ONBOARD ENTERTAINMENT
Airlines are still to maximise the many opportunities to generate ancillary revenue from IFE, whether that be advertising right through to passenger upgrades once on board
few ad agencies, such as Aeromedia Network, have recognised this opportunity. The team at Aeromedia works with clients to create video content that is intended for terrestrial use. As part of a larger media buy that includes radio, print, online, etc., Aeromedia places the video on airplanes. This package approach delivers a revenue stream to the airline from advertisers that otherwise would have probably never been interested.
The point is that there are a lot of small to mid-sized airlines who are not able to realise advertising revenue because of route structure and the number of impressions. Further, the middlemen (e.g. content integrators and agencies) are not financially incentivised to find a solution.
The advertising value chain All of this discussion about advertising revenue and the various parties involved raises an important question - who owns the revenue stream? Consider the entire value chain for a moment. 1. The advertiser who pays 2. The ad agency who creates the advertisement and places the media buy 3. The content integrator who puts the ad on the IFE system and may have sourced the advertiser or agency
4. The airline who flies the plane and provides the passengers (not to mention the potential internal conflict at airlines over who owns this media)
So along that chain, who is providing the most value and is entitled to appropriate the most value? Each party has a legitimate claim. To date, the airlines nab most of the value because they provide the seats and passengers. But what if someone changed the structure in order to address the fragmentation issue addressed above? What if someone were to aggregate carriers and routes or package IFE ad sales with terrestrial media? Suddenly, the value begins to shift. Instead of being price makers, airlines become price takers and the profit pools at the middleman.
Searching for monetisable innovation Virgin America, long known for its innovation, is using its IFE system to generate additional revenue through seat upgrades. After boarding the plane, passengers are presented the opportunity to move to a seat in a better
class, if any are available. Payment is collected through the IFE system. The two obvious advantages are the ability to collect additional revenue from passengers with a propensity to spring for the upgrade and the limited amount of crew interaction. In fact, the flight attendant is only required to relocate the passenger to his or her new seat.
Final thought
As always, the world of inflight entertainment is changing, slowly; though the suppliers and airlines that stand the most to gain are those who are able to re-engineer how the advertising value chain is structured and re-envision how the inflight entertainment system provides ‘immersive media’ and new monetisation opportunities.
Send your comments to
aj@speakwithadam.com
www.onboardhospitality.com 117
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