Scandinavian Airlines (SAS) – Media Company or Airline?
Media company or airline… what a choice I hear you say. Many would run a mile from either of these industries which are both experiencing extreme structural change but not Stefan Hedelius, the Vice President of Marketing & Brand at Scandinavian Airlines (SAS), the largest Scandinavian airline. He is a business leader who thrives on change and believes he has the best job in Scandinavia. I caught up with him to learn more about SAS’s new marketing concept “We are Travelers” and the change he is driving through the organisation in terms of the way they look at marketing and communications. This bold move by SAS has been covered extensively in the marketing trade media in Scandinavia but I wanted to get a better understanding of the approach and answers to four clear questions:
1. Is the new content marketing and owned media approach about cost cutting, increasing sales or enhancing customer experience?
2. How will the new marketing concept take advantage of the new media pillars of Content, Community & Commerce?
3. How will this thinking affect your marketing and brand communications budget spend going forward.
3. Is there an opportunity to become Scandinavia’s leading travel media?
For those of you that really want to understand the full picture of what Stefan and his team are doing just listen to the interview. It’s 36 minutes of some real insight from a marketing leader who knows what his objective is and how he’s going to get there.
Cut Costs, Increase Sales or Give More Sunshine?
As any marketer knows before you set out on any new campaign, concept or program you need to be clear about your objectives. As the Content Marketing Institute’s Joe Pulizzi always says there are only three possible objectives to any content marketing initiative: Cutting costs, increasing sales or in his words providing more sunshine AKA improved customer experience. One would think that for a business that has announced 2 years ago it needed to find billion SEK ($417m) of savings to ensure they are fit to compete in the future this new initiative would all be about cost cuts. Not a bit of it according to Stefan. The primary objective with We Are Travelers is to build brand and enhance the customer experience. Of course it needs to be efficient which may lead to cost savings and it should ultimately lead to sales but the primary objective is about enhancing the customer experience. And Stefan knows all about this. Whilst a new report from Brian Solis’ Altimeter Group shows that even though 88% of organisations state they are working on a digital transition program, only 25% have mapped a the digital customer journey, Stephan and his team are ahead of the curve on this. They have mapped every interaction of the digital and physical customer and every screen interaction for awareness to sale which gives him even greater confidence that they new marketing concept will succeed.
Content, Community and Commerce?
I have written before about the important 3 pillars of content community and commerce for any new media entity and so I was curious about how and if Stefan and his team had thought around this subject. On the subject of content he has made a bold move to end the 42-year-old inflight publication Scanorama, loved by many of the SAS regulars and employees alike. However that will be replaced by another inflight magazine Scandinavian Traveler, but supplemented with other owned content pieces such as web TV, video, newsletters and other digital channels which are being developed by his new content agency OTW, owned by the Swedish media group Stampen. However as Mary Meeker pointed out it is the combination of both professional and user-generated content that will provide the future of new media. Up step Björn Lundström, a SAS pilot who unknown to SAS’s marketing machine has developed a following of over 16,000 followers on Instagram with his beautiful images and video’s documenting the life of a SAS pilot. Expect to see more from this engaged employee and many more like him as SAS look to put user-generated content at the centre of much of their content strategy. Bjorn’s 16,000 followers may or may not be on a SAS customer databases but they sure enjoy Bjorn’s enthusiasm for both his job and his employer.
In my opinion no content agency, star art director or celebrity can replace the authentic voice of an employee or customer to tell a brands story and this is exactly what Björn provides SAS. The balance will be keeping his content authentic and dare I say it ensuring Stefan and his team have a little to do with Björn as possible… but how do you do that when you know you have a star on your team?
Regarding Community this is where Stefan has a razor focus. He knows his target segment well, the 2.3 million customers (10% of Scandinavia’s population) that travel over five times per year and make up a large majority of the total travel market. 80% of this group have been on a SAS flight in the last 12 months. Now that’s a strong position to start from. However when Hedelius first assumed his role at SAS it was some other numbers that amazed him. SAS has approximately:
- 28 million passengers per year (80,000 per day) interacting with either a SAS digital service before and after travel or a print content product onboard
- 100 million visitors to the company’s website (annually)
- 3.5 million members of the company’s loyalty program Eurobonus
- 700,000 fans on Facebook
- 50,000 followers on Twitter
And this is just the corporate community that SAS has not to mention the communities that are around the likes of Björn and his other 12,000 colleagues. In our interview Stefan is not specific about the exact community building tactics they will employ but is focused on providing content in context in the most personalised way possible before, during and after travel. The opportunities are endless with an audience focused and sharing a love for travel and flying the engagement level is already very high and can be enhanced with the right, relevant content services.
As for commerce it is clear with 80,000 purchases per day SAS is in the retail business and will look to extend their offering in combination with the new editorial and content platform. However as Stefan points out “You need to put some brain on it” and balance brand engagement and inspiration with the hard sell.
How will this affect you marketing and brand communications budget spend?
Obviously in an organisation focused on cutting 3 million SEK ($417m) over three years the marketing spend efficiency will come into focus. Stefan has already done a lot in this area including consolidating to just one advertising agency Åkestam Holst instead of several, one content agency OTW and four media buying agencies (Tre Kronor, Mediacom, Mindshare) across the Scandinavian countries and one for international media. However it is in the budget allocation between paid, owned and earned media where Hedelius sees the biggest efficiencies.
“When I saw these figures (referring to SAS own audience) I asked myself why should I spend money externally in the magnitude I do now when I have all these customers so close to me”
Looking back on 2013’s Brand, Marketing & Communications spend Hedelius estimates that SAS had spent 93% on paid media / advertising, 5% on owned media and 2% on earned media / PR. In his opinion this will now rapidly change to a mix of around 20-25% on owned media, 70% on paid media and 5% on earned or social media. This is remarkably similar to an exercise I did with a group on European CMOs in Berlin earlier this year. The direction of travel is clear. For those media and publishers that have benefited from SAS marketing budget over the last 40 years its time to think again and position yourself for the owned and earned media revolution where a brand does not need you anymore to connect with their audience. However your content and editorial skills could be key to their success.
Becoming Scandinavia’s leading travel media?
Whilst Hedelius believes that companies should stick to their core business, ie the airline business, he clearly sees the opportunity for the We are Travellers concept and the Scandinavian Traveler (the title of the new inflight magazine) brand to become the leading travel media in Scandinavia. With reference to his owned audience numbers he is asking himself the question,
“Should I pay somebody else to expose my messages or should they pay me to communicate on one of my platforms”
SAS has traditionally sold advertising in its inflight magazine but the new editorial concept and platform development gives them much greater opportunity to monetize their content and turn marketing at SAS from a cost to a revenue centre. It’s early days in this but with DG Communications on board to assess the opportunities for media sales on SAS content platforms the intention is clear. Whilst Stefan does not see SAS going as far as acquiring a media house for content generation and prefers to use the agency and partnership model he sees limitless possibilities there. If I was a traditional news publisher in Scandinavia I would seriously assess my spend on travel related editorial and see if there were more efficient possibilities of partnering with SAS to create some of the best travel content out there from both a professional and user-generated content perspective. With daily newspaper and media circulations in the hundreds of thousands across Scandinavia how do they expect to compete with SAS’ over 3.5 million owned audience. Partnership is the only way forward. This development will be exciting to see but in my world SAS is just another travel brand like the Marriott hotel chain who wish to take advantage of content marketing and their owned audiences to create the leading media in their niche or region.
If you have made it this far you will realise I am full of admiration for the work Stefan and his team at SAS are doing. As someone who travels a lot both personally and professionally and has an influence on which travel providers our 170 employees use I form part of Stefan’s key target segment. For years I have seen SAS as an old player in a changing industry and quite frankly not relevant to me personally. I have prefered the approach of the new, fresh challengers in the region. Whilst my attitude will not change overnight to see what the leaders at SAS are doing in terms of marketing innovation ensures they now become relevant again for me to consider and if the product and service lives up to the brand promise I may well be back on board again with my Eurobonus card renewed very soon.
For those of you that just can’t get enough of SAS here’s some of the new advertsing created by Åkestam Holst which cleverly uses existing employees and customers to tell SAS’s story. Expect more of that to come.