Martin Schneider, Director of Publisuisse and Chairman of the Board of Directors of Mediasense, looks back on a year of experience in radio marketing.
WW: One year of Mediasense—what’s your assessment so far? Martin Schneider:
We’ve achieved many of our goals, but not all of them. The Publiplan booking tool, with its interfaces to the radio stations’ scheduling systems and the Radiocontrol Manager, is working very well. Unfortunately, however, we haven’t yet been able to convince all market participants of the benefits of our open system. Some intermediaries are deliberately bypassing the Swiss Radio Pool. As a result, our revenue is not where it should be. In terms of expenses, we’re on track. How large is the deficit? Publisuisse and the other shareholders have already had to inject additional funds. The business plan anticipates a deficit for the first year, as well as corresponding loans to bridge that deficit.
The Federal Office of Communications (Bakom) is also interested in this; after all, Publisuisse’s share ultimately comes from the SRG, which is not there to subsidize private radio stations.It is not true that the money comes from SRG: It comes from Publisuisse’s own funds—and these are generated on the market, just as with other advertising brokers.
You could also look at it the other way around: Whatever you invest in Mediasense is taken away from the SRG. That’s a bit of a narrow way to look at it. Last year, we generated 310 million Swiss francs in TV advertising revenue for the SRG, while Publisuisse’s bottom-line profit amounted to about 3 million Swiss francs. Even if it had been a few hundred thousand Swiss francs higher, that would be a small amount relative to revenue.
The SRP radio stations contacted are disappointed with Mediasense. They had hoped for an expansion of the radio market, but instead, there is an intensifying battle for market share among the marketing agencies. What’s going wrong? Our business model is based on handling as much of the national radio advertising as possible through the Publiplan booking system. That’s not happening right now. On the contrary: To avoid having to process SRP bookings through Publiplan, various intermediaries—led by IP—are now only making individual bookings with the SRP radio stations, even though these are more expensive. This leads to a lack of transparency, as additional discounts are granted behind the scenes on individual bookings or, in some cases, on other media in the intermediaries« portfolios. In some instances, the stations are also pitted against one another. To expand the radio market, it is essential to be able to attract new clients; however, a »channel war” is currently underway among the agencies. This is not conducive to the radio industry.
Some SRP radio stations say this is partly due to the structure of Mediasense itself. They claim it is designed in a way that puts other marketing agencies at a disadvantage. I don’t believe that’s the case. The main problem lies elsewhere: Until recently, there were two radio agencies of similar strength, IP and Radiotele. Today, Radiotele’s volumes are rather low. The other agencies and Mediasense have benefited from this. However, the bulk of the volume still goes through IP. If IP—which generates high revenue—now boycotts the SRP’s central processing, it will naturally become more difficult for Mediasense in terms of revenue. IP has ways to circumvent the SRP: The average 20 percent discount advantage that SRP bookings have over individual placements—and which must be passed on to the client when the SRP is bypassed—can be offset by IP, for example, with TV Freespace during advertising slots. Other agencies such as RadioEmotion, Radiotele, and even Mediasense do not have these resources. IP thus has a disproportionately greater advantage over its competitors. This raises the question of who is actually at a disadvantage here.
Nevertheless, even SRP radio stations criticize the fact that the commission paid by Mediasense is too low. This makes SRP’s referral program unattractive. Although the commission is below ten percent, it is possible to earn a higher rate. We have also recently proposed a new bonus system to the referral partners.
So is it attractive to sell the SRP through Publiplan? No. But one thing is clear: the commission is no longer 15 to 20 percent as it used to be—though those rates only became established in recent years. On the other hand, there is a gain in efficiency. However, it seems we haven’t been successful enough in communicating this.
Another point of criticism: Publiplan allows Mediasense unilateral access to competitors« booking strategies. Mediasense uses this information to make cheaper (dumping) offers to competitors» clients. We anticipated this potential criticism. For this reason, we have proposed a «protection system» for “their” clients to the other agencies, particularly IP. We were and remain willing to guarantee this to the other agencies through a contract. Unfortunately, we have not yet received a response from IP. Regarding the dumping offers: That is incorrect. We have assured the other intermediaries that they can also make any offers that Mediasense makes. Thus, there is no preferential treatment for Mediasense. That would also be nonsensical. After all, if we were to poach customers from the others, our open model would indeed never work.
Wouldn't it be wiser, after all, to spin off Publiplan into a company owned by the radio stations, without any Publisuisse involvement? These are the kinds of scenarios we are actually considering.
In hindsight, was it a mistake to give Publisuisse a majority stake in Mediasense? No, in the initial phase, it was actually important in order to build up Mediasense more quickly. After all, on the SRP side, the decision-making process is more time-consuming with 15 partners. But in a second step, we now need to consider how the SRP radio stations can be more closely involved and take on more responsibility. We are therefore examining the question of who should hold the majority stake in Mediasense.
Perhaps the SRP—excluding Radio Energy Zürich, which is marketed by IP—is also a flawed concept? A pool comprising all radio stations could solve a fundamental problem. No, the SRP is a good product. But there are also discussions underway regarding the SRP as a product.
Working groups have been formed at Mediasense. By when will the solutions be ready? We want to have taken concrete steps by the end of the year. I’m confident that we’ll get this off the ground. However, the basic conditions must be right—namely, adherence to rate agreements, transparency, strong market development, and simple, professional handling of radio advertising using efficient tools. This should make it possible once again to generate new clients and convince agencies of radio as an advertising medium. And to position radio for what it truly is: an excellent and efficient complement to TV, billboards, and print.
Interview: Markus Knöpfli
