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Advertising at Departure
Airports not only make money on servicing airplanes and passengers, but also on so-called non-core activities, including advertising. Although income from this activity amounts to no more than 2% of total turnover, it is no trifling business. Last year, Moscow’s airports earned nearly $3 million from advertising and are counting on earning $5 million this year. Dengi reporter Leonid Zavarsky investigated the special features of using airports as an advertising medium.
Advertising between Earth and Sky
In answer to the question as to whether it was hard form him to work in the theater at his age, English actor and playwright Peter Ustinov replied that at least while on the stage he did not see the advertising that so annoyed him on TV and in airports. Since September 11, foreign airports have been complaining about the twofold reduction in revenues from placing ads, but the sums are still impressive. According to data of the British Airport Association, foreign airports earned about $9 billion from advertising last year. Revenues in Russia are much more modest. Although there are no official estimates, according to some calculations, advertising brought in about $20 million to Russian airports last year.
Aleksandr Artemenko, director of Sky Media, the airport advertising placement department of the News Outdoor group of companies: The development of the “advertising in airports” market sector in Russia began at Sheremetevo-2, which handles 100% of the international passenger traffic. Placing ads in airports has some important features. The consumer audience consists of affluent people and so it is more effective to advertise brands and trademarks here, because it yields higher revenues than ordinary advertising. The advertising also has a greater impact on a specific audience. It is estimated that a person traveling along Tverskaya Street in a car spends no more than 2 seconds looking at a billboard, whereas in an airport, this figure is at least 15 seconds.
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| Photo: Dmitry Lebedev |
| Sheremetevo Airport has the largest volume of advertising and the most vacant space allocated to it |
It is a matter of how many consumers of advertising there are at an airport. Development of the market in Russia was hampered by a steady decline in passenger traffic. Passenger traffic reached a low point of 21 million passengers in 1999 and then began to increase. In 2000, Russian airlines transported 830 000 more passengers. In 2001, traffic increased to 25 million passengers, and 2002 it reached 26.5 million passengers. Naturally, advertising activity at airports has also increased.
Sergei Rudakov, general director of Domodedovo Airport: Last year, we earned $500 000 from renting advertising space. This is 20% of the revenues from non-core activities. Of course, this figure is only a modest 2% of the airport’s total revenues, but our prospects are good and this year we will be right on the $1 million mark. Advertisers are attracted by the increase in passenger traffic. Last year (2002), we served about 8 million passengers, and this year we will reach 11 million.
Although Viktor Nikolaev, Sheremetevo’s commercial director, did not talk about the advertising business, he showed himself to be a real entrepreneur when he tried to get money for letting our press photographer film the billboards at the airport. According to Aleksandr Artemenko, Sheremetevo earned $1.5 million last year from renting advertising space.
It is worth noting that the cost of a square meter of advertising is higher at the airport than in Moscow. According to Konstantin Vertogradsky, a director of the Aerogroup company, placing an ad in a 3 x 1 m light box (a billboard with interior lighting that is the main advertising medium at airports) yields annual revenues of $20 000, whereas a basic city billboard measuring 3 x 6 m brings in no more than $12 000.
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| Photo: Dmitry Lebedev |
| Baggage carts at airports carry not only baggage, but also advertising |
The regions cannot boast of earnings like these. For example, at Ekaterinburg’s Koltsovo Airport, a square meter of advertising space yields $540 per year. A 6 x 3 m billboard yields $4000 at the airport and $3200 in the city. According to Nikolai Lavrukhin, head of the rentals and advertising department of OAO Tolmachevo Airport in Novosibirsk, the airport realized $50 000 from advertising last year (total turnover at the airport was $30 million). The cost to the client for placing a billboard at the airport entrance is $300–500 per month, about the same as in the city. The airport receives $4 per square meter in rental payments, or about 1%. In Moscow, rental payments take up about 50% of an advertiser’s income.
Meanwhile, each 1.8 x 1.2 m light box at London’s Heathrow Airport earns £30 000 per year and a 6 x 1.5 m light box earns £55 000; a 2.1 x 1.3 m light box at Dublin Airport earns £50 000; and a 4.95 x 2.38 m light box at Frankfurt Airport earns ˆ 61 000. The figures for Singapore Airport are up to $60 000 per year for a 1.8 x 1.2 m light box and $100 000 per year for a 6 x 1.5 m light box. Now is the time to explain why foreign airports earn so much more from advertising than ours.
Movies at the Airport
The prospects for increasing revenues from advertising at airports depend on the area of these airports. In reality, revenues can only be increased through the use of more expensive advertising media. According to Domodedovo’s Sergei Rudakov, one 75 sq. m supersite (a three-sided billboard revolving on a tall post) will earn $50 000 per year. The trouble is, they will not be set up in the airport and no more than four will be placed at the entrance (there is not even one today). Thus, Rudakov is pinning more hopes on a 4 x 5 video display unit that will be installed this year above the main entrance to the airport. The unit costs $200 000 and will pay for itself in abut two and a half years.
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| Photo: Dmitry Lebedev |
| It is very difficult to find ads for strong drinks in the city, but promotion of spirits is allowed in airports near the sales outlets. |
Advertisers have other plans. In the last few years, plasma video display units with a 101 cm diagonal have proved to be a profitable advertising medium. There are currently ten of them at Domodedovo, and each one brings in about $6000 per month. Their number will double in the near future. In addition, Konstantin Vertogradsky said that an interesting experiment had been going on at Domodedovo since April 10, when they started showing Luc Besson’s blockbuster Taxi 3 on the video screens. Counting on the fact that passengers will not miss an opportunity to watch a movie, commercials will soon be inserted in the films and they will run at least twice as often as in a popular film shown on TV. Skeptics who say that TV broadcasts are merely a means of filling the gaps between commercial breaks will be proven right, and this will happen at the airport. Vertogradsky could not say how much money this kind of broadcasting would bring in, but in his opinion the prospects were breath-taking.
Aleksandr Artemenko believes that the potential for increasing revenues from advertising in airports and at the approaches to them lies in the specific character of the business. This is primarily the high price level for advertising (from $5 to $15 per sq. m of advertising space per day) and the greater length of the campaigns (at least six months) compared to outdoor network advertising, as well as the larger variety of advertising materials in a limited area (outside ads, promotions, ads on video displays, unique designs, ads on baggage carts, displays of cars, products in special windows, distribution of advertising brochures, and radio ads).
In Artemenko’s estimation, advertising volumes are about $1.5–2 million at Domodedovo, $3.5–4 million at Sheremetevo, and $2 million at Vnukovo. This could change, however. For example, Artemenko estimates the current ratio of advertising revenues at Domodedovo and Sheremetevo at 1 : 3 , but with the construction of new terminals, this proportion is gradually changing in favor of Domodedovo.
Tony Went, a consultant of the EU’s transport commission, believes that the largest Russian airports may be of potential interest to Western advertising agencies. Whereas opportunities for placing ads in Western airports are decreasing along with international air traffic volumes, traffic volumes are steadily increasing in Russia.
Boris Rybak, the director of the consulting company Infomost, thinks that the most important resource for increasing advertising revenues at airports is the arrival of foreign advertisers. The products advertised in airports today consist mainly of banking services, alcohol, cigarettes, and perfumes. Foreign advertisers could increase the range of advertising and come with direct agreements with the best known foreign producers of goods for placing advertising, which could increase the value of advertising space several times. The question is how our advertisers, who generally have exclusive agreements with the airports, will react to this.
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Do you like the service at our airports?
No (73.54%)
Yes (5.82%)
I don’t notice it (20.64%)
The poll was conducted among visitors to the Kommersant DENGI site (http://dengi.kommersant.ru) between April 9 and 16, 2003. One hundred and eighty-nine people took part in the poll.
Leonid Zavarsky
All the Article in Russian as of Apr. 21, 2003
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Photo: Dmitry Lebedev
