Air France:Internet Advertising and The

‘Search’ For Answers

• Determine if Air France needs a uniform or tailored strategy for search engines

• Evaluate search engine KPIs, bid strategy, keywords and groups

• What will increase ticket sales and improve ROA?

• Which search engine delivered the most value to Air France?

• Potential future strategies Media Contacts should consider for increasing AF’s market share and profitability in the U.S.

Objectives

• Born from merger of 5 French transport companies, 1933

• Paris to New York route inaugurated, July 1946

• Listed on the Paris Stock Exchange, February 1999

• Merger with KLM to become largest European air transport group, 2003-2004

Background

• Target international passengers with the concept of “One Group, Two Airlines”

• Strategic Growth through fleet management

• “Rationalization” - similar aircrafts for easier training and maintenance

• ”Flexibility” – utilizing “progressive operating leases” to receive new aircraft and retire old aircraft as fluctuating demand necessitated

• The strategies were very instrumental in bringing positive financial results from 1999 to 2007

Strategies

Planning international growth strategy and looking to increase their share in the U.S. air travel market, 2007

• New Trends, 2006

Profitability within $500 million of break-even

International travel became the fastest growing market

7.4% growth in economy tickets (+4.3% premium)

• E-commerce

Uniquely suited to direct online sales

Intangibility of travel as a product

Airline Industry

0

37.5

75

112.5

150

2000 2002 20042006

20082010

• 64% of U.S. households have broadband

• Media Contacts had a partnership with Double Click (later acquired by Google)

Landscape

Broadband HouseholdsTotal US Households

(in millions)

The Expanding Internet

• A new medium that unified all the things traditional outlets did singularly 

• The internet turned the advertising world upside down

• 3 distinct advantages

• Leveled the playing field

• Reach

• 2-Way Communication

Competition

0

12.5

25

37.5

50

(in millions)

41

38

3029

2222

21

RyanairLufthansa

Air FranceBritish Airways

KLMEasyjet

American Airlines

International Travel2006 Scheduled Travelers

0 25 50 75 100

100

96

71

69

54

51

49

American

Southwest

Delta

United

Northwest

Lufthansa

Air France

2006 Total Scheduled Passengers(in millions)

28%

14%

15%7%

16%

7%

13%

Scheduled Passenger Revenue by Destination

Caribbean and Indian OceanNorth AmericaSouth AmericaAsiaAfrica and Middle EastEurope France

Key Players and Rankings• Media Contacts needed to determine who was going to help

increase ticket sales and improve ROA

• Rank each Search Engine and determine the leaders in:

Brand Awareness (Impressions and Clicks )

Conversion Rate (Purchase)

Revenue per booking

Volume of bookings

Net Profit Per Order

Net Revenue

• Google is the premium player, high costs but those can be managed

• Careful keyword selections, bid strategy, and positioning

• Indexing is critical and keywords are a major ingredient

• Utilize additional metrics: impressions and conversion rates

Keywords and Improvement

Publisher Comparison - Summary

Publisher Name

Sum of Net Revenue

Average Cost Per

Click

Total Volume of Bookings

Average Revenue

Per Booking ROA

Probability of Booking

Sum of Click

ChargesCost/

Booking

Google - US $1,391,841 $1.84 1550 $1,126 394% 0.04% $353,641 $228.16

MSN - US $165,451 $1.49 140 $1,297 1,028% 0.08% $16,098 $114.99

Overture - US

$205,457 $1.19 289 $1,202 145% 0.00% $141,976 $491.27

Yahoo - US $836,091 $1.01 662 $1,333 1,810% 0.07% $46,198 $69.79

Grand Total

$3,906,597 $1.47 3939 $1,184 517% 0.01% $755,316 $191.75

• Kayak is a must

• People look for bargain niche sites (Orbitz, Travelocity)

• Not using metasearch engine utilization is like watching a foreign film without subtitles

• Website indexes are connected to SEs and read via the HTML code

• Utilize sponsored links, cookies, and additional advertising on Kayak as real estate is available

Metasearch

Sponsored Links - Air France

Search Engine

Clicks Media CostTotal

BookingAvg Ticket

Total Revenue

Net Revenue

Kayak 2,839 $3567 208 $1124 $233,694 $230,127

Overture - US Grand Total

Sum of Impressions 3855689 170120 17062488 933345 22021642

Sum of Clicks 192109 10808 119323 45598 367838

% Impression 17.51% 0.77% 77.48% 4.24% 100.00%

Average of Trans. Conv. % 41.48% 73.15% 9.49% 182.88% 62.19%

Average of Avg. Revenue per Booking $909 $941 $1,132 $1,273 $1,012

Total Volume of Bookings 1550 140 289 662 2641

Sum of Net Revenue $1,391,841 $165,451 $205,457 $836,091 $2,598,841

Sum of Total Costs $353,641 $16,098 $141,976 $46,198 $557,913

Total ROI 393.58% 1,027.74% 144.71% 1,809.81% 3,375.84%

Making The Cut

Objectives• Determine if Air France needs a uniform or tailored strategy for

search engines

• Evaluate search engine KPIs, bid strategy, keywords and groups

• What will increase ticket sales and improve ROA?

• Which search engine delivered the most value to Air France?

• Potential future strategies Media Contacts should consider for increasing AF’s market share and profitability in the U.S.

“(SEO/SEM) is really about getting the right ad to the right person at the right time and having them click on it.”

Google CEO E. Schmidt

Conclusion• Must continue to use Google, Yahoo and MSN for unique SEO /

SEM campaigns

• Need a customized approach for each tool

• Each has a distinct search format, different CPC rates, and booking probability

• Demographics and reach are separate as well

“...the internet had the greatest effect on the travel industry, more than other. It changed the way we travel forever.” B. Bearden