IFE advertising is at a crossroads: Part 1
IFE advertising is stuck in a pre-roll paradigm that depends on the general desirability of the broad passenger demographic without segmentation. The future is a video advertising ecosystem that establishes a global, cross-platform advertising market that combines broadcast, Internet, OTT and mobile out-of-home viewing, supports “programmatic” advertising, enables advertisers to buy audience segments, target specific profiles, and is trackable and verifiable.
IFE advertising is at a crossroads – either becoming an important component in an emerging global advertising ecosystem, embracing an automated, rules-based environment, or retreating into ephemera. This is the basis for an article that I have written for the March issue of Aircraft Interiors International.
Moreover, it is the basis for the creation of the Advertising Delivery Working Group (ADWG) that we have organized at the Airline Passenger Experience Association (APEX) Technology Committee, which I chair.
Major disruptions in the advertising industry in the last few years promise to generate substantial changes in IFE advertising in the near future. There are already indications that advertisers are losing interest in smaller IFE advertising opportunities. As I see it, IFE can leverage an opportunity to become part of a multi-market, multi-platform digital advertising renaissance, or sustain considerably diminished advertising revenues from the failure to act. With initiatives we have underway at both APEX and Lufthansa Systems, I am betting it is the former.
Historically anchored in broadcast television, video advertising has been displacing print for some time. Market fragmentation has seen the broadcast TV market lose audience share to cable and satellite; OTT services like Amazon, Hulu and Netflix; the Internet, e.g., Facebook and Google; and finally to the mobility of content with increasing consumption of content outside the home. “Mobile out-of-home” and “digital place-based” are two emerging segments of the content and advertising markets, and we have engaged with the Digital Place-based Advertising Association (DPAA) about these opportunities.
DPAA advises that the biggest advertising opportunities in the mobile/travel sector will be those that consider the entire trip holistically rather than just that portion of the trip that occurs inside the fuselage of the aircraft, a view shared by APEX’s Airline/Advertising/Ancillary Revenue Committee (ARC).
Advertising delivery workflows have become increasingly automated as to ad placement, as well as to data capture and reporting of consumers’ viewing of such ads. Moreover, ads are increasingly targeted, contextualized and personalized. According to DPAA, the data that is important includes environmental data about the flight - city pairs, destination weather - as well as personal data such as age, gender, profession, etc.
Another major change is that advertising whose views cannot be verified are of diminishing interest to advertisers - ad fraud is a major concern with bot traffic at its highest level ever, according to ADWEEK¹ - and the inability to access "programmatic"² advertising seriously limits potential.
Today, IFE advertising remains in a pre-roll environment heavily dependent upon the desirable but broad demographics of the typical airline passenger, and with no individual data to separate ad impressions, or to enable advertisers to buy specific audience segments. This model is approaching ephemera. CBS’ All Access OTT service has begun using “advanced data and technology both to deliver a higher” return on investment (ROI) for advertisers and “to monetize our audiences more effectively,” according to CBS president and acting CEO Joseph Ianiello. “To that end, we are rolling out a proprietary new platform,” called DnA, short for Data and Audience, he noted.
DnA enables advertisers to buy specific audience segments, “so our advertisers can target people who like to eat out and drive SUVs rather than just the broad demographic of adults between the ages of 25 and 54,” Ianiello explained.
A global cross-platform ecosystem
The Holy Grail is now a video advertising ecosystem that establishes a global, cross-platform advertising market that combines broadcast, Internet, OTT and mobile out-of-home viewing, supports “programmatic” advertising, and is trackable and verifiable. And though controversies over ad fraud, ad viewability, and ad blocking have created challenges for digital advertising, solutions to these issues are within reach.
An Interactive Advertising Bureau and PricewaterhouseCoopers report shows that considerably more money is being spent on digital advertising due to increased use of mobile devices, as well as online shopping and greater consumption of video, music and podcasts. Digital advertising increased by 23 percent to $49.5 billion in the first half of 2018, from $40.3 billion during the same period in 2017. Of that, advertisers spent almost 63 percent ($30.9 billion) on mobile advertising in 2018, compared to 54 percent in 2017.
Inflight entertainment, and by extension, airports, have the opportunity to participate in the digital-out-of-home (DOOH) and digital place-based-advertising (DPA) markets - which is where the growth is taking place. Advertisers will potentially turn to IFE, among other mobile out-of-home markets, to offset the losses from home viewing - IF the IFE industry can meet their criteria.
Location-targeted mobile ad spend is forecast to reach $D29.5 billion in 2020 in the U.S. alone.³
Ads placed within this ecosystem will be more targeted and focused on the context surrounding the ad – including “content adjacency”, i.e., which content the ad precedes in pre-roll. This not only means city pairs and destination focus, but such things as seasonal context, and even destination weather, all matched with the use of personal data and content adjacency data to target and personalize ads. “Data analytics” will play a major role and will be common to both targeted advertising and content selection recommendations.
The preponderance of IFE ads will not - and should not - go to everyone, but to passengers based on their personal demographics as well as flight-specific data in a rules-based environment. This means the use of ad servers with ability to store and activate a range of ads based on such context, and to have the ability to enable them dynamically, not constrained by the typical IFE exhibition cycle.
This also means that passengers will be subjected to fewer ads, but that advertisers will pay more per ad because of the personalized data that is attached to them. Clearly, our advertising program must insure that the increase in aggregate value of the ads exceeds the reduction in volume. Tripling the CPM rate while reducing the ad volume by two-thirds is standing still! Therefore, the ability to drive the CPMs much higher by obtaining personal data from passengers, to be combined with environmental data from the flight, is key.
The IFE industry needs to find new ways to capture personal data from passengers in a fair, reasonable and GDPR-compliant way. Such data is fuel for IFE advertising engines, and is potential currency for the traveler. “General Data Protection Rules (GDPR)”⁴ that went into effect in May 2018 governing the use of personal data in Europe severely limit how personal data is used, and are quite different from the emerging rules in the US.
This means the development of sophisticated “permissions management” processes that coax passengers to agree to part with their data. Passengers must see that they are receiving something of value in exchange for such permissions. Such a database may not be aggregated all at once, and the process may begin during the ticketing process and continued at other appropriate times when the passenger is most willing to part with a few pieces of information. Therefore, the integration of such data sources is an important challenge.
In an effort to develop a cross-platform marketing initiative, and to support search-engine based advertising, Madison Avenue has established a number of new standards, specifications and spot advertising practices.
Two of the biggest emerging requirements are 1) the ability to track and verify ad impressions in an era of ad fraud, and 2) the ability to empower the use of “programmatic advertising.”
The Airline Passenger Experience Association’s (APEX) Advertising Delivery Working Group will address these data capture and reporting requirements under the direction of chair Andy Rosen, a digital solutions consultant. Andy Rosen also consults to Lufthansa Systems, where we are currently developing a comprehensive approach to these issues. While nothing short of an industry-wide effort to embrace the new requirements will enable us to become part of the emerging ecosystem, Lufthansa Systems intends to remain in front of the industry as both a thought-leader as well as a solutions provider.
1) Recent projections from the Association of National Advertisers have more than $7 billion in advertising investment wasted. -ADWEEK, February 21, 2018
2) “Programmatic” marketing is automated bidding on advertising inventory
3) BIA Advisory Services, June 16, 2018
4) GDPR is EU regulation 2018/679 regulating the use of personal data
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