ANALYSIS: How many airlines are making money from social media?

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This story is sourced from Airline Business
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Comment from the March 2013 edition of Airline Business

At a recent Airline Business conference that explored ancillary revenue streams and new commercial models for airlines, the subject of using social media as a sales channel was tackled. In other words, we asked: how can you make money using it?

And the conclusion was that it's not proving to be very easy. Many airlines have already recognised that whatever it costs, they can't afford not to play in the space - be it on Twitter, Facebook or LinkedIn.

But the statistics indicate that they're not doing a very good job so far. Data researched by aviation social media gurus SimpliFlying highlights just how ineffective the airline industry's assault on social media has been with respect to the global "gossip network" Twitter.

There are currently 213 airlines enrolled on Twitter but only 88 are active. "Of these, 24 generate the majority (80%) of the content. So 24 have a formal strategy not just for content but also resource and are dedicating a budget to it - and doing it effectively," SimpliFlying's David McMullen said during our conference.

As discussed elsewhere in this issue, understanding how to exploit the social media arena fully, and measuring its success, is no mean task.

Anyone who joins the social throng must be prepared to constantly innovate. Dusting off "a great idea" from 2012 for another Facebook competition is exactly that: "so last year". And treating it as a hard-sell channel will be a guaranteed turn-off.

It's all very well measuring your status in terms of the number of Facebook fans or how fast you are able to respond to Twitter queries, but the real question should be: how much does all this activity deliver to your bottom line?

Some of it is intangible, such as the customer loyalty driven by social media incentives or being able to respond to criticism in the proactive way demanded by today's generation of connected travellers.

What social media delivers airlines is another - and simply the most dynamic - way to communicate with customers through every phase of their journey, from booking to arriving back home. The opportunities that social media offers for revenue earning and up-selling should be literally endless, particularly if consumer data is harvested and put to good use.

"Imagine if you could use that data about the consumer habits of 'passenger Smith' and his friends for our own promotion?" Vueling's Alex Cruz said at last year's SITA IT Summit. "Google today delivers an experience. We say we deliver an experience but frankly we're delivering a service."

Should an airline view its social media activity as a marketing function, or a public relations function, or a sales channel? The truth is that it is all three, but if the emphasis is not applied correctly then it will never pay for itself let alone deliver significant revenue.

Cruz tells how he made it clear from the start to Vueling's marketing department that there had to be a return on investment for its social media activity: "I insisted that before we did anything on Facebook we had an ROI, and today we are measuring euro cents per Facebook fan every week - we've come up with a way to measure how we're delivering revenues out of Facebook."

Airlines also like to talk about how their social media activities will allow them to reduce costs. For example, this new channel could become a much more effective way of communicating with customers proactively and mitigate the need for costly call centres.

But from our research, turning these aspirations into reality is proving difficult so far. After all the hype of a few years ago, most airlines have yet to realise any tangible returns.

When it comes to social media, the easy bit is deciding to play along. How you measure your success and what to do next will be the challenges.