|Comment on this story
Do you have a viewpoint on this story? Should airport advertising providers be granted concession relief in the current circumstances? And should those providers offer their key brand clients additional flexibility in such a deep and sustained crisis?
We encourage feedback on this key issue at a time of great strain for the airport advertising sector and travel retail in general.
You can make your comments (attributed or anonymously) via the DISQUS platform at the foot of the page or via email to Martin@MoodieDavittReport.com
INTERNATIONAL. With passenger traffic in freefall at many leading international airports due to the COVID-19 crisis, major international brands are expressing concern at their multi-million dollar exposure to premium advertising contracts – and the lack of flexibility in some of those agreements.
One leading luxury brand director told The Moodie Davitt Report, “Our exposure runs into the millions of dollars yet we are simply not seeing the foot traffic – or anything resembling it – that we would reasonably expect and that we have very much paid for. We are not talking here about any typical traffic downturn… these are extraordinary circumstances.”
“Airport advertising prices are a function of traffic. If the promised traffic does not materialise, it is only fair that advertisers and airport media concessionaires receive relief.” – The Estée Lauder Companies Global President, Travel Retail and Retail Development Olivier Bottrie
An executive from a prominent European beauty house, also speaking on the grounds of anonymity due to the sensitivity of negotiations, said: “We’ve seen very heavy traffic declines in many of our key airport locations globally, particularly among our most-targeted nationality, the Chinese. We believe that we should get assistance from the concessionaires and they, in turn deserve relief from their landlords.”
A spokesperson for leading independent French beauty house Clarins said: “We are facing the same situation as other brands and are currently negotiating with JCDecaux to reduce fees and postpone the campaigns when traffic will catch up but it is a tough battle.”
Asked for his view, The Estée Lauder Companies Global President, Travel Retail and Retail Development Olivier Bottrie told The Moodie Davitt Report: “The situation you describe is indeed a great concern for us too.
“Airport advertising prices are a function of traffic. If the promised traffic does not materialise, it is only fair that advertisers and airport media concessionaires receive relief. Airports are giving relief to other concessionaires, why would the media category be treated differently?”
Jean-Charles Decaux, co-CEO of JCDecaux, the world’s leading airport advertising company, told The Moodie Davitt Report that the company was deeply concerned about the impact of the COVID-19 outbreak,
“JCDecaux’s ambition has always been to be the most trusted partner of airport principals and clients/advertisers and this ambition is reinforced during such crisis” – JCDecaux co-Ceo Jean-Charles Decaux
Commenting on the commercial implications of airport advertising that is not being viewed by expected audience levels, Decaux said: “All aeronautical and non-aeronautical industries are heavily impacted by this crisis.
#EsteeLauder ensured high visibility for the Lunar New Year at #HKIA, Duty free Area with the combination of Lightboxes and Experiential Advertising. Duty-free visitors had the opportunity to discover their skincare range on their way to boarding gate area!#JCDecaux #OOH pic.twitter.com/qxO6aCFacp
— JCDecaux Airport HK (@JCDAirport_HK) February 20, 2020
“During the past few weeks we have been talking to clients/advertisers, including brands from the travel retail industry and we are supporting them the best we can with reliefs knowing that most of them want to keep their premium locations in our airports for the long term and are expecting a recovery in Mainland China from the second half of the year – if not May for those most optimistic.
“All our airport principals in Asia fully recognise and understand the significant setback for the advertising business and have all already expressed their intention to grant us rent reduction. As this moment we have not received any official confirmation, and JCDecaux continues to honour its contracts fully including payment of rental due.”
Talking about the human dynamic of the crisis, Jean-Charles Decaux said: “Our top priority is to protect our employees in China as well as all other territories where infection cases have been detected.
“JCDecaux is now applying a worldwide business continuity plan with a specific focus in China (including Hong Kong region) and Singapore with two teams working alternate days (and never meeting each other),” he added. “And obviously we are following restrictions established by the local authorities and communicate precautions of the World Health Organization.”
He concluded: “JCDecaux’s ambition has always been to be the most trusted partner of airport principals and clients/advertisers and this ambition is reinforced during such crisis.”
Asked if rent relief previously granted to certain concessionaires also applied to airport advertising, a Changi Airport spokesperson said: “The assistance package is targeted at the retail, F&B and service concessionaires in Changi Airport that are most immediately affected by the impact of the COVID-19 situation worldwide. We remain in close contact with all our concessionaires and continue to update them as we keep a close watch on developments as they unfold.”
|Responding to the Australian bushfires
The coronavirus crisis has piled pain upon pain for Australia’s beleagured tourism sector, and airport advertising has not been immune to the recent challenges.
A spokeperson for Australasian out of home advertising company oOh! said: “At this challenging time for Australians, Australian businesses and people all around the world, we are supporting our advertising partners and impacted community in various ways.
“Regarding the bushfires, oOh! have been using the scale of our assets across Australian airports to amplify Tourism Australia’s latest campaign ‘Holiday here this Year’ to encourage domestic tourism, and support the local and regional economies devastated by the bushfires. We have also been directly providing support to organisations and companies to rebuild their local businesses and communities through promotion across oOh’s! national network.
“With our own people in mind, we are providing all staff an additional two days’ annual leave should they holiday to any bushfire-affected community over the next two years while they rebuild.
“More broadly, we are using our data capabilities to identify and target audiences who normally travel abroad which subsequently allows much greater targeting efficiency for advertisers across our entire network.”
As reported, Airport Authority Hong Kong has also implemented a relief package for some of its airport commercial partners. However a spokesperson said that the authority cannot comment on commercial arrangements for individual concessionaires or tenants.
A spokeperson for Australasia’s leading out of home advertising company oOh! said: “While it’s too early to judge the impact of the coronavirus on the wider Australian advertising industry, we are focused on demonstrating both the effectiveness and low wastage our media proposition can provide brands by targeting the right customers through our global leading audience data offering.
“We are working closely with our partners across airports, retail and government sectors to enable the use of our screens and content capabilities to inform citizens of local precautions and alerts and will continue to monitor any impact and demonstrate support moving forward.”
NOTE: The Moodie Davitt Report also publishes Sight Lines, a new quarterly publication dedicated to airport advertising. If you would like to take part in Sight Lines, please contact Martin Moodie (Martin@MoodieDavittReport.com) and Liam Coleman (Liam@MoodieDavittReport.com) for editorial and Irene Revilla for advertising and sponsorship (Irene@MoodieDavittReport.com).