Young woman sitting using phone on the aircraft seat wearing face mask

Inadvia on unlocking the full potential of inflight advertising

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For decades, airline passengers have watched advertisements in-flight. Sometimes a video ad simply runs on the seatback entertainment screen just before a passenger tucks into a Hollywood blockbuster, or it serves as the gateway for them to access free wireless content or connectivity on their own device. Digital advertising might also be visible on an airline’s onboard portal, showcasing credit card offers or its travel partners.

Now, as the world fleet is getting connected — and with it the ability for some inflight entertainment and connectivity (IFEC) players to remotely load content by ferrying it via satellite to the aircraft — one can imagine a possible future that involves hyper-customization of advertising to passengers.

Untapped potential

According to market intelligence firm Valour Consultancy, IFEC-driven advertising yielded airlines an estimated $266 million in 2019. That’s certainly not chump change. Yet airlines and their IFEC partners have yet to unlock the full potential of inflight advertising, especially given that airline passengers are a truly captive audience.

Unlocking this potential does not necessarily mean bringing more advertisements on board — which will no doubt come as a relief to passengers! Rather, it’s about serving up more relevant advertising to prove out the business model of ad-supported IFEC and ancillary revenue generation for airlines, an especially timely motive given that industry is seeking to recover from a crushing pandemic.

Screen shot of Balani advert on American Airlines' Viasat-powered portal. A man is seen in a smart suit, standing in front of the NY skyline.

American Airlines is offering 20 minutes of free Viasat-powered Wi-Fi if the passenger views a video advert. Screenshot of a Balani video advert on AA’s portal.

“When we think about people’s experience on the ground, I think generally people acknowledge the value exchange of accessing content and the need for advertising,” says Matthew Blay, director of Inadvia, whose in-transit programmatic advertising trading platform is billed as enabling airlines, cruise lines, rail and coach operators to maximize the advertising potential of their entertainment and connectivity systems. “I think my view is if we get the advertising model right for IFEC, what we’ll have is more relevant or higher value advertising which people are more receptive to.”

Programmatic advertising misconceptions

So how can this be accomplished? Firstly, it’s important to understand some of the reasons why advertisers aren’t working more expansively with airlines. And for that, we return to Valour, which in January 2021 answered the question on its website, explaining that passenger numbers don’t always give brands the scale they want; airlines have not been able to target adverts to passengers beyond simple city pairs due to a lack of analytics; and lengthy IFE content refresh cycles preclude them from many campaigns.

“In some cases, airlines themselves are the issue, with strict policies about who and what they are willing to promote. Such policies prevent some carriers from engaging meaningfully with programmatic advertising, a solution that automates the advertising workflow, from trading (the buying and selling of media), to serving (delivering the right ad to the right person) and reporting (proving the ad was served to the person),” noted Valour.

“There’s a common misconception that programmatic advertising means a loss of control over the ads featured, but this isn’t the case — platforms such as Inadvia’s allow blacklisted brands or sectors to be inserted up-front and to ensure creative approval is received for every campaign. More and more advertisers are buying and running their digital campaigns in this way today.”

The UK-based consultancy reckons that inflight advertising could grow to a $3 billion dollar industry over the next decade — that is, if programmatic advertising becomes commonplace in the aviation market.

Some airlines’ embrace of digitalization during the Covid pandemic could be seen as laying the groundwork to support a better inflight advertising ecosystem on board aircraft. “Some of the technologies like touchless cabin or some of the really innovative platforms around food and beverage ordering — and of course the loss of the inflight magazine — will really help inflight advertising accelerate,” said Blay. Consider, for instance, how relevant advertisements could be served up alongside menu items.

D2C-IFE, threat or opportunity?

But there are also new opportunities and potential challenges on the horizon. Given that a growing number of inflight broadband connectivity solutions can support a streaming class of service for passengers, a direct to consumer (D2C) inflight entertainment model is gradually gaining traction, whereby passengers can access their own streaming subscriptions over the Internet in-flight. And perhaps, once the movie arrives on board, it can be cached for other subscribers to view, which would preserve precious and costly bandwidth — if studios approve.

Creative airline/streaming provider partnerships are also being forged that entail bringing cached content offerings on board that deliver content created for D2C but are not delivered that way. The primary motivation is to expose the brand and the D2C exclusive content so as to generate subscriptions. JetBlue and Peacock’s new collaboration is a good example.

During the APEX TECH conference on 21-23 March in Los Angeles, Blay and other scheduled speakers will consider whether ad-supported D2C inflight entertainment can become a revenue generator for airlines, and if so, how to maximize it (and indeed, speakers will also separately address the intriguing idea of ‘edge caching’ streamed movies to preserve bandwidth).

Providing Runway Girl Network with some color before the event, Blay shared that he doesn’t believe that D2C-IFE will threaten airlines’ ability to really capitalize on inflight advertising dollars. “As long as there are engagements, there is great potential.”

At the same time, however, he said:

There is an absolute need to operate inflight advertising in the same way that ground advertising works. Our competitors should be Netflix and Apple and I think until we do that, we will never really fulfill the potential that inflight advertising has.

That requires a shift in mindset, according to Blay.

Airlines are those with the attention, they hold the commodity that advertisers want, but it’s the advertiser who has the money, so it’s the advertiser who is the customer. Typically, in the IFEC sector, the airline is the customer. But if airlines want to recognize that the attention they have with their passengers is of value, they need to put their customer, i.e. the advertisers, in the middle of that strategy. If we help them do that, we can access the mainstream digital market and succeed.

But, as mentioned, there are barriers to entry. At present, inflight advertising isn’t easy to buy. “It previously took months to get on board and the targeting isn’t quite good enough,” noted Blay.

Moreover, inflight advertising “has struggled with the digital advertising workflow. Formats need to be compatible with advertising industry standards and we have not done that in the industry,” he explained. “This is where the Airline Passenger Experience Association’s APEX Advertising Delivery Working Group (ADWG) will play a meaningful role, as it is working towards lowering the barrier to entry for advertisers into IFEC by complying with their industry standards so they can trade with us.”

As a member of the ADWG, Blay observed a lot of “innovative” activity during the pandemic downtime and said: “I do think that will pay dividends.”

In his view, accessing mainstream markets requires that the technology employed can provide the right campaign tools and the right targeting, and that it adheres to the appropriate standards to be able to trade like Netflix or YouTube on the ground. Video ads, purely for example, achieve steep growth and premium rates and, as such, are ripe for the inflight market, but airlines must be able to know if the video played, if the volume was on, and if the video ad was adjacent to quality content.

Screen shot of a Marriot Bonvoy advert on AA's portal, with the volume turned off.

Is your passenger watching the video ad to score free content or connectivity with the volume turned off? Screenshot of a Marriott Bonvoy video ad on American’s portal, with the volume off.

Digital advertisers’ sophisticated requirements

With the death of the third-party cookie on the horizon — a story in its own right — Blay also reckons that it’s especially timely for airlines to consider how they can attract more advertising investment by using first party data that goes beyond simple city pair information to include, for instance, time of year or exact flight information, or even going further into the content layer to understand what passengers are watching on board. If a passenger is flying into Denver during the winter season and watching winter sports content, a major outdoor sportswear company would likely be happy to spend considerable money to advertise to this type of customer.

These are the advertising features that Inadvia and its colleagues and competitors around the world are trying to address. “We can make it easy to trade and give airlines and their IFEC [partners] the right campaign tools,” said Blay.

But is there a clear path forward for inflight advertising with GDPR rules hanging over airlines’ heads? Michael Childers, a content management consultant who advises on data management strategy, told RGN:

Yes, there is. For years, inflight advertising was driven by the broad assumption that travelers represented a higher income, better educated, more sophisticated demographic. But that overly-simplistic generalization is not only outdated but is not consistent with the more sophisticated data requirements and expectations of digital advertisers.

Childers continued: “The basic cohort for advertisers that is the baseline today for entering the world of higher CPMs is ASL — age, sex (gender) and location. But a lot more data is needed to raise CPMs even higher. There are three categories of data: personal (GDPR-protected), environmental, and behavioral. Environmental data relates to the ‘location’ requirement — the city pairs, and whether or not the destination is home or away for this passenger. This kind of information is available from the manifest and is not GDPR-protected. The passenger’s behavior inflight — content selection, etc. — is not GDPR-protected.

“We will discuss this in some detail at APEX TECH — today’s movie and television content contains ‘smart’ metadata that tells an advertiser something about a passenger who chooses a specific movie and watches it to, or near, completion. This is ‘contextual’ metadata that can be used as what advertisers call ‘GDPR-proxy’ data. If an airline reports ad impressions by identifying the Ad-ID of the advertising viewed, alongside the EIDR [Entertainment Identifier Registry] number of the content against which it was seen, this data can be used in place of some GDPR-protected data to raise CPMs — not by as much as personal data, but considerably more than the general data about the passenger demographic today.

“Moreover, if this ‘smart’ metadata is used in real time, it can be used for content recommendation and discovery, and for ad selection and personalization. We will talk about ad-placement servers, ad-decision servers, increasing passenger engagement, and personalizing the experience [at APEX TECH]. Of course, if the airline adopts the attitude that ‘data is currency’ there are ways in which to incentivize a passenger to share data by offering something of value in exchange.”

Inadvia’s Blay sums up the inflight advertising opportunity nicely. “Modern advertising success is built on businesses that combine consumer attention and data through the applications of technologies to execute campaigns using advertising industry protocols. What’s really important here is the attention combined with data and processed in the right way which will drive the success of advertising.”

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Featured image credited to istock.com/FG Trade