Inside a Major Brand's Marketing Strategy
Rob Britton just finished a five-year stint as American Airlines' managing director, brand development and advertising, spending five years in that position during one of the worst periods in air transportation business history. His marketing budget was slashed in half even as the media industry was on the verge of fracturing into a challenging array of advertising options. During his tenure, Britton carefully engineered a double-edged marketing strategy that balances brand development with tactical efforts aimed to drive retail activity. Up to now, says Britton, the two priorities have been targeted toward specific platforms. That's beginning to change, particularly for branding, as consumers determine how they want to interact with each available medium.
Britton spoke with Folio: about AA's advertising priorities;brand versus tactical;in an era of drastically reduced budgets, and how these priorities play out across online, TV, newspaper, and magazines.
In the end, Britton remains skeptical of the power of print to drive what for now is his brand imperative;emotion. That is reflected directly in his company's spending mix in 2006 versus 2005. Magazine spending was cut in half, with resources being redirected to national TV and the Internet. On the tactical side, he's seen a significant surge in sales via online marketing, and has adjusted American's budget accordingly.
Folio: Describe the scope of your role with American Airlines.
Britton: For the past five years I've been the managing director of brand development and advertising, and I've been responsible for brand stewardship, media advertising, all the targeted and direct work we do, sales promotion and also customer research, which is something of an outlier, but it was an orphan and needed a home and we took it on and it's actually nice to have the research function close to us.
Folio: How has your advertising strategy changed over the past few years?
Britton: Because of the dramatic reduction in budget that has swept over us in the last six years we've got half the money we had in 2000. So we've got half the money to market a larger airline with broader global reach, and so there ain't enough resources. And in order to cope with that, the media strategy has basically become two-pronged: We're using TV to build the brand and we're using online for tactical growth. We launched a brand campaign a couple years ago and it's got some traction and it's got some resonance and even though we don't put nearly enough money towards it, we do the best we can, and the tracking we get out of that is very positive. And we've used print, too. We're using it again this fall, and we will again in the spring. But the lion's share of dollars are going towards spot and cable TV.
In general we're thinking that in this limited-budget world, TV works very well for brand building. For tactical growth, to drive transactions, the retail piece of it, it's going increasingly online. Now the big loser there, and this might be temporary, is newspaper.
For years, airlines spent pretty significant sums in daily newspapers for price advertising, typically around fare sales. We don't do that much anymore. In fact, last year, in terms of mainstream media, we ran one or two ads. And the rest of it is online. And when I say online I'm talking about everything from banners to keyword search.
Folio: Is that trend going to continue?
Britton: Probably not. As budgets get built back up we will start to do more print media again. One of the things that we are thinking about that we very clearly understand is if you are trying to drive bookings to your Web site, which we and everybody else are trying to do because that is a very low-cost distribution channel, you can drive people to AA.com in conventional media. There is nothing that says online booking has to be promoted with online media. So we do not have any orthodox sense of that. In fact, we've had a lot of discussion as we plan for 2007 about going into conventional media to promote the Web site.
Folio: Describe your online marketing strategy.
Britton: Even if our budget was restored to 2000 levels we would still be taking up the online spend. I don't think there's anything secret about the following: We've taken our online spend roughly up to the fifteen percent range. As a percentage of total media spend, that about corresponds to the amount of time that our target audience spends online. There's nothing magical about that, but we think it's appropriate and as things go upwards, we'll still be poking at that.
One of the things we're looking at for 2007 and beyond is we're very much starting to think about using various online vehicles for brand advertising. The conventional wisdom for the last decade is that online is the place to sell stuff and it's tactical. Well, that world is changing and there are people that are mastering so-called long-form content where you could do some good for your brand in the online space. It's not just something where you want people to click and make a booking, but also it might be able to enhance your brand with somewhat longer content.
Folio: Are you buying integrated programs?
Britton: Absolutely. When we launched our brand campaign in 2004, it was right out of the box an integrated effort that went across all the properties, with the exception of radio. And we've been pretty diligent about sticking with that the last couple of years.
Folio: Are they broad programs in general?
Britton: Yeah. What it essentially means is that in the brand-building stuff that we have online, the broad themes and the videos that we show, parallel the TV commercials that we've developed. They use some of the same tag lines and so on.
Folio: What's your overall advertising budget and are you doing more brand or tactical?
Britton: If you look in the third-party reported stuff, you'll see a number below $100 million and it's probably a little bit more than that. In rough terms, compare $100 million to $200 million six years ago. If you look back over 15 years of our history, we've sort of alternated between spend on brand and spend on tactical through the years. We've never been wholly one way or the other. In a lot of years we've leaned towards tactical at the expense of brand. We're trying to be as balanced as we can. I don't mean that it's going to be 50/50, we're not excluding one or the other, we made a commitment to this brand work and we've stuck with it, kind of to my surprise because we very often flop around a lot in our business.
Folio: How has keyword search performed for you?
Britton: It's been colossal. As you take up your spend for keywords, you need a bigger pipe as the bookings just come flooding in. It's worked very well for us. I can't tell you how much, but we increased our spending a lot. You could say we more than doubled in 2006 over 2005.
Folio: What are your engage-ment priorities in the media you market with?
Britton: If we slice our activity into brand versus tactical we have come to believe;and this may be an artifact of greatly reduced budgets;that for brand the best place is television. We're looking at more online for the future. Tactically, we're just going increasingly online. We do an enormous amount of one-to-one marketing using our frequent traveler database. And so there's a whole element of tactical stuff that you never see unless you're an AAdvantage member and have opted in for e-mail and stuff. That's a big chunk of our marketing efforts. We invented the idea of a frequent flier program 25 years ago and we've ridden that horse awful hard through the years, and we do a ton of targeted stuff aimed both at retention as well as acquisition.
Folio: You've talked about online and TV, where does your print strategy fit in?
Britton: Here I'll be very candid with you. I've told you that newspaper seems to be declining in relevance, at least as a vehicle for price advertising. We still use newspaper when we have new route announcements. We launched a Chicago-Shanghai route in April, daily non-stop, and we were in the Chicago Tribune. That's what you do in local markets. We still use it for that kind of stuff, when we need to be in quickly. The great thing for us is our demographic, our target audience still reads the newspaper. They're consuming a lot online and we're there too, but these are folks who still read a newspaper. And I think by extension they're pretty big magazine consumers as well. We've had a magazine buy this fall in a pretty broad swath of titles. We were in the business books, the newsweeklies, some public-affairs stuff;we were back in the Atlantic for the first time in a long time. Smithsonian and places like that. We're generally skewing up-market, which is where our target demographic is. The ads are very nice and the message is good, but I'm still a skeptic, suffice it to say. And my successor might think differently. But I'm a skeptic of using the newspaper or magazines;and magazines are probably better because of color and quality;for the brand message.
Folio: Why is that?
Britton: Because you can't get emotional and our new stuff is all about emotion. And you can't convey that in a print ad. When we set off to do this brand campaign two years ago, in all the stuff that we've done we've dialed emotion back up;whether it's humor or poignancy, or something in between or both, we've used that a lot.
Folio: For the occasions you do use magazines, what kind of message are you getting across?
Britton: If you look at what we've done this fall and what we'll do this spring it's what you would call global scope. It's either reminding people or exposing them to the idea that despite our name, American, we are a significant international player. Almost forty percent of our revenue now comes from international flying. So people need to know that we fly to Shanghai, Delhi and Tokyo, for example. And by the way, that's an element of our brand, it's an important message. That happens to be something you can pay off very effectively in magazines. We've used some really gorgeous photography with a minimum of copy. We're not clubbing people over the head with a timetable. And the magazine is a superb medium for that.