Interview: Paul Dickinson, Virgin Atlantic

Creating ads with wow factor has proven a recession-busting move explains Paul Dickinson, the sales and marketing director of eternally upbeat UK airline Virgin Atlantic.

There are few, if any airlines that can say they have immunity to the global economic crisis and Virgin Atlantic is no exception. The UK long-haul carrier took quick steps to address the issue early last year – reducing capacity by 13% by dropping unprofitable routes and cutting staffing levels by a similar percentage to mirror that strategic move.

But unlike many travel firms, whether airlines, hotels or tour operators, Virgin Atlantic, which is renowned for its ‘out-there’ cheeky and influential ad campaigns, did not cut back on sales and marketing spend. In fact, it embarked on a 25th anniversary advertising extravaganza that involved creating a TV advert that set the airline back £800,000 (AED 4.6 million).

This ’25 years and still red hot’ initiative was a roaring success, picked up by websites, bloggers and cyber geeks worldwide, while it was parodied and posted online by avid fans, from groups of bus drivers to Essex girls. The result of this investment has created a formidable brand and one that is ready to wow the crowds once again in 2010. Gemma Greenwood speaks to Virgin Atlantic sales and marketing director Paul Dickinson about this success story.

What was your strategy towards sales and marketing during the recession?
We didn’t cut resources and we didn’t cut spend and it has really paid back for us when others were cutting back. UK is our number one market and so we always invest the most in that market. But with no new routes or aircraft, the question was ‘what to market?’ so the story was to make more of our 25th birthday and run the campaign all year. We challenged the agency to come up with a good concept and they came back with the ‘25 years and still red hot’ campaign. We produced a TV advert at the cost of £800,000 involving 200 extras, a massive crew and turned Ascot into an airport terminal. The ad was based in 1984 and the day or our first flight. It ran three times throughout 2009. Admittedly, we took a big risk in spending that money.

So how did you measure its success and ROI?
We did ad tracking and used econometrics – a special agency that tracks data and calculates the effect of adverts on your revenue and tells you your return on investment. We discovered that our ROI was £15 (AED 86) for every £1 (AED 5.8) spent on this campaign. By using this system we also found that our very glamourous adverts for Premium Economy didn’t work as well – the ROI was just £5 (AED 29) for every £1 spent – and that’s mainly because of the limited size of the Premium Economy cabin. With the ‘still red hot’ campaign we recorded more than 700,000 searches on Google and more than 100,000 hits on our website. When the TV campaign was aired the number of people searching for the Virgin name increased by 500% and as a result, our rating as an airline for business and leisure is the highest it’s ever been.

How does this position you against your competitors coming into 2010?
In the UK and US, our brand has never been stronger. Virgin Atlantic is perceived in the best light ever, particularly as some of our competitors haven’t had the most effective advertising and marketing this year and others haven’t had the best price relations either. At the same time, the on board experiences of some have been disappointing. During the past 12 months our crew have carried on professionally and have not lowered their standards or become grumpy and we are currently the only travel brand listed in the top 50 family-friendly companies.

What’s your sales and marketing strategy for next year?
The challenge for 2010 is to maintain and grow. The big news is we are changing the way we do our marketing – we are globalising the creative work whereas in the past, each territory has had its own budget and agency. From now on, all the creative work will be done out of the UK with our ad agency (Y&R) and each marketing team [overseas] will have access to an online system where they can adapt the creative to the local market. From March 1, which is the start of our financial year, we will have consistent ads around the world.

What’s your advertising theme for this year?
The theme is a secret, but it’s going to be very confident – we are never pessimistic and never shy and try to be amusing. We think it will work in all of our markets.

Your marketing in Dubai has been low key of late: what’s the plan for 2010 in this market?
We always invest proportionately to the scale of opportunity, so smaller markets like Dubai get a relative percentage of spend. For 2010 it will depend on how big we see the potential – if we think the biggest opportunity will be inbound to Dubai then we will spend less in Dubai and more in the UK and vice versa. Dubai does have potential however, if we did go to double daily flights (currently daily). It would probably be on the back of inbound to Dubai. But this is unlikely to happen for the next two years. Saying that however, we are seeing an increase in the number of hotel rooms available and average rates are coming down, so suddenly we can offer fantastic packages for prices that people can afford. This opens up massive new markets for us.

What is your distribution structure/strategy?
About 30% of business is direct, which has increased from around 18% from a few years ago. Bookings on the phone remain unchanged and that’s about 10-12% of our business. What’s changed is the number of people booking on the website, however, our strategy is to work with all channels to market. We are not so big that we can dictate how people book. We work closely with the big agents and TMCs plus there are some big leisure players out there – Expedia, Trailfinders, Thomas Cook, TUI etc. Web penetration is low in Dubai and our strategy is to work with all agents to support their growth and objectives, but at the same time, ensure our website is up to date. We don’t pay commission in many markets anymore, but of course, we have overrides and marketing agreements in place.