How Airlines and Media Find their Correlation

As I waited at the airport on my way to the East Coast I began to think on how resembling airlines are to publishers/media and found several similarities between them. I took down some notes and I have decided to elaborate this a bit more. A closer look at both of them denotes certain reciprocity.

Ad inventory and seats have a limited lifetime (perishable inventory), they both have limited supply of inventory (they cannot sell more by increasing their stock like a store does), they both charge different customers different prices for the same inventory (depending on when and how much a customer buys) and they both have high fixed costs, so they need to maximize their revenue by selling as much as they can at the highest average price possible.

To wring the comparison, business class is like ad premium spots, you cannot sell them low even if they are going to be left empty because advertisers or travelers do not want to share that space with stinky backpackers.

Flying with Ryanair is like being a cheap advertiser willing to accept higher frequency cappings (you will somehow agree that it is never quiet in there) from publishers for a lower price (which is a perfectly fine habit).

As a matter of fact, the parallelism is such that traditional airlines and publishers are struggling to survive; especially the latter. This excludes apps, search engines, and so on, but includes those typically referred to as offline publishers (as if the world had turn them off or time had condemn them to disappear). They are in the urgent need to maximize their gross profit by reducing their costs.

Traditional publishers have survived in a model of newspaper-selling and are now figuring out how to make money out of their web properties. Traditional airlines have spent big dollars in the past and are now competing in a market that only cares about the lowest airfare. As a famous joke quoted, "the best way to become a millionaire is by being a billionaire and buying and airline". Replacing airline with traditional media would probably still make sense.

I am not an expert in airlines, in fact I am not an expert in anything, but here is a thought for publishers: if there was a way to increase ad value, measurable and direct value from any ad block, publishers would watch their profits grow as advertisers rush to buy their inventory at the speed of light. Why not focus on creating ad blocks or ad-networks that can guarantee greater amount of conversions instead of delivering "value-ads" together with a bunch of junk? It is in the publishers' interest to limit the amount of junk. Start offering proper incentives in those ads, and those ads will quickly increase their value, and so will their price as they move away from being a simple commodity.

No comments:

Post a Comment