Out-of-home advertising Affichage has been expanding eastwards with Europlakat for ten years. Affichage took its first steps with Europlakat International (EPI) together with the Austrian out-of-home advertiser Gewista until the latter was taken over by JCDecaux, the world's second-largest out-of-home advertiser. With the entry of the French company, which also holds a 30 percent stake in Affichage, the Eastern European business received a new boost. In the last three years alone, the two partners have invested 60 million Swiss francs each. Today, EPI is present in Bosnia, Bulgaria, Croatia, Montenegro, Serbia, Slovenia and Hungary. two years ago, when Affichage bought a small company in Greece on its own initiative and also established itself in Romania, a certain emancipation process began to take shape. At the end of February 2007, the time had come: Affichage decided to leave EPI (WW 08/07). This decision was taken "unanimously" by the Affichage Board of Directors, emphasizes Affichage CEO Christian Kauter. EPI partner Jean-François Decaux, who sits on the Affichage Board of Directors, also supports this strategy.
Kauter justifies the separation primarily with the introduction of the new IFRS accounting standard, under which an investment can only be consolidated if more than 50 percent of the shares are held. "Neither JCDecaux nor we could consolidate our EPI joint venture, which is why we are splitting the markets," says Kauter. He makes no secret of the fact that this also gives Affichage more independence.
The demerger is to be completed on July 1, 2007: JCDecaux will receive Slovenia, Kosovo and Croatia and will focus on the north-east, as the Group already has a presence in Poland, the Czech Republic, Slovakia, Ukraine and Russia. Affichage, on the other hand, will gain Hungary, Bosnia, Serbia, Montenegro and Bulgaria and, with Romania and Greece, will focus more on the south and south-east.
The new starting position is advantageous for the Swiss out-of-home advertiser: it is already in pole position in Serbia, Bosnia and Greece, where it has a market share of over 60% in both backlit poster sites (citylight posters, CLP) and large billboards (GF). It is also the only provider with national coverage in these countries. In Montenegro, Affichage is the second-largest provider, and in Romania it is in third place.
In Hungary and Bulgaria, where Affichage is not (yet) at the forefront, the prospects are also good. This is because the out-of-home advertising markets in these countries are so fragmented that consolidation, in which Affichage is actively involved, is progressing rapidly. For example, the number of providers in Hungary has fallen from 17 to 8 since 2003; in Bulgaria there were 25 and today there are 20. As Affichage is one of the larger international players in these countries, the company hardly has to compete with stronger players.
Clear Channel Outdoor (CCO), the number one worldwide, is present in Hungary and Greece - but only in niche markets. It is therefore particularly important to keep an eye on the German AWK and Wall as well as the Austrian EPA Group. Thomas Rainer, currently CEO of EPI and in future active at Affichage, confirms: "The situation suits us, as we are mainly competing in these countries against local companies that have to make do without international expertise."
Posters are in demandIn addition to the acquisition opportunities, Southeast Europe is also interesting for Affichage due to its rapid economic growth (see interview on page 15). The fact that the poster medium's share of the advertising market is usually well above the European average makes these countries even more attractive. Out-of-home advertising has a market share of 17.7% in Bosnia, 11% in Serbia and 9-10% in Hungary, Romania and Bulgaria. Only Greece, with a market share of 6%, falls slightly behind.
And the future looks bright: With the purchase of the largest Greek outdoor advertising company at the beginning of the year, Affichage will be able to multiply last year's modest sales in Greece in 2007. In Hungary, the Budapest city contract won in 2006 will come to fruition for the first time. And in eastern Romania, where Affichage is active, Kauter senses good opportunities for expansion into western Romania. Tenders are also pending in the capital cities of Bucharest and Sofia. However, it is still uncertain when these will take place. Affichage is also active in northern Italy, where progress is also being made.
Markus Knöpfli