INTERNATIONAL. Damazo Group Founder Oana Damian and Partner Muriel Zingraff are influential players in the sphere of commercial revenue optimisation at airports worldwide. During an intriguing presentation at the recent Moodie Davitt Virtual Travel Expo Knowledge Hub sessions, they mooted various ideas to create new airport commercial revenue streams. These included rethinking the use of airport space to flexible, programmable media platforms and the involvement of airlines in data sharing to boost sales.
The duo – who have worked with almost 50 airports globally – claim they can forecast the value of these proposed new revenue models, to help airports confidently build budgets for the short and long term. The Moodie Davitt Report delved deeper with Damian and Zingraff to find out how airports and other stakeholders will actually make money from these potential new initiatives.
The Moodie Davitt Report: Tell us more please about your notion of airports becoming a space for a flexible, programmable media platform.
Muriel Zingraff (MZ): A flexible media platform is a menu of media offers for brands to choose from. An example would include a brand activation programme (smaller scale, more advertising based) and brand immersion programme (larger scale, interactive campaign) coupled with digital data analysis.
Our proposed media platform programme transforms and grows the advertising revenue through a combination of physical and digital offerings, which enable brands to create amazingly effective touch points with consumers within the airport space. For airports there is a totally new revenue stream to be created from going beyond selling real estate metres on walls.
A flexible media platform means it can adapt its offering to the different needs of brands. We don’t work with Minimum Annual Guarantee (MAG) and long-term fixed contracts anymore.
Programmable means that airports can programme these campaigns digitally and take into consideration all sorts of factors such as brand requirements, airport facilities, consumer behaviour, purchase journeys (offline to online and vice versa), data tracking and others. For example, a D2C [direct to consumer] brand – a first timer in an airport – will be interested in a specific media product in terms of location, functionality of the space and analytics.
In short, a flexible and programmable media platform enables the airport to optimise the revenue from its existing space, beyond what is generally allocated to commercial use, for example seating areas, circulation corridors and so on.
How is the data captured from the individual airport or brand activations, so that their real impact can be measured?
Oana Damian (OD): Most of the data which brands are interested in will be captured at the airport and by the airport through its app or specific platforms that are tailored to the immersion programmes, which then feed into the airport (and/or the brand’s) database.
Such data includes exposure (impressions) and digital spend (calculated as length of engagement with the brand’s activation campaign, or direct product spend). Taking data such as the increased engagement with the brand will be measured by the brand over a period of time from the start of the activation to the following 2-3 weeks – also known as the halo effect.
We at Damazo Group have created new forecast models to calculate the revenue generated from such initiatives, as all that ultimately matters is the capability of airports to generate additional revenue and measure it.
How do brands know what sales have been generated via what has been seen at the airport and the airport activation?
MZ: A well-done brand activation campaign or a brand immersion programme will have a digital call to action linked to the campaign, as well as other incentives that encourage sales in the physical airport retail space.
With this in mind, the physical to digital consumer journey to purchase is followed through an API [application programming interface] and linked back to the consumer and their afferent data.
Whether landside or airside, the objective of brands is to offer the consumer a seamless transition between physical and digital – for example a product can be discovered online and bought in-store, or seen in-store and bought online. This new way of shopping needs to be brought to the airport environment in order to fulfil the consumer expectations and to prevent loss of sales.
The airport can negotiate a variable percentage of sales, which can easily be attributed to the brand presence/activation/immersion programme at the airport.
There has been much talk about airlines sharing data with the travel retail Trinity of airports, retailers and brands and you alluded to it in your Virtual Travel Retail Expo presentation. How do you see this working?
OD: The airline should enable the airport to have access to the passenger as soon as the journey has been booked. Therefore, the data shared is only in relation to a trip booked through that particular airport.
Early access to passenger data gives the opportunity for the airport to start a conversation with the passenger offering an improved, personalised service and commercial offers – for example retail, F&B, car parking etc – that are relevant to that particular passenger.
As more data is captured by the airport’s CRM system, the more personalised the offerings and the closer the relationship is becoming. The airport in that sense becomes a brand in itself, a facilitator with a name, a destination in itself.
If airlines are persuaded to co-operate, how will the amount they are paid be decided?
MZ: There can be various creative models of incentivising and rewarding the airline for sharing such data, one being a percentage rent reduction or, as Dubai Airports CEO Paul Griffiths suggested during the Virtual TR Expo, it can even be a rebate on landing fees.
We understand from your presentation that two UK airports are already using this airline data-sharing formula. Can you tell us more about how the relationship works?
MZ: The two airports we have mentioned – which we cannot name for confidentiality reasons – are direct clients of one of our business collaborators. They are part of the ecosystem of experts we work with, whose expertise lies in the creation of digital journeys and highly rewarding loyalty programmes.
We have modelled precisely what unlocking the sharing of passenger data with airlines would generate in terms of revenue for the airport and believe it is one of the keys to improving non-aeronautical revenue in the future.
When airlines agree to give access to the passenger data, they enable the airport to communicate to their passengers pre-travel. It would be a partnership, as it is a win-win scenario. Passengers can pre-reserve goods or pre-book services and benefit from special offers, which results in direct, guaranteed income for the airport, as well as increased browsing time for passengers at the airport – hence potential for additional sales.
In simple terms, how do these kind of affiliate programmes work and how do the enablers get paid?
OD: Affiliate programmes reward the enabler with a revenue share of the sale. If a person is logged in on an airport mobile application or website, for example, and they click on a branded link, this takes them to the brand’s website.
If a purchase is made as a result of this linked, online journey, the brand would give the enabler (in this case the airport through its mobile app or website) a percentage of the sale – this usually sits between 5% and 10% depending on the product category.
How does a third party such as the Damazo Group help airports generate these new revenue streams, and the resulting financial resilience?
MZ: We specialise in helping airports and brands realise commercial revenue opportunities while managing risk. In order to do this, we have worked out new modelling techniques that go beyond the traditional precedent [precedent = taking past revenue growth patterns and using them to forecast future revenue] and take as a benchmark the wider retail and ecommerce industry [not just airport retail].
The focus of our approach is on identifying and implementing short term to long term commercial revenue maximisation scenarios, which consider the new revenue models and streams we have mentioned.
We look at the potential of terminal space as a media platform, so that the revenue generating terminal footprint is expanded beyond the generally allocated commercial space and the usual travel retail brands and operators. For example, we create revenue-generating media products targeting new types of brands like D2C, through brand immersion campaigns which follow the customer journey from online to offline and vice versa, offering seamless integration and maximising spend.
Individually for each airport we model and forecast bespoke new revenue streams linked to the digitisation of the airport shopping and services, from data collection to loyalty programmes of high reward.
OD: This is where our extensive expertise in hands-on airport concession planning and contract tendering and selection combined with commercial due diligence and business plan reviews of non-aero revenue at almost 50 airports worldwide, is extremely important. We bring a clear, calculated perspective on how things should be done.
This, combined with our impeccable understanding of passenger/consumer needs and behaviours, is the perfect service offering for airports in order to create a sustainable, profitable, passenger-friendly and most importantly, future-proof terminal environment. We really encourage airports to act now, as opposed to when the crisis is over, in order to make the best of the current situation and prepare for a changed future.
Watch the Damazo Group presentation on future airport revenue streams from their Knowledge Hub session at the Moodie Davitt Virtual Travel Retail Expo here.
Contacts:
email: Oana Damian: odamian@damazogroup.com; Muriel Zingraff: murielzingraff@aol.com
Web: www.damazogroup.com
