“Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Mihai Fanache, CEO at ChargeAds.com.
Not long ago I searched for a flight from San Francisco to Singapore.
Expedia presented me with no fewer than 4,500 options, many delightfully affordable. The lowest came in at just $899 round trip, with more stopovers than fingers on one hand, and an estimated flight time of 52 hours. That’s way more airline food than any human can handle. Who would ever sign up for that?
There were plenty of flights that, for $600 more, would get me to Singapore in half the time, which made more sense. But I had to work to find them.
Are There Lessons They Can Teach Us?
For good or ill, we have many similarities. Both industries sell a perishable, time-sensitive commodity. First class or economy – seats are worthless if they’re not sold before within an hour of departure. Ditto for ad slots on a sports page featuring game scores. In both cases, time is of the essence, and both sectors have responded by developing sophisticated and dynamic pricing systems to fill as many seats and impressions as possible before it’s too late.
Both industries have an abundance of acronyms and buzzwords that utterly confound people but eventually become part of the industry lexicon.
Airlines have revenue passenger mile (RPM), available seat mile (ASM), revenue per available seat mile (RASM) and cost per available seat mile (CASM). We have cost per thousand, which we write as CPM but if you don’t speak Latin you might find that confusing. We talk bid density and debate around various forms of programmatic that will execute across DSPs. And we expect our partners to trust us for what we’re doing with their money.
Finally, both worlds have myriad partnerships, which is why I could easily find more than 4,500 flights to Singapore, and why ad tech’s org chart looks like a bowl of spaghetti. How does that pan out to customers? Airlines offer to deliver me to Singapore via Atlanta, New York, London and Doha, while ad exchanges throw bids and cookies at each other for a while, before my 300x250 ad shows finally shows up on a screen in Denver.
Why Is The Airline Highly Automated And Digital Advertising Isn't?
Once upon a time, travelers went to an agent to book a flight. Or they could call an airline to inquire about flights, reserve a seat, mail a check and wait for their ticket to arrive in the mail.
Today, just about every aspect of booking a flight is automated and updated in real time. You can search for flights, pay for a seat, go window or aisle, choose your food options and reserve a car at your destination from any device, wherever you are, 24/7. That’s an incredibly efficient real-time seating operation that allows airlines to transact directly with their passengers.
Let’s compare that level of automation to the digital media’s direct sales model.
My eyes roll. Anyone who has ever bought digital inventory directly from a publisher’s sales team knows just how thoroughly spreadsheets permeate the process. In spite of all RTB innovations, availability of data and trade automations, our buy-sell model resembles the travel industry circa 1972.
We could fix it, so why don’t we? Here are a few ideas:
1. Design systems for humans.
Universal design is something the airline industry does really well, which is why most booking interfaces are intuitive. They keep all the science needed to support these transactions hidden from the user.
In other words, you don’t need training courses or webinars to book a flight, and even my 59-year-old mom is a champ at electronic check-in. So if we design systems for humans, they will be used by said humans, not ignored.
If 100,000 of our ad impressions are worth $699, why can’t it be sold as a prepackaged bundle in a storefront or marketplace? Let’s wrap a deal ID around it, and top it off with all the data and science that will make it perform. (This is what programmatic direct is supposed to deliver, but in truth there are very few proper executions around the idea.)
The industry can’t grow on confusion or half-baked concepts. And I’m pretty sure that almost buying myself a ticket won’t fly me anywhere.
2. Teach advertisers how to play your game.
If saving money is your top priority in choosing a flight, then you know to expect minimal leg room, to pack a bag that easily fits in the overhead compartment and, by all means, to bring your own sandwich and ear buds.
Good or bad, we all know the game, because the airlines have done a terrific job in teaching it to us. We accept the rules and adapt our behavior accordingly. Compare that to the digital ad-tech world, where every deal is a customized job, endlessly negotiated and eventually traded over a whole stack of middlemen and inefficiencies.
How much would we benefit from more direct and standardized buying options? I think for many buyers who need to launch campaigns quickly and efficiently, standardized bundles would do a world of good.
3. Make efficiency your secret sauce.
Operational efficiency is what most innovations are focused on today. But is that a business model? Or a process model? Whatever the answer, process innovations don’t compete with business innovations.
The airlines transformed their business model when they used the Internet to connect and transact directly with their passengers. They provide better access to their inventory and great value for their customer, but ad tech seems to have missed the plane on that big idea.
Airlines have a lot to teach us, as long as we’re willing to listen. That is what is going to take us out of Kansas and over the rainbow. No offense to Kansas.