Future Investment by Media Channels: Global Airports Industry Suppliers

Tuesday 28 February 2012, Amsterdam

Within the global airports industry, 51% of respondents are more optimistic about revenue growth for their companies over the next 12 months relative to the previous 12 months, 22% of respondents are less optimistic, and 22% expect no change.  The chief reasons for this revenue optimism include consolidation in the industry, the inclusion of various ancillary revenue sources and technological upgrades, all of which are projected to increase the profitability and cost performance of airport operators in 2012. For example, Changi Airport, based in Singapore, recorded a year-on-year retail sales revenue growth of 16% in 2011, with similar growth expected in 2012. Interestingly, revenues from the commercial segment of the airport accounted for more than half of its overall revenue, with Changi Airport managing to overcome a decline in traveler frequency by promoting itself as an attractive shopping destination to passengers and locals and increasing retail sales. Specifically, the airport authority identified cosmetics, liquor, electronics, candies and luxury goods as the top five product categories in terms of sales.

See figure: Future Investment by Media Channels: Global Airports Industry Suppliers (%), 2012

A regional analysis of spending budgets shows that the largest increase in budgets of 7.4% is expected by respondents from companies that primarily operate in North America, whereas respondents from companies in Europe expect the lowest growth of 4.8% in 2012. Notably, 26% of respondents from North America expect to increase their marketing expenditure by at least 10% in 2012. “Although profits were relatively weak in 2011, we obtained a good number of customers in the last 12 months due to a widespread marketing initiative we started last year. As we grow in 2012, we need to extend our reach further through the use of social media and other electronic marketing,” states a senior executive of an equipment supplier company operating in North America. Similarly, a supplier respondent from a company operating in North America states: “We expect to increase our marketing expenditure as the growth of our company is spread globally and we have recruited new agents. Furthermore, marketing expenses are being reduced by manufacturers and the cost of marketing goods is being borne by the new appointed agents in their territories.”

This indicates that marketers are expected to allocate a higher proportion of their budgets towards new media, such as emails, internet searches and websites. A director-level respondent of an airport industry supplier company based in North America agrees, saying, “Our company believes in maintaining a loyal customer base, and our interactive company website helps us to maintain this relationship.” Consequently, suppliers are keen to update their online content sites to increase qualified sales leads and online exposure to customers, as well as to provide customers with valuable, relevant content that addresses their requirements. Websites are therefore increasingly being tailored to make content attractive to prospective clients and improve the company’s web presence.

As mentioned above, investment in search engine marketing is growing steadily, with some of the preferred services used by companies including Google Adwords, Yahoo search engine marketing and MSN adCenter. Furthermore, in order to attract traffic to their websites, companies are increasingly adopting the following methods:

Designing search engine friendly web sites using SEO techniques

Ensuring key words and phrases are properly used within the site

Adopting search engine marketing (SEM) campaigns

The use of CRM systems is also steadily increasing, with 27% of survey respondents indicating that they expect to invest in CRM systems in 2012. For the successful implementation of such systems, an accurate value chain is vital, with CRM value chains typically including a customer portfolio analysis, IT and database integration, value proposition development, and customer lifecycle management. CRM systems are used by companies to develop existing customer target groups, as well as to attract and maintain high quality clients and referrals. They also help companies to execute business strategies on a more consistent and cost-effective basis, and to manage customer experience through all points of contact, including initial online and offline inquiries, follow-up, sales experience, customer service, aftercare and loyalty programs. The majority of companies use CRM systems primarily to increase customer retention, respond to competitive pressures and improve customer service.