September 15, 2005
Advertising Age
By Greg Lindsay
I purposefully chose Song rather than JetBlue for the five-and-a-half-hour transcontinental flight to Los Angeles. After all, it was a name in the news as well as the conversation all around me along the way. In fact, not long after I landed, its parent, Delta Air Lines, filed for chapter 11 as everyone predicted.
There is a certain sense of adventure surrounding Song, whose innovative marketing strategies could all be for naught if it is ultimately strangled by the tightening financial troubles of Delta. On another level, it is effectively spearheading Delta’s attempt to reinvent itself out of bankruptcy as something of a low-cost carrier overall, as demonstrated in Delta's new “Simplifares” programs and lower walk-up ticket prices.
JetBlue disses Song
Back in New York JetBlue's sales and marketing executives had obliquely dissed Song as too “product-focused,” which I interpreted as “gimmicky.”
But personally, I found that JetBlue had struck a nice balance between style and efficiency, while Song was attempting to win market share on behalf of Delta with a blizzard of branding initiatives -- organic food by chef Dave Lieberman, cocktails by Rande Gerber, uniforms (and stationery) by Kate and Andy Spade, Song Records (a partnership with Artemis Records, with CDs available on the flight for $14), a pair of Song-inspired $200 jeans by Chip & Pepper and the temporary Song store that had opened with a splash in SoHo back in New York. Song seemed like Virgin Atlantic in reverse -- an airline giving birth to a constellation of brands rather than emerging from one.
Song doesn’t just have live satellite TV -- there are pay-per-view movies (including Breakfast At Tiffanys for anyone truly longing for the Jet Set era of 1961 again), and onboard MP3s, and even a music trivia contest.
Being a bit of a Jet Set nostalgist myself, I thoroughly enjoyed sipping an $8 cocktail at 40,000 feet while listening to The Thievery Corporation track “International Flight” followed by Air’s “Universal Traveler.”
'Can't beat the price'
Still, my seatmate –- who was neither a woman nor leisure traveler, both of which are Song’s targets –- only flew Song “because of the price. You can’t beat the price on this route.”
The flight attendant we struck up a conversation with didn’t see it quite the same way. “It’s not about the things as much as it is the people, still,” he said. “And you don’t walk into a Cadillac dealership expecting a VW price.
A Song airliner sits on the tarmac at LAX. The main terminal building is in the background. But you can make a difference with the little things.”
Later, the flight attendant told me, “The best thing [former Delta CEO Leo] Mullin could have told [original Song president John] Selvaggio was to totally separate this operation from Delta. Because if they had gone through Delta’s regular marketing department, all they would have heard was ‘Don’t do that.’ It was still all the old thinking.”
Of course, Selvaggio fled Delta before long into the arms of Virgin, where he is supposed to be developing Virgin America, its nascent low-cost carrier. (When it comes to the new generation of low-fare carriers, all roads seemingly lead to and from Virgin.) His former chief of marketing, Joanne Smith, is Song’s president now, and we’re due to meet next week in Atlanta. What I really want to know is whether Song will actually live long enough to answer the questions it and JetBlue have posed to the airline industry: Is there any way to differentiate yourself in an era of commodity products and perfect pricing? (And in the interest of full disclosure, thanks to Smith, I flew Song for a song -- actually, for free.)
Largest concentration of hotels
Shortly after touching down at LAX, I crashed for the night at a Super 8 motel in the sprawl just beyond the airport. I unwittingly helped justify Cendant’s $1.25 billion purchase of online ticketing engine Orbitz a year ago, as I used the site to chase down a rock-bottom fare for the night (I had no idea until later that Cendant owned, among seven other chains, the Super 8 brand). The next night, I was a guest (compliments of the house) of the Four Points Sheraton, a budget business traveler’s brand in the Starwood family. “This is the largest concentration of hotels on the coast,” the Four Points general manager, Phil Baxter, said, referring to the surrounding cluster of hotel towers as dense as L.A.’s actual downtown. “We have 570 rooms and we’re just medium-sized.”
Cendant and Starwood are just two of the giant holding companies owning dozens of brands hovering at the periphery of Airworld.
It only took me minutes to realize why LAX was such a different kind of place within Airworld when I first entered it from the Song gate. It is the busiest origin and destination airport (i.e. non-hub) in the world. It’s the home airport for the second-largest media market in the country, the hub of the entertainment industry, but there isn’t a scrap of advertising anywhere. Its concourses are literally blank slates.
Ads have long been banned
LAX has held out for decades against what its executive management once decried as crass commercialism -- back in the 1970s, there was even a board resolution expressly forbidding any ads from going up. Besides institutional inertia, other reasons for the city’s uncharacteristic sense of restraint include spartan facilities and limited terminal space (LAX is so devoted to the pure function of processing passengers onto planes that it doesn’t even really have a name after all, just an airport code) and aesthetics. The architects and engineers in management really liked those white walls.
But all of that is about to change. LAX is only a few weeks away from awarding a contract worth $30 million a year or more over the next decade in terms of gross revenues to either Clear Channel or JCDecaux, the airport “outdoor” giants that consolidated their way to the top over the past decade, and are now engaged in a full-tilt struggle to win the last unclaimed piece of airport real estate.
On Monday, JCDecaux officially announced it had renewed its contracts in New York with JFK and LaGuardia, and had wrested away Newark Liberty from Clear Channel, creating the second-largest regional airport advertising platform in the world, with 100 million annual passengers. (The largest is comprised of the London airports, which is also controlled by JCDecaux.)
The New York win was a huge one for JCDecaux, which currently trails behind Clear Channel in the U.S. (Denver and Chicago O’Hare, my next airports, are both Clear Channel affiliates.)
JCDecaux vs. Clear Channel
If JCDecaux wins LAX (along with the regional Ontario airport), it will effectively control the air corridor that is the cultural spine of blue state America. If Clear Channel wins, it can slam the door on another market in the U.S. -- the winner will receive a five-year contract, with a five-year option to renew.
At lunch, LAX concessions manager Karen Tozer and her deputy, Mark Miodovsky, and the airport’s public relations director, Nancy Castles, filled me in on the the last laps of the two-year race for the airport contract. The process began with a request for proposals and eventually yielded 400 potential locations around the airport for static signage, banners, touch screen kiosks, plasma screens and sponsorships similar to what airports like Dallas-Ft. Worth and London Heathrow have done -- the former granted exclusive pouring rights in all terminals to Pepsi, while the latter (with the help of JCDecaux) has set aside areas for passenger-friendly services (like banks of power outlets) sponsored by the likes of Vodafone. Planning accordingly, both sides have marshaled small armies of potential sponsors as part of the their LAX bids.
But the winner won’t be the one who slams the most advertisers into the most slots but rather the one that devises the most elegant, non-vulgar commercial messaging tactics that make maximum use of new technologies. “We wanted to really embrace technology,” Tozer said. But all of my lunch companions recoiled when someone brought up the enormous new plasma screens in the baggage claim of Las Vegas’ McCarran airport, which blast non-stop casino ads at their captive audience.
Sweep tech upgrades planned
Before lunch, Miodovsky gave me a quick tour of Terminal 2 -- served by Northwest, Air France, KLM, and several other carriers -- to see what he meant. He pointed to the ancient hotel and rental car information kiosks that consisted of little other than postcards and converted rotary phones. “Those could become touch screen kiosks with up-to-date information about a lot more than just hotels. They could be Web-based or custom built.” Upstairs, he pointed at blank walls where banners might be hung, and to a planter containing drooping, sickly palms that "could become display areas that generate revenue,” he said.
Whether that happens will ultimately depend upon the ingenuity of Clear Channel’s and JCDecaux’s final inspection teams and the willingness of LAX to implement them. With best and final offers due is less than two weeks, those planters could well sprout plasma screens by the time Angelenos fly home after Christmas.