Authorised Investment Fund (ASX: AIY) has announced it is entering the programmatic advertising market via its existing stake in Asian Integrated Media (AIM).
AIY currently owns 25% of AIM with an option to raise its stake up to 30%. Via its holding, the company has a significant influence on AIM’s activities and a sizable interest in how it is performing.
Programmatic advertising is a term used in digital marketing to describe computer-based automated buying, selling, placement, and optimisation of digital advertising.
In contrast with traditional advertising, programmatic ad buying involves the use of non-human software machines to purchase digital ads.
The digitally-powered and Internet-dependent form of advertising looks to deliver efficiency and reduced advertising cost, with early indications that the market is on its way to becoming a US$60 billion giant.
According to AIY, AIM has created a bespoke programmatic digital advertising company called ‘Travel Elite’, to tap into exclusive travel data from leading airlines across the globe, and possibly rake in around US$16 million (A$22 million) over the next three years.
The basis on which Travel Elite will look to generate revenues is ‘programmatic digital advertising’ – in other words, using platforms which automate the process of serving online ads to targeted audiences.
Programmatic advertising uses data to target specifically the consumers that match a particular set of criteria which helps advertising companies offer better services and far more cost-effectively because ads are “targeted” by taking into account user preferences.
Insight into consumers’ interests, attitudes, perceptions and behaviours, for example, allows a brand to reach a specific audience with a relevant advertisement, regardless of which website they might be visiting.
Importantly for the airlines, Travel Elite does this without them having to invest in the creation of a digital platform of their own.
From past to present for Travel Elite
Travel Elite was developed by AIM as a unique and powerful solution to address two important global trends – the growth in ancillary revenues amongst airlines and the continued growth in digital advertising spend, aimed at “high-value airline passengers”.
The company is looking to court leading brands as they seek more targeted ways to engage with passengers in more creative and engaging ways – often supplemented by digital tools and platforms rather than accessed through traditional media such as in-flight magazines.
“Our investment in AIM is part of a deliberate strategy leveraged off companies working within the digital and data landscape, given that they provide the greatest opportunity to potentially generate substantial revenue streams,” AIY chairman Ben Genser told Small Caps.
“We are continuing to invest in companies who are actively engaged in a variety of digital and data market opportunities,” said Mr Genser.
A global programmatic market
According to market statistics, global ancillary revenues for airlines in 2017 reached US$82 billion, equating to around US$20 per passenger. In parallel, global airline profits were only US$34.5 billion last year which highlights the increasing importance of ancillary revenue to airlines.
As margins have tightened on the back of greater competition and lower airfares, airline have been left with no choice but to seek supplementary ways of generating sustainability and profitability.
Market analysts have even predicted that the growth in programmatic advertising will account for 66% of global digital display advertising as early as next year.
Travel Elite is looking to monetise this trend with its parent companies AIM and AIY potentially in line to benefit as the company is developed by its managing director Michael Yates.
Mr Yates has spent more than 20 years creating market strategies for companies and governments in the Asia Pacific region specialising in the travel technology, distribution and tourism services sectors.
Having joined AIM following several senior management roles with Travelport, the Pacific Asia Travel Association and Tourism Australia, Mr Yates has also run a successful consultancy business in collaboration with global brands such as Disney, Visa and CNN, and regional blocs such as ASEAN.
“I am thrilled to have joined AIM, truly one of the world’s best media representation companies. Along with the global team at AIM, we are working with travel organisations in the Asia Pacific and the Middle East to partner luxury brands with international travellers through the Travel Elite platform. We forecast revenues to be in excess of US$16 million over the next 3 years,” said Mr Yates.
“We have managed Cathay Pacific in-flight advertising for 15 years and represent media for 20+ airlines including Qantas, Singapore Airlines, Emirates and KLM. We recently conducted a programmatic campaign for Thai Airways and continue our valuable partnership with SPAFAX – producers of IFE content for airlines globally,” said Peter Jeffery, founder and CEO of Asian Integrated Media.
“So, with Mike on board and the launch of Travel Elite, we are very excited about the future prospects for AIM and the positive growth and value we can offer AIM’s shareholders,” he added.