The nation's No. 2 airline, now emerging from bankruptcy protection, is poised to shift some of its estimated $60 million direct-marketing duties to the Interpublic Group of Cos. agency. Its direct and Mileage Plus customer-loyalty communications account is currently held by WPP Group's Grey Direct, Downers Grove, Ill.
"We're currently in negotiations with Draft and haven't finalized how and if we'll work with them," said a United spokeswoman. "They are being considered for future assignments at this point. That's all I'm able to say [on] this right now."
A spokesman for Draft declined to comment. Grey declined to comment.
Draft, along with WPP's OgilvyOne, Chicago, was a finalist in the United review that ended in January 2003 with Grey Direct triumphant. The business previously had been with WPP Group's Brierly & Partners, Dallas.
United made that decision less than a month after it entered Chapter 11, devastated by the decline in air travel after the Sept. 11 terrorist attacks. Draft is poised to join the roster at a time when United's outlook is much sunnier-and as airlines ratchet up their spending on direct, particularly e-mail marketing.
With a wide range of information about their customers-where they travel and how often, for starters-carriers can issue finely tuned offers to loyalty-program members. For instance, when Northwest Airlines was hit by a mechanics' strike last year, United sent offers to its loyalty-program members who lived near Northwest hubs.
Indicative of this shift, the airlines spend less on measured media than they did a decade ago. Ad spending by the top five airlines-American, Continental, Delta, Northwest and United-was lower in 2004 than it was in 1994, according to TNS Media Intelligence. The five spent $229.2 million in 2004 vs. $357.4 million in 1994. (Spending during the first nine months of 2005 was slightly below the year-earlier period.)
Just the beginning
One-to-one communication is going to be even more important in the years to come, said Terry Tripler, airline analyst with CheapSeats.com. For instance, airlines likely will step up efforts to learn from customers about destinations they would like to visit. "The one-to-one outreach is just incredible," he said. "I think we're just seeing the beginning of it."
United is expected to exit Chapter 11 next month and is expected to have a break-even year. Its competitive situation has been helped by rivals Northwest and Delta succumbing to Chapter 11 this past September, and high fuel prices have made it difficult for the discount airlines to slash prices. While Delta is folding its discount Song line, United insists it's sticking with Ted.