Nils Schilling (l.), Florian Weischer (r.).
WW: Mr. Weischer, why are you expanding into Switzerland?
Florian Weischer: We find Switzerland a very interesting market. We were approached from two sides beforehand. One was from our customers, who liked our marketing concept in Germany. Many of them are also responsible for the Swiss and Austrian markets, and they found the differences in the marketing concepts of the individual countries to be very significant. These customers encouraged us to take a closer look at the market situation in Switzerland. At the same time, there was a timid tentative approach from cinema operators in Switzerland. They said that we have seen that what you are doing is quite successful. Wouldn't Switzerland also be a market for you? At first we said no. Although the countries are so close to each other, you simply can't underestimate the fact that the culture is different and that the way the media business is handled is perhaps not something we can really assess. Encouraged by these voices, we took a closer look at the market and realized that it is interesting. There is a great need for renewals. The market itself is small, but not unattractive. We see great potential there. That's why we want to take a chance.
The Swiss market has always been characterized by a monopoly position of one marketer. How high will KinoWeischer's initial market share be in Switzerland?
FW: In terms of the market as a whole, we estimate that we will have a market share of around 30 percent of the cinema advertising volume at launch. That's not particularly big, but it's very interesting. Kitag is a modern cinema operator that offers us a very attractive market position. It would have made little sense to start with two or three small cinemas scattered around Switzerland. Kitag was our partner of choice right from the start, they were right at the top of our list. Now they are the first to sign up with us. From January 1, 2013, the Swiss cinema market will at least no longer be a monopoly, that's for sure (laughs). We'll see what happens next. Of course there are plans. Kitag is just the start for us. It is the first important stone. We're holding further talks with cinema operators; we'll also have another meeting today. There is a lot of interest. In our experience, the Swiss market is definitely open to discussing alternatives. However, you have to present your concepts in great detail. There is intensive discussion. You need a few rounds of talks and then there are signals as to whether the topic is viewed positively or not. We have also had this experience with Kitag. We have been on the Swiss market for almost a year now.
Will you be setting up a joint company with Kitag?
FW: We have initially concluded a contract with Cinetrade that does not provide for a connection under company law. That would be an option that could work if we wanted it to. At the moment, however, it looks like we will be starting with a classic advertising management contract from January. Preparations for this are underway. We are in the process of moving into our offices here in Zurich and are recruiting staff for the Swiss office. Our first priority now is to talk to other cinema operators. The most important thing would be that we could perhaps move a little further forward from this 30 percent market share at the start. We have the impression that many contracts with cinema operators have been concluded at short notice, i.e. there is certainly the possibility that our market share could increase significantly before the launch.
You could also buy the competitor!
(laughs) We know Cinecom well, of course. I would say that when Cinecom was last sold, there must have been beaming faces on at least one side in view of the purchase price. That was phenomenal. Today's value is certainly a far cry from that! Three years ago, we were still involved in the first round because there was naturally already interest back then. We had our new marketing concept in preparation and thought that it could also work in Switzerland. But the signals were not as clear as they are today. There was also another important aspect: the advanced digitization of cinemas. We were interested in Cinecom at the time, but dropped out after the first round because our ideas about the purchase price were too far removed from the interests of the owners (laughs). That's also legitimate, we weren't offended. After all, it wasn't sold. Apparently, other interested parties also offered too little, or the demands were too high. I don't want to judge that at all. At the time, we put the project to one side. When the voices from the market became more precise and louder, we unpacked it again. We had a rough idea of the market, as we had dealt with it in advance. We took a top-down look at the cinema operators. We spoke to all the big ones. Some of them have long-term contracts. But they know what to expect, they know our marketing concept and have followed it with great interest. They want to see to what extent they could also be affected. In this respect, we have presented the concept quite openly. We will continue to do so. This summer, we will take a detailed position on this topic here in Zurich and invite the cinema operators. As soon as the technology is in place, we will also be able to show our concept live in one of the Kitag cinemas. By the end of August at the latest, we should be able to demonstrate it in concrete terms.
What does your marketing concept look like?
Nils Schilling: When we started out with the aim of reforming cinema advertising, we conducted an extensive customer survey of advertising companies and media agencies. Our customers gave us the following feedback: A very important aspect of cinema advertising is seen as targeting specific groups within the movie-going audience. It is obvious that individual films are more male or female-oriented, that they appeal to a family audience or more to teenagers. Customers want to be able to take greater advantage of this. Another important point is the process costs: the path from master to 35mm film print was tortuous, complicated and very expensive. Then there were the requirements for flexibility and transparency.
But these are more things that happen along the way. The central question was: "How can I better address my target group in the cinema?" We have addressed this need. The concept is new in that we are no longer based on individual theater bookings. A booking for a customer is based on the target group. It selects those films that guarantee the highest possible proportion of the respective target group. The range of films is made up of these. This range of films is then purchased in the regions concerned. This is the basis for planning, so to speak. In addition, there is an accounting with box office data, i.e. real visitors to the campaign.
...a demand that the agencies have been making for years.
NS: Yes, that's true. The issue of transparency is very important. People wanted up-to-date figures, correct figures. It was the same in Germany. In Germany there is the IVW system, which means that we work with annual averages from the year before last. Not exactly the optimum in terms of timeliness and transparency. We have said that we will change this rigorously, we will count the real moviegoers for every single film from every single cinema. These will be summarized and then used for accounting. This is a big step that would not have been possible five to ten years ago. I don't think it would have been possible in any country in the world. Today, the handling of data is much more open. Cinemas also have a completely different relationship to it. Ultimately, successful attendance figures are performance data. Cinemas see it that way today. In the past, we wouldn't have been given this data, but today we can.
The change in the cinema landscape in recent years towards larger chains has certainly helped...
NS: I believe that the large cinema chains are subject to different requirements anyway. Some of them are also listed companies with fairly strict transparency guidelines. But the mid-tier, which runs a very committed cinema - this is the case in all countries - and which is also a very important target group for us, because in most cases very good cinema is made there, also sees things differently today. In the past, cinema operators were afraid that if they published attendance figures for a particular film, the competitor across the street would be able to draw any competitive information from it. Today, all sides are actually interested in using the attendance figures to generate real performance figures for campaigns. The fact that this creates more transparency in the market overall is now seen as an advantage.
About your plans in Switzerland: how far along are you?
FW: There is already a domicile address that I can announce here: it is Theaterstrasse 10 directly on Bellevue-Platz in Zurich, also known as Corso-Haus. An address with cinema history. At this address there is Thomas Berner, who represents Werbe + Verlags AG and is president of the Zurich Cinema Association. He compiles the program data of all cinemas and distributes it to the media. Some of it is also sent to digital media and for his own website Movies.ch. There is also information outside of cinema topics, such as museum, event and jazz planners. For us, Thomas Berner was not just a suitable domicile address to look for cinema-related information in his premises. This is an important strategic cooperation for us. We are super happy to have found him. He fits in very well with us, he helps us to bridge the cultural gap and pave the way. Berner runs a cinema data business. What we are planning, this Cinema Reloaded concept, is extremely data-intensive. We need to know which movie is showing where and when, and we need to do this across the board. We also want to work with him to develop a feedback system for visitor data - an aggregated figure from the box office data. That would also be something new for the Swiss market.
What does this mean for the customer in the future?
NS: I don't want to say too much about the existing Swiss system, that might sound too critical. You have to respect that, because if it wasn't justified, it wouldn't be there. The big step forward means that this offer of 500 feature films a year is made transparent. For us, the essential - let's call it intellectual - achievement is the preparation of the data for these films. This gives us a forecast of the total number of viewers, which we can also break down by region, right down to the individual cinema. And we also forecast a corresponding demographic, a target group. If you have the data on the entire film offering, you can put together target group packages for customers. If you don't have that, or if you have it inadequately and inaccurately, it doesn't work. That's the first requirement. If this is given and you can react quickly, i.e. you can schedule the campaigns precisely to the movie releases of the cinemas and at the end have the billing with real visitor numbers of these cinemas, then it is a self-contained system. If I take one element out, it no longer works. It's difficult to achieve the whole thing. It took us a year and a half to build up this film knowledge, or monitor as we call it, before we launched it on the market. We've also been working for a year on creating reference figures so that we can transfer the model to the Swiss market, because the Swiss market is different. For example - and this is completely new for us - it has three release dates for the films and at least three language versions. If you now add the different subtitle options, it becomes very extensive.
And three completely different movie preferences in the three language areas...
FW: Exactly! Switzerland is a super-complex market. But we've had plenty of time to prepare and we still have a bit of time before the launch in January. We want to make the most of this time. We are confident. The current system used in Switzerland does not provide the target group or transparency about actual performance. It is a network sale that is unsatisfactory for both customers and cinemas. The cinemas do not know their share and therefore their value in the individual campaigns. To put it mildly, there is a great deal of dissatisfaction at this point. However, such a change of concept means that you have to go the whole way: from the very first forecast to the arrival of box office data and the settlement of accounts with the cinemas and customers. Any compromises in this line lead to a worse result. NS: It also requires the conversion of each individual cinema contract. We know this point very well, because in the German market we had to rewrite 1000 cinema contracts of individual entrepreneurs. Because the cinema operator has to accept that he won't get a flat-rate, predetermined bill, which might be balanced out with freespace at the end. They are dependent on the actual performance of their individual cinemas, just as the advertising customer only pays for this actual performance. In the end, this is a new product specification. In this respect, we're aligning ourselves with the new digital media. Contact rules there too. Contacts are bought. This is the future currency that we believe will bring much joy to the cinema market. The customer can say, I would like to have 100,000 contacts for Ice Age or 300,000 contacts in a female-oriented environment. They then get this number, usually even a little more, because we keep the commercials running until the end of the week. The billing basis is then a cost per visit, a very hard, transparent currency.
So cinema is becoming a measurable medium...
NS: Absolutely! This currency can be calculated. From the customer to the media agency to the cinema owner. We can tell the cinema owner exactly what goes in at the top and comes out at the bottom.
FW: Today, we are experiencing a dramatic change in the media markets. Many markets were supplier markets in which the media had the longer leverage. Today, they are demand markets. The options for advertisers are so immense, particularly as a result of the digital revolution, that as a medium you have to operate very differently in the market today. If we don't offer the service that customers demand, we don't stand a chance. And even cinema, which is certainly one of the media with the highest impact of all - a "paradise" for advertising in terms of the framework conditions - cannot escape this. It would be absolutely fatal to say today that we can carry on as before. We also remember those days when there was a surplus demand for the big cinemas in the big cities, which we could then allocate. Unfortunately, that's long gone and we won't see it again any time soon (laughs).
How will the cinema advertising market develop?
NS: We believe that it will develop positively thanks to the new target group opportunities. Many companies can now reach their target groups precisely in cinemas. Audi, for example, can now reach its exclusive target group in Germany through certain films in art house cinemas. This is also an important point for Switzerland. We will combine these demanding target groups into bookable units.
FW: Another point that will contribute to the revival is the combination of online and cinema. Moviegoers spend a lot of time in the online world. We are making intensive use of this fact for our customers in Germany. We also offer advertising on online sites. We have contracts with websites of major cinema operators, some of which are also film portals. Today, we already run almost ten percent of our campaigns online. In a campaign for a specific target group, we accompany the user from the online preparation phase to the visit to the cinema and any online follow-up phase. This also makes the medium of cinema faster, the service can be provided more quickly and we have a feedback channel, so to speak. We will also offer this in Switzerland.
Interview: Pierre C. Meier
Photos: Pierre C. Meier