internet or posters, for examples. In order to do this the airline will pay money to place an advertisement. See below advert as an example.
You might also be interested in my post- ‘How do airlines use frequent flyer programmes to make ancillary revenue?’
Please note- THIS IS NOT ADVERTISING AS AN ANCILLARY REVENUE PRODUCT!!!
Many of my students (mostly the ones who do not listen or attend class!), get this wrong. If any airline is PAYING, how can this be a way of MAKING MONEY? Seriously, just think about it, that makes no sense at all!
So, if this is not advertising as an ancillary product, then what is?
Advertising as an ancillary product is when an airline SELLS advertising space to a third party company. They may money from selling this space and so it is therefore an ancillary revenue- ding, ding! Makes sense, now, right?
Methods of advertising as an ancillary revenue strategy
There are lots of different ways that third party companies can advertise with an airline. Some of these you may be familiar with, others you may not be. Below I will provide some examples.
You might also be interested in my post- ‘Why do airlines use commission-based ancillary revenue products?’
Advertising as an ancillary revenue strategy is perhaps most prevalent online. Websites effectively sell advertise space to third party companies. This could be a banner ad, a side ad, an affiliate link, a review or any number of ways that a company can be promoted on the website. Some airlines may offer spaces on the home page or on other pages.
Ancillary revenue can be made from a number of sales techniques. This might include pay per click agreements, daily, weekly, monthly or annual rates or rates per impressions. The exact nature of the commercial relationship and how much money changes hands will not usually be known to the general public.
Airlines often sell space to advertisers as a means of ancillary revenue in their inflight magasines. This could be a page advert, half a page advert or a small feature. It could also include link advertisements.
In-flight entertainment is something that is generally offered by scheduled carriers on long haul flights. It provides the perfect opportunity for ancillary revenue income, yet to date is largely under exploited. Just like YouTube or ITV, some airlines will place adverts created by third parties before or during entertainment facilities, such as films. However, many airlines are missing an opportunity here.
We can’t help but look at the seat in front of us while on a flight! Therefore, this can make for a perfect advertising space for an airline to sell.
Livery/exterior wrap advertising
Some airlines will allow advertisers to paint the exterior of their aircraft to promote their own brand. Whilst an airline can make a lot of money from this, they need to weigh up the costs against the benefits. Ryanair, for example, stopped selling exterior wrap advertising some years ago as they deemed the lost opportunities to advertise their own brand outweighed the money that could be made.
You might also be interested in my post- ‘Why do airlines use a la carte ancillary products?’
Some airlines will have removed headrest covers. This can be a convenient place for an external company to advertise their product and for the airline to make a little extra ancillary revenue.
Tray table advertising
Similarly, some airlines will allow for adverts to be placed on their tray tables. This can be on the back on the tray table so that the customer can see it while it is folded away, or it can be on the inside of the tray table. Some airlines will also place a paper insert on top of their food trays with an advertisement on it.
Boarding pass advertising
Airlines can make money through ancillary revenue advertising on their boarding cards. For traditional boarding cards, adverts tend to appear on the back. For online check in, where boarding cards are printed at home, adverts tend to follow the main flight details.
This can be a useful way to make money, but it can also cause some confusion when passengers are looking for important details on their boarding card.
Overhead locker advertising
Some airlines, typically budget airlines, will allow advertisers to use the space on the overhead lockers. Some airlines avoid this practice, however, as they think that it looks untidy and is not in keeping with the brand image.
Airline cup advertising
Ever noticed advertising on cups? Maybe you will next time…
Sick bag advertising
Yep, airlines have thought of it all… sick bag advertising is a real thing!
Should an airline allow any old company to advertise with them?
When selling advertising space as an ancillary revenue product, it is important that airlines choose the right companies to work with. It is essential that the airline assess the opportunity costs i.e. will the negative impacts of this advertising outweigh the positive?
Airlines need to consider their long-term strategy. Just because an advertisement might bring in money in the short term, doesn’t mean that it might not drive away customers and in fact lose the airline money in the long term. This is something that airlines must consider when choosing to work with an advertising partner.
Airlines should choose commercial partners which align with their own brand values and which are appropriate to their business. Hilton Hotel, for example, might be a good fit for a page advertorial in the British Airways magasine. This is because their brand image is similar to BA’s- premium quality etc. British Airways may, however, turn down an offer from an online casino company who wishes to advertise on their website as this may have negative impacts on sales. Casino gambling companies are not aligned with the BA values and is unlikely to be of interest to the customers, who instead are likely to view it as spam.
An airline must carefully consider who they choose to work with and why.
There we have it, an overview of how airlines use advertising as an ancillary revenue strategy. I’ve given lots of examples in the post, but I’d love to hear more if you have them? Drop your comments below!