As we kick off the new year, we’re covering trends from key markets in 2022. We’ll recap the state of each industry over the past year, the ad strategies of its biggest players, and what we predict 2023 will hold.
Airlines have been in the headlines recently for all the wrong reasons. Southwest Airlines, for example, just announced that its holiday debacle cost it $800mm.
A few weeks ago, the FAA’s system outage caused thousands of flight delays and cancellations, leaving passengers in an unprecedented and puzzling situation.
Still, airlines are big business.
In fact, U.S. scheduled passenger airlines reported an after-tax net income of $2.4b for Q3 2022 despite the industry still regaining its footing after the turbulent pandemic years.
It shouldn’t be surprising then that airline advertisers are increasing spend as travelers return to the skies.
We looked at our data to understand their spending and what they’ll do in 2023 as millions more take flight.
MediaRadar Insights on Airline Advertising in 2022
Airline advertisers spent more than $422mm in 2022, representing a 138% YoY increase from 2021.
The biggest jump came in Q1 when airline advertisers boosted their budgets by more than 200% as travel restrictions began to fade. On January 28, 2022, more than 1.6mm people crossed through TSA compared to less than 775k on the same day in 2021.
In February, spending spiked by more than 500% YoY, thanks mainly to advertisers for Delta increasing their investment by 730%.
As revenge travel, i.e., traveling to make up for lost time during the pandemic, started to consume the masses, airline advertisers continued to spend.
In Q2, spending jumped by 55% YoY but fell by 36% from Q1.
Meanwhile, spending in Q3 and Q4 rose by 51% YoY (7% QoQ decrease) and 168% YoY (83% QoQ increase), respectively.
More than half of 2022’s airline ad investment (60% or $254mm) went to digital formats, up by 86% YoY.
At the same time, advertisers spent roughly $27mm (6%) on print publications and the remaining $142mm (34%) on TV, the latter of which was up by more than 288%.
Major Airlines Drive Ad Spending in 2022
No surprise here.
In 2022, advertisers for Southwest, Delta, United, and American Airlines took the industry’s spending to new heights, collectively investing more than $294mm or 70% of total spend from airline advertisers.
With that growth came more ad dollars.
In 2022, advertisers for Southwest Airlines increased spending by 103% YoY. The most significant push, however, came in Q4 when spending increased by 388% YoY and 199% QoQ.
Although spending is on the rise and the airline is returning to its pre-pandemic ways, it’s making tweaks to its go-to-market strategy, which will certainly impact future ad spend.
One of those tweaks involves an intensified focus on business travel, which is interesting considering former CEO Gary Kelly predicted that 20% of the business travel market may never return after the pandemic. It also goes against the low-cost airlines’ “identity,” which historically hasn’t included corporate travelers.
Regardless, their market expansion strategy is working, and the leadership team has clearly had a change of heart. As a result, advertisers will have to adjust their targeting accordingly.
Delta continues to take a unique, albeit effective, approach to win over travelers.
Of course, Delta isn’t expecting free Wi-Fi to cement loyalty—an expanding ad strategy is also helping.
In 2022, advertisers for Delta increased spending by nearly 200% YoY. Q1 spending, in particular, increased by 1,000%+ YoY, peaking in February.
In addition to a booming advertising budget, the airline plans several other initiatives to improve the passenger experience.
Delta Sync is at the heart of that, integrating customer data and engagement history on the in-flight entertainment platform to tailor content offers.
According to Ranjan Goswami, Delta’s SVP of Customer Experience Design, “Delta Sync is basically an umbrella brand that says Delta is personalizing something for you, they know you, they see you, they want to give you experiences that are unique to you.”
Delta’s focus on personalization will surely carry over to its ad strategy and put a premium on ecosystems that can zoom in on its target audience.
Advertisers for U.S. airlines face an uphill battle following a year of scheduling mishaps, delays, and cancellations. Those for United Airlines aren’t immune to that.
Significant ad dollars must flow to get back into consumers’ good graces and make up for lost time.
United (Continental and United Airlines) knows that, which is why advertisers increased spending by 271% YoY. That triple-digit increase came despite a 35% YoY reduction in Q1.
From Q2 through Q4, advertisers increased spending by 300% to 630% YoY, with the largest increase coming in Q3.
Like other airline advertisers, United’s quest for air supremacy relies in some part on standing out.
Its first national advertising campaign in nearly a decade is helping. The campaign “tells the story of United’s leadership in areas like customer service, diversity and sustainability, and captures the optimism fueling the airline’s large ambitions at a time of unprecedented demand in air travel.”
The campaign will run across video formats, out-of-home (OOH) ads, digital, social, and other channels. While United doesn’t specifically call out TikTok, given its penchant for the platform in the past, the widely popular social haven will likely play a role.
Advertisers for American Airlines embraced a somewhat reserved strategy compared to their contemporaries.
In 2022, advertisers for American Airlines increased spending by just 49% YoY, which would have been significantly less if not for the 242% YoY spike in Q4.
While the stark difference in American Airlines’ strategy is puzzling, there could be a simple explanation: the company’s pivoting more than others, and, therefore, used 2022 as a reset.
Historically, airlines, American included, have separated passengers into two categories: business and leisure, which led to separate “strategies for pricing, seating and schedules.”
The pandemic changed that and introduced a new category, which Vasu Raja, Chief Commercial Officer at American Airlines, is calling “blended,” i.e., someone whose trip involves travel and leisure.
Raja’s focus on the “blended” passenger could explain the relative halt in spending. A focus on domestic travel, partnerships, and credit cards may also have something to do with it as could the recent appointment of Walton Isaacson as its agency of record (AOR).
Tough Times Never Last
To say that airlines were hit hard during the pandemic would be one of the biggest understatements of all time. In just 2020, the airline industry lost an estimated $370b.
But tough times never last, and the industry is returning to glory—and so are ad budgets.
Although it could take years for the airlines to make up lost ground, Southwest, Delta, United, and American Airlines advertisers will waste no time pouring their dollars into digital and traditional formats in 2023.
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