MAS announces big move to digital

After a tumultuous season of losses of massive losses, Malaysia Airlines is taking a drastic turn, with huge changes to its marketing and digital strategy.

The airline hit crisis mode in 2011, where it lost RM$ 2.52 billion, which it attributed to rising fuel costs and other expenses. Since then, the company has been working furiously to turn itself around.

“A burning platform”

News of the airline's struggle was rife in the past few years.

“We basically had a burning platform,” senior vice president of marketing Dean Dacko told Marketing. Aside from other issues, its marketing department was a mess.

“We could not sustain those losses. There was a realisation all the way from our prime minister to our board of directors that more of the same would not do - we had to decide how we were going to deploy our resources,” he said.

“We had no proper marketing department. There would be various parts of the organisation doing different things – we had an advertising and promotions department, a loyalty division, but there was no such thing as (a unified) marketing department,” said Dacko.

Also, in the past few years MAS has had several agency partners, for instance, hiring Landor and Ogilvy for its branding and creatives after a massive pitch in 2012. However, making real changes were difficult, admits Dacko. “The agency would propose certain changes but because of the situation they (MAS) were in back then, the answer would be – not now,” he said.

This has been happening for the past decade, he added.

Since then, the airline has done a major restructure within its organisation, creating a marketing department, as well as integrating other areas, with the aim of coming up with a common strategy and placing the customer in the middle.

It also reinvested in its product, which will eventually lead to better branding, said Dacko.

In the last year, MAS bought an entirely new fleet of airlines, which is expected to cut fuel expenses, the airline’s biggest cost at 37%.

Investing big in digital

Aside from working on its products and restructuring, digital will play a huge part in MAS’ new strategy. It expects to move its 70% of its marketing budget to digital this year. Last year the split was 50-50 between traditional and digital, reveals Dacko.

Prior to this, MAS’ marketing was completely tactical.

“A huge chunk, 75% - 80%, of the marketing budget would be in traditional mediums like newspapers.”

“We would put a destination and a price point. The problem with that is if you bank on price point – if you’re on page 3 and your competitor is on page 7, you’ve basically wasted your money on the ad,” said Dacko.

Last year, it beefed up its investment in search. (Read more about its search strategy here.)

It yesterday also announced its signup with Adobe for its digital push. While both firms have been working together for the past four years, Dacko said that the new investment was significant, without revealing numbers. This is part of its digital integration plans.

He said that in 2013, the marketing budget had gone 50%-50% to digital and traditional, and but this year it would be 70%- 30% respectively. The company was has also doubled its overall marketing spend this year, he added.

Traditional advertising would still play a part in MAS’ marketing. “Newspapers are still important – but what are trying to do is different – get you to our website. Once you are there in our environment– just shop us. We can better understand the customer and work on converting them,” said Dacko.

While it has been reducing losses, it looks like tough times are not over.

For the full year of 2012, Malaysia Airlines reported a net loss of RM433 million compared to its 2011 results. For the nine months ended September 2013, Malaysia Airlines group registered a net loss of RM830 million.

“The airline business environment is tough. Still, we are pleased with how the market has reacted to our newest products, increased capacity, new destinations and increased frequencies,” said MAS group chief executive officer Ahmad Jauhari Yahya in an interview with The Star.