Group4 Air France

October 15

IMC Case Analysis

2012

Air France Case Analysis

Submitted by Group 4:

IMC Section B

Amber Kumar Yadav

Anshul Kumar

Arnab Guha Mallik

15/68

15/71

15/74

Darshan Sullia 15/81

Ashutosh Vikram 15/210

1) Should Media Contacts recommend a uniform strategy for Air France across search engine publishers? Or would it be more effective to tail each publisher strategy to maximize return on investment? From the case, the optimal search marketing campaign is based on choosing effective allocation of ad dollars across the various search engines, as well as selecting appropriate keywords and bid strategies for placement on the search result page for Internet users. In determining the optimal strategy, the case presents background information on the airline industry as well as the Internet search options available at the time, including Google, Microsoft MSN, Yahoo!, and Kayak. Additionally, background information is provided on SEM and its associated costs and means of measuring the successfulness of each marketing effort. The table Exhibit 6 included line item information for keywords and keyword groups for each campaign and search engine, implying that strategies between each search engine is at least slightly difference, although high level conceptually they all lie on similar principles. However in another case, the author suggests that buyers using search engines to look for information tend to trust and follow links displayed in the editorial section of the searchresults page. Most on-line sellers, however, do not invest in search engine optimization (SEO) to get higher search-results rankings for their listings, but instead prefer paid placements. They explain that SEO is more expensive than paid placements, produces results that do not justify its cost, and does not consistently lead to high search-results rankings. This implies that sellers would invest in SEO if it were less expensive and its rankings were more consistent. However, even if SEO and paid placement cost the same, and SEO always produced high rankings, paid placement would still be the search engine marketing (SEM) strategy of choice for most on-line sellers. Interestingly, no optimal SEM strategy includes SEO. These findings are especially significant for advertising professionals who have to justify investing in paid placements despite overwhelming evidence that buyers ignore them and follow links in the editorial section of the search-results page. In the PivotTable we can isolate and separate variables that lead to deeper insight into the impact and revenue effect different publishers have on facilitating Air France ticket sales. Placing Publisher name in ‘Column Labels’, with ‘Campaign’ and ‘Keyword’ as row labels and ‘Average of Return on Dollar Spent’ we see that each publisher has their own distinct advantages. For example, customers looking to find western European destination results, “flights to Florence” had a 1572% return when search via Google, with no such result on Yahoo. Conversely, any dollar spent to link ‘European airlines’ with sales on Google was a dollar-for-dollar waste, whereas Yahoo had a ROA of 1424%. 2) How can campaigns be improved to increase overall value gained from investment with a search engine publisher? Should keywords be added or dropped from the campaign? Should campaign tactics or copy be adjusted to improve campaign performance?

To optimize a sponsored campaign, the campaign had to improve on one or more of the following: cost-per-click reduction, increase in bookings, net revenue, and revenue per transaction, return per transaction, and overall performance by engine, or other performance metrics that could improve the net revenue of a particular campaign. We need to understand how to maximize the net revenue and the ROA of its Internet marketing campaigns by evaluating alternative strategies. We also need constantly look to improve our online performance through innovative thinking and testing new approaches. The level of analysis and reporting we receive from them is crucial to the continuing success of our business. It is essential, especially in an increasingly saturated airline industry and the emergence of travel aggregators, that Air France target and pay for the keywords that are most effective on each site. We can decipher from the data that geographically based campaigns are sensitive to certain cities, thus destinations in France. This data not only gives us insight into which regions frequent which French metropolises, but such data should be further used to implement dynamic pricing. Pricing based on the city from which the search took place, should correspond quite efficiently with the airport from which someone departs on Air France. This should certainly be implemented one step deeper, on a publisher-basis. Seeing as how different sites have their inherent advantages, based on the order of the search result, or on the bid strategy, keywords (including city names and words like “cheap” or “international”) should be exercised on a case-by-case basis. Obviously this is an idealistic approach; however, to truly isolate those marketing efforts that contribute to Air France’s web traffic and the facilitation of ticket sales, the extra effort would certainly be worth the initial cost. By our estimates, only 322 out of 4,510 keyword searches, across the various platforms had positive return on the investment. With overall returns being so high, across all websites, we can see that this cost-model for advertising will sustainably remain effective. However, when bidding on useless terms can be eliminated, we can further increase margins by not only saving on our expenses when bidding for terms, but by increasing the costs for our competitors to advertise. 3) What are the most important KPIs, and what impact will campaign changes have on these KPIs? The most important KPIs are the ‘average return on ad dollars spent’, the ‘total cost’ and the ‘probability of booking’. Between these three key variables we can execute a balancing act between margin benefits and overall expenses. We would want to remain flexible, given the evolving technology platform, to the overall expenses accrued and the percentage return we like to receive. The reason we are not deciding to prioritize average cost, is because large expenses can be incurred if the high percentage rate accompanies such an investment. Likewise, if something has slim margins but is relatively cheap, we see no reason why not to maintain our presence on web, as people search, purchase, and later

recommend to others. ‘Probability of Booking’ is a reinforcement variable. We can do a sensitivity analysis between overall investment in advertising and the rate of return on that investment, but to ensure that little inefficiency are explored, we need to ensure that the investment has at least a minimal benefit. It can be debated whether exposing Air France to the internet user, whether their cognizant or subconscious noticing Air France as an option, is worth the overall investment of advertising via a specific channel and whether it has the potential to place Air France into minds of travelers as a prominent airline provider. Index

Target

Search Engines Bid Clicks Clicks Charges Avg cost per click Impressions (it actually depends if people want to see it or not) Engine click thru%, Avg Pos Transaction Conversions % Total cost/ transaction Amount Total cost Delta of cost / delta of amount Volume of bookings

4) How should future SEM campaigns be structured? In the past, Media Contacts had concentrated on Google, Microsoft and Yahoo; was there now an opportunity to optimize search advertising with metasearch companies such as Kayak? We can first determine the key performance indicators for the project to guide analysis and enable comparison of various SEM campaigns. Cost per click and probability to produce a sale differ among publishers. Then we can use a portfolio application model’s quadrant positions to determine optimal publisher strategies. Additionally, pivot tables help illustrate campaigns and strategies that have historically been most successful in meeting Air France’s target Internet sales. Multiple recommendations on how Media Contacts can assist Air France in improving its SEM strategy can be derived from the data provided. Kayak does have its competitive advantage. Kayak is considered a travel aggregator of sorts, meaning it sourced the Internet for travel business and services. As a SEM niche, Kayak also differentiates itself as having an alternative business model, from established travel service aggregators, and as having a unique technology architecture. On the other hand it doesn’t have an impressive historical business results although it has good forecast. I think to determine if it is good or not depends on how likely people are use Kayak as a search engine if they book tickets from Air France. Metasearch companies like Kayak are certainly the movement of the future. While search engines are going nowhere and clearly cemented into the habits and lives of internet users, the evolution of these sites as a platform for travel booking make them the most attractive

source of advertising. We can see what Kayak was able to do in one week for Air France, generating nearly a quarter-million dollars of revenue, with roughly cost being 1% of revenues generated. The legitimacy of search engines cannot be questioned; however, these sites should now be used to maintain a presence in the mind of the consumer. Early in the case we were told how consumer behaviors have shifted to economy classes, while people’s familiarity with traveling has increased. A conclusion could be made that with travelers looking to remain thrifty, the prominence of such site like Kayak will increase, as people turn to websites that are known for providing low cost options. Thus, we may see people turning away from simple website searched for airfare as legitimate websites that facilitate the sale of cheap tickets continue to merge.