Distribution The Direct Mail Company has chosen to go it alone in distributing the free newspaper .ch, making itself the market leader among private delivery companies.Markus F. Hof, Director of the Direct Mail Company (DMC), is not to be envied, as he has the Herculean task of getting the distribution of the free newspaper .ch up and running by mid-September: early delivery from Monday to Friday to the doorsteps of apartment blocks with at least five households - in Zurich, Basel, Bern and Winterthur. At the beginning of June, the contract was then extended to St. Gallen and Lucerne. It remains to be seen whether DMC, which has previously only been active in daytime delivery, will be able to achieve this. After all, the market for newspaper carriers is quite dry, as other free titles and new Sunday titles are currently also intensively looking for carriers.
For a moment, Hof also seemed to doubt whether going it alone would work. In mid-June, at any rate, he stated that he had sounded out other early morning and daytime delivery companies "for possible synergies" (WW 24/07). In the meantime, however, Hof has changed its strategy. He turned down an offer from Zuvo, the delivery organization of Tamedia and NZZ. Similarly in Bern. "There was an intention to cooperate between DMC and AWZ. In the meantime, however, DMC decided to set up early delivery for .ch independently," says Marco Hinni, Managing Director of AWZ Bern. Markus F. Hof confirms this. He decided against the Zuvo offer for "technical publishing considerations". He turned down the offer from the publisher-independent AWZ, on the other hand, because it had "no infrastructure for early delivery".
It may be understandable that Hof is wary of the publisher's own delivery companies. However, they can all tolerate competing products. The rejection of AWZ, on the other hand, is a cop-out, as DMC itself must first build up an early delivery infrastructure. Why should this not be possible for AWZ?
Opportunity for major expansion
The real reason for Hof going it alone is probably something else: The additional contract for St. Gallen and Lucerne offers DMC a unique opportunity for expansion. Until now, the Swiss Post subsidiary was "only" active in the cities of Zurich and Winterthur as well as in more rural areas, but now it will be present in the six most important German-speaking Swiss cities in one fell swoop. And on a daily basis. In the early delivery sector, the Swiss Post subsidiary is thus becoming the most important rival to Zuvo and its partners. With one difference: DMC early delivery is unaddressed.
However, twelve regionally active and mostly publisher-dependent daily delivery companies are coming under even greater pressure. These are networked in the Swiss Direct Mail (SDM) association with the Swiss Post subsidiaries DMC and Epsilon. Thanks to this cooperation, each of the 14 SDM members is able to offer nationwide distribution of unaddressed advertising material twice a week. However, the SDM also guarantees that each member can have its own area where it is not in competition with any SDM partner. DMC is now threatening to disrupt this order in Bern, Basel, St. Gallen and Lucerne, because the Swiss Post subsidiary will be encroaching on the territories of SDM partners AWZ, Distriba, Prisma and Anzeiger Luzern for the distribution of .ch. Markus F. Hof emphasizes that DMC will only be active in early delivery, which does not affect the SDM contracts. However, the SDM partners see this somewhat differently. At Distriba, Managing Director Alexander Pytloun speaks of a "breach of contract". The others are more cautious, but all express concern that DMC could also distribute unaddressed advertising material together with .ch in future - volume that would then be lost to SDM partners. "This fear exists - and I don't want to simply banish it to the realm of dreams," says Marco Hinni, Managing Director of AWZ Bern, who is also Chairman of the SDM Coordination Committee.
The SDM coordinator's statement shows that Hof was unable to dispel the concerns of the SDM partners. No wonder: instead of giving concrete answers, Hof asks counter-questions or makes do with bogus arguments. This was certainly the case when Werbewoche asked him about his partners' concerns: he initially pretended that DMC had to distribute the free .ch magazine exclusively. But this is demonstrably not true. Hof's client Sacha Wigdorovits would even welcome more early delivery customers at DMC (WW 24/07).
New balance of power
Hof then tried to make it credible that the DMC early delivery was of little interest to direct marketing customers, as it only served blocks of flats and was therefore incomplete. But the question arises as to why the free newspaper .ch distributed by DMC should be a success. After all, the paper has to make do with the same gaps in coverage. Hof squirms. "It makes no sense for me to torpedo the well-functioning SDM cooperation," he says, slightly annoyed. Maybe so. But that is still not a rejection of the distribution of advertising material. Above all, however, the SDM partners are also aware that even if DMC refrains from doing so for the time being, the company is in a position to launch a corresponding offer at any time.
Hof's behavior is therefore feeding the concerns of his partners. Nevertheless, SDM coordinator Marco Hinni does not want to become active for the time being. This is understandable, as DMC, already the largest SDM member, now has at least as much weight as all private SDM partners combined thanks to the .ch distribution. In future, DMC will be able to set the tone and probably also negotiate certain special conditions. Soon it will no longer be dependent on the SDM cooperation, but will have a sufficiently broad base to be able to go its own way at any time. No other SDM partner is in a position to do this.
Markus Knöpfli
Contract with Distriba terminated
Two weeks ago, Markus F. Hof
terminated its contract with Distriba, which belongs to Basler Zeitung Medien (BZM), at the end of 2007 "as a precautionary measure". A bold step in SDM's current situation. But Hof is reassuring: He had only terminated one of two contracts with Distriba. One governs the SDM cooperation, the other the cooperation in distributing the BZM free newspaper Baslerstab: DMC distributes the regional edition of Baslerstab twice a week. He had only terminated this in order to make price adjustments. It is quite conceivable that Hof first wants to test how high he can now push his demands in view of the changed balance of power at SDM. (mk)