Bold moves in bad times

I’ve just been putting to bed two separate presentations over the last week or so and found myself returning to a well worn quote from George Bernard Shaw:

“Reasonable men attempt to adapt themselves to the world,

Unreasonable men attempt to adapt the world to themselves,

Progress is in the hands of unreasonable men”

My reason for using this quote was in both situations I felt the need to instill some backbone in to the two organisations I was about to see. My waters were telling me in both cases being brave was not going to be warmly received.

The GBS quote is of course a very accurate view of life from the very top of society to the everyday lives of us all. Also as the speed of technology continuously evolves, progress is often in the hands of people who are looking for a better mouse trap rather than creating another version of an existing product.

In conversations with a few leaders in the world of advertising the common theme has been about clients being ‘risk averse’. Not rocking the boat, taking risks, being different. The view from my (few) conversations is fairly obvious; people worry about their job security and avoid taking actions that could lead to them being carpeted for exposing the organisation they belong to. The prognosis is a downward spiral of fear born out of anxiety that leads to safety; Bill Bernbach once said something like “Being safe is the biggest risk one can take with advertising” – or something very similar.

The question that goes through my head frequently is  ‘what is driving advertisers to review their ad agency arrangements?’ particularly when commercial life is harder. In recent weeks both Flybe and Ryanair have announced agency reviews, both operators are in a very competitive market and one where the airline analysts are predicting a decline in volumes. We’ve seen the problems Thomas Cook are having where they are struggling with a big dip in forward bookings compared with the start of 2011.

Both Flybe and Ryanair promote their businesses with price based advertising. In a growing market they are creaming off share with a value proposition which is obviously highly attractive to millions of passengers. But how do the dynamics alter in a declining market? What % of their business is ‘marginal’, i.e. people who are not regular travellers and in the past have gone for the cheap trip to Prague? It isn’t just about a cheap flight, it’s all the other costs such as hotels, car hire, eating out, etc. Also with the £/€ exchange rate the Eurozone is very expensive for us Brits making the marginal traveller think twice about that random long weekend away.

So if price was the only attraction for brand A what happens when price becomes irrelevant? A £50 return flight to Prague is no longer attractive if the other £500 for the weekend needs to pay for a repair to the car. These are choices millions of people are making daily as disposable cash becomes very precious.

Let’s assume the market for air travel in and out of Europe will stall this year or maybe decline. Airlines can cut capacity by parking aircraft, reducing frequency, cancelling unprofitable routes, etc., but this is cost reduction which isn’t enough. They still need to fill aircraft with ‘yields’ – price per seat – that deliver profit. Their fixed costs are massive and their variable costs – flying planes – require positive cash flow.

This then turns to the role of advertising and these reviews I mentioned. I suspect for Flybe the challenge for them is ‘why Flybe?’ for non-users. I would accept they have a band of loyal customers but they won’t be sufficient to keep Flybe operating at the level needed. In some research we conducted recently respondents were asked an open question on which airline might fly to a particular destination from the UK. Flybe was not mentioned. We went back over the research to make sure there wasn’t a mistake somewhere but it was correct. This result was confirmed by a second wave of research. I was very surprised that Flybe didn’t get a mention which got us thinking about why this might be the case.

Our guesses were as follows. First, it feels like Flybe isn’t on the radar if you have never flown with them. Ryanair, easyJet, BA, Virgin Atlantic dominate the advertising space and Flybe is a small advertiser that features cheap flights to regions in the UK. Second, we guessed that again with non-users the assumption is they are domestic only yet they do fly to Alicante, Dusseldorf, Faro, Nice, Milan and numerous other mainland European destinations. Third, they are personality free; Stelios, O’Leary, Sir Richard and Willie Walsh for example all enjoy very high profiles and provide a personality, like it or not. They help define their brands and sustain broadcast presence for their brands. With all due respect I couldn’t put a face and/or name to Flybe. ( I also think it isn’t the best brand name in the world but I also believe it is all to do with what you make of  it, they do nothing as far as I can see.)

If all of this speculation is roughly accurate then the challenge is obvious; how is Flybe going to get the same consideration as its competitors given price isn’t a  sufficient differentiator and they do not have the same level of marketing spend as their competitors? Seems to me it’s back to GBS. Unreasonable men and all that. It places a large burden on the advertising (mainly because Flybe can’t make radical changes to their product) plus an imaginative, inspirational client who gets the value of being bold and understands why strong brand values add dosh to the bottom line.

As a footnote I felt I should correct some comments I made about the new easyJet advertising campaign some time ago. In my defence I had only seen the TV work and those comments stand! The poster campaign is very strong and should be applauded as it avoids all of the conventional wisdom’s of the travel market, e.g. shove in as much information and as many logos as possible. The poster work is distinctive and cuts through the mass of average poster advertising surrounding it. For what it is worth as an observer I feel as though they have discovered their brand mojo and I hope they build on this strong start. From where I sit it should give Ryanair a run for their money; maybe that’s why they are also reviewing their advertising relationships because in all honesty Ryanairs advertising to date has been dire which has helped to create a brand that has become the butt of stand up comedians jokes.

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