Ringier also compensates those who book directly

Thomas Passen, who is responsible for the reader and advertising markets at Ringier Magazines, comments on the «direct booking compensation.» WW: Eighteen months after Tamedia, Ringier is now also introducing a «direct booking discount.» Why? Thomas Passen: Hold on—we’re deliberately referring to a «direct booking compensation» because we’re using it to compensate agencies that book directly for work for which, until now, only Publimedia was compensated in the form of a commission. We want to eliminate this unequal treatment. A direct booking compensation has long been a need for agencies. Since, in our view, they are gaining influence, we cannot ignore their needs in the long run. This situation was further exacerbated when Tamedia broke the mold last year: that put us under pressure to act as well. WW: What exactly has worsened? Passen: We noticed that Tamedia titles were gaining market share, at the expense of similar titles from other publishing houses. WW: This raises doubts about the impartiality of media agencies. After all, they apparently place ads primarily where there’s a financial incentive for them. Passen: No, Swiss agencies operate with great integrity. But you have to be aware that there are substitute products for most magazine titles. The price levels are also fairly balanced. If an agency has a choice between two titles with similar media performance and then chooses the one that compensates it for its efforts, I understand that. What we don’t offer, however, is an incentive for revenue growth, as Tamedia additionally provides. WW: To what extent are these shifts in market share occurring? Passen: That depends on the specific title. And they aren’t the decisive factor for introducing the compensation. Something else was more decisive: Following Tamedia’s initiative, we expected Publimedia to take appropriate measures to counter a potential discount spiral—but we don’t see that it’s reaching a consensus with all media agencies.WW: What kind of response did you have in mind? Passen: A clear commitment to print. You can tell that the company, which was originally focused on print, is now looking in other directions as well. That’s why we’re already wondering why we should continue to focus solely on P. WW: Doesn’t your «direct booking compensation» conflict with the commission agreement between Ringier and P? Passen: No, we terminated the contract for the magazines years ago. Currently, there’s a kind of service contract under which we pay P the rates that were previously contractually agreed upon. But now we only want to pay a single commission rate for all titles.WW: Back to the compensation: What exactly is the new fee for?Passen: We first defined what P’s services are worth to us: del credere, favorable payment terms, a print planning tool, administrative support, and other services. Based on this assessment, we concluded that anyone who provides us with one or more of these services is also entitled to the corresponding compensation.WW: What reactions do you now expect from the agencies and P? Passen: A certain degree of relief on the part of the agencies, since we’re showing that we pay for the services they provide to us. Some agencies will certainly demand the same compensation level as Tamedia immediately. We are now conducting a trial and reserve the right to make changes if it primarily causes unrest. We do not expect any punitive action from P, as we have always openly discussed our considerations with them. Six-Month Trial Period This week, the media agencies received a letter
by Ringier Magazines. In it, the company announced that, from July 1 through December 31, 2006, it would, on a trial basis, «pay a commission to all media agencies and clients who place their orders directly and without the involvement of an intermediary.» The compensation would amount to 1 percent of the annual net-to-net revenue from advertisements and inserts—across a total of 15 Ringier magazines, as well as in Cash and the future Cash Daily. The only exceptions are *Gesundheit Sprechstunde*, *Sportmagazin*, and the newspapers *Blick*, *SonntagsBlick* (including the magazine *Sie + Er*), and *heute*. Two additional requirements must be met: The minimum annual revenue across the eligible titles must total half a million Swiss francs, and the agencies and clients booking directly must ensure a professional booking process and handle proof, publication, and quality control.By way of comparison: Tamedia’s «direct booking compensation» amounts to 1.5 percent on annual volumes of at least one million Swiss francs. If revenue exceeds that of the previous year, Tamedia even grants four percent.

Markus Knöpfli