Inflight Advertising Market Analysis

Inflight Advertising Market (Global, 2024)

Introduction

The in-flight advertising market has developed into a dynamic and evolving area of the advertising industry. It has benefited from the unique captive audience that air travel offers. In the process of improving the passenger experience through digital developments and personalised services, in-flight advertising is also changing to meet the changing needs of travellers. The in-flight advertising market is made up of a variety of formats, including video content, touch-screen monitors, branded merchandise and a range of other services, all of which are designed to engage the attention of passengers during the flight. The increasing use of technology on aircraft, combined with the growing importance of a targeted approach to marketing, means that in-flight advertising offers an opportunity for brands to communicate with consumers in a way that is memorable and effective. Especially as the air transport industry recovers and the number of passengers increases, it is important for the various players in the industry to understand the trends, challenges and opportunities that are shaping the market.

PESTLE Analysis

Political

In the year 2024, the in-flight advertising market is influenced by various political factors, such as government regulations on the content and mode of advertising. In the United States, for example, the Federal Aviation Administration has established a guideline stating that in-flight advertisements should not be incompatible with the rules of the flight, and this may restrict the types of advertisements that an airline can display. In addition, the European Union has enacted a General Data Protection Regulation that affects how an advertiser can use passenger data for targeted advertising. The fine for noncompliance is up to 20 million euros or up to 4 percent of the annual turnover.

Economic

In 2024, the economic situation is better. The International Air Transport Association (IATA) expects the number of air passengers to rise to 450 million, an increase of 10 per cent. The growth of air traffic should lead to an increase in the revenues from in-flight advertising, since the passenger flow is growing. The average revenue per passenger for the airlines is expected to be about $200, which will allow them to invest more in in-flight advertising and thus develop more effective and engaging formats.

Social

Travel trends in 2024 are pointing towards an increasing demand for individual experiences. A survey by a leading travel research company found that 68% of passengers would prefer to see a tailored inflight advertising service based on their own interests and preferences. This new demand for personalisation is driving an increase in the use of data analysis and CRM systems to better understand the passenger profiles of their clients and to tailor their marketing strategies accordingly. Also, the emergence of social media influencers is causing a demand for influencers to appear in inflight advertising. Indeed, 45% of travellers say they are more likely to engage with a brand if it is endorsed by an influencer.

Technological

In the year 2024, technological advances will transform the in-flight advertising market, especially through the introduction of Wi-Fi and entertainment systems. Almost 80 per cent of the world’s airlines already offer Wi-Fi, which allows for the distribution of real-time advertisements and content. Moreover, the use of augmented reality in in-flight advertising is on the rise, with 25 per cent of airlines planning to offer augmented reality by 2024. This technology enables the creation of fully-immersive experiences that enhance the engagement of passengers and brand recall.

Legal

The field of flight advertising is becoming increasingly complex from a legal point of view in 2024. There are different regulations in different countries, especially concerning misleading advertising and consumer protection. For example, the US Federal Trade Commission has imposed a requirement that all advertising be transparent and clearly marked. The penalties for not complying with these regulations are high, up to 43,792 US dollars per infringement. The legality of an advertisement has thus become an important concern for an airline.

Environmental

In 2024, the in-flight advertising market will be dominated by the issue of environmentalism, as the carriers continue to pursue their sustainability efforts. According to a study, 60% of consumers are more likely to support a company that is concerned about the environment. The carriers are therefore increasingly choosing eco-friendly advertising methods, such as digital screens instead of printed material, which can reduce paper waste by up to 70%. Also, the carriers are collaborating with the environment and with the public, which will meet the growing demand for sustainable brands.

Porter's Five Forces

Threat of New Entrants

The market for in-flight advertising is moderately restricted by the need for alliances with the air lines and compliance with the regulations of the civil aviation authorities. The initial investment is considerable, but the growing demand for new forms of advertising may attract new entrants. There are already companies in the field with established relationships and experience that may discourage new entrants.

Bargaining Power of Suppliers

In-flight advertising suppliers, such as content creators and technology vendors, have limited bargaining power. There is a large number of suppliers in the market, and the airlines have many options to choose from. Moreover, the increasing trend towards digital advertising solutions makes it easier for the airlines to change suppliers, thereby reducing the power of suppliers even further.

Bargaining Power of Buyers

In-flight advertising is a market with considerable buyer power. The buyers, the airways and the advertising agencies, are in a strong position. With a large number of advertising opportunities available, the airways can negotiate favourable conditions and prices. The advertising agencies also have a choice of different airways and media, which increases their bargaining power.

Threat of Substitutes

The threat of substitutes in the in-flight advertising market is moderate. There are still a lot of traditional advertising methods, such as the use of print media and announcements, but digital advertising and targeted advertising on the Internet are becoming more and more popular. There is no doubt that in-flight advertising has a very high barrier to entry, and it is difficult for substitutes to imitate it.

Competitive Rivalry

Competition in the in-flight advertising market is high, with several established players vying for market share. To attract both the airlines and the advertisers, the companies have to keep on improving and innovating. Competition is further intensified by the fact that the market is now open to both traditional and digital advertising solutions. The result is a fierce price war and a proliferation of aggressive marketing strategies.

SWOT Analysis

Strengths

• High visibility and engagement with a captive audience during flights.
• Ability to target specific demographics based on flight routes and passenger profiles.
• Innovative advertising formats, including digital screens and interactive content.

Weaknesses

• Limited advertising time due to flight duration constraints.
• Potential for ad fatigue among frequent flyers.
• High costs associated with inflight advertising placements.

Opportunities

• Growing demand for personalized and targeted advertising solutions.
• Expansion of inflight Wi-Fi services enabling interactive and real-time advertising.
• Partnerships with airlines to create unique advertising experiences.

Threats

• Economic downturns affecting airline travel and advertising budgets.
• Increased competition from digital and social media advertising channels.
• Regulatory changes impacting advertising content and delivery methods.

Summary

In-flight advertising in 2024 will present a unique combination of strengths and opportunities, notably in its ability to reach a captive audience and to use new advertising formats. In the face of these strengths, in-flight advertising will face a number of challenges, including limited time and high costs, as well as threats, such as economic fluctuations and competition from digital media. Strategic alliances and a focus on personalised advertising could improve its market positioning and drive its growth.