Advertising rates What prompted Tamedia to offer "compensation" to agencies that book directly, thereby upsetting the entire industry? Jürg Brauchli, Head of Newspapers at Tamedia, explains.
WW A month ago, PubliPresse General Director Otto Meier sat in your office and warned you in vain about your direct booking discount. Jürg Brauchli It's not a discount, but an expense allowance, the introduction of which has been in the pipeline for some time.
was in the pipeline. Mr. Meier also came to us because of the
terminated Commission agreement. We submitted a new proposal to him and have been waiting for a response ever since.
Nevertheless, one gets the impression that you have rashly instigated an industry merger.
That's what P says; it also claims that we are undermining the current tariff system. In fact, however, it was the P that in recent years has increasingly provided services that were previously the responsibility of traditional media agencies. The agencies, which are under great cost pressure, took on services such as booking or billing checks in order to reduce their own costs. For in-house publishers, this meant that order volumes that used to be handled directly with the publisher were increasingly handled via the P. However, this is not in the interests of an in-house publisher. However, this is not in the interest of a self-publishing house because it has to pay a commission to the P. That is why we think it is right, in the interests of similar lengths and freer competition, that an agency can choose whether it wants to have the booking work carried out by the P free of charge or whether it takes on the work and is then compensated by the publisher.
What proportion of Tamedia's total advertising volume comes from P? In Swiss francs, it is currently around 50 percent. If you look at individual orders, the P accounts for significantly less than 50 percent. Agency sales booked via the P have risen by around 15 percentage points in the last five years.
Why has Tamedia stirred up this hornet's nest right now?
P felt more and more strongly. In addition - and I admit this - there is the new situation in the Zurich area: because P is now closely linked to NZZ, it will no longer be actively doing anything for Tamedia. The time of neutral advertising sales is now also over in Zurich.
An old cliché that doesn't become any truer simply by repeating it.
Believe me or not, there are statements from PubliGroupe to this effect.
From Otto Meier? let me say from PubliGroupe (laughs). I don't want to personalize it.
So last year, someone from the P said or wrote that they would do less for you than before.
No, not like that, it was on the occasion of director negotiations. It is clear that the P is trying to positively influence the market for these titles within the framework of directing contracts. But that's only the second reason for our proposal - the third point is that more and more agencies are outsourcing not only the booking but also the actual planning to the P, which is what worries me personally the most. Because from this moment on, it becomes dangerous for self-directed titles, because the P and its subsidiaries will try to place orders where it has the highest commission or has made the biggest commitments.
Nevertheless, back to PubliGroupe's statement: who said what exactly and when? The accusation that PubliGroupe is not neutral is heard time and again, but hardly anyone puts their cards on the table.
I don't want to say any more at the moment. I just wanted to make it clear earlier that there are such statements from the P. And I don't want to mention any names of agencies that assign their planning to the P either. But it's no secret that P actively offers planning free of charge. I would also keep an eye on this as an advertising client, because it can't be in their interest if such mechanisms start to play out.
What do you fear for Tamedia if the P starts to "positively influence" the market for the NZZ titles? If it shifts a certain advertising budget in favor of a certain title, this can only be to the detriment of another title. How effectively it can do this and whether this will lead to a drop in sales for us is an open question. I'm not particularly worried about this, but it's not something that should leave us cold.
The agencies were already asking for a direct booking fee 20 years ago. Why has Tamedia done nothing so far?
Because Publimedia did not yet offer agencies so many free services. This has increased significantly in recent years. In addition, the P in Zurich has been more or less neutral up to now.
Tamedia therefore waived the compensation out of concern that P would "positively influence" the market for NZZ if it went it alone.
No, not so much because of that, but because P would probably have seen such a move as an unfriendly act. Today, things are different in that we are the only publishing house in the Zurich area that is not leased by P - with the exception of the Ringier titles, which are not solely focused on the Zurich area.
What basic commission did the P receive for your titles under the previous agreement? >> Page 16>> We give 2 percent everywhere. This is also provided for in our new proposal.
In other words, 0.5 percent more than the agencies that book directly. For what?
For the delcredere, which P takes over. We also pay a certain amount of compensation to the P branch network.
Otto Meier says this is not enough for the Delcredere (WW 5/05).
The delcredere at our company does not account for more than 0.3 percent for the P - because the orders are well diversified. Perhaps Otto Meier should take another look at the accounts. In the Erb case, for example, we bore the entire del credere ourselves, as Erb was a direct customer of Tamedia.
What is new about your proposal, which lies with the P? In addition to the basic commission, we have also granted the P sales-related bonuses for each title to date. We no longer want this, because if it no longer actively does anything for us, we don't want to reward it for additional sales that it doesn't influence. We are therefore proposing market share-related bonuses: You jointly define certain market participants, and if the market share then changes in our favor, that's worth a bonus. Otherwise not. Simply going with the flow of the advertising market is not an additional effort; the P has the commission for that.
What do you want to achieve specifically with the direct booking discount? First and foremost, we want to use the expense allowance to prevent more orders from moving from the agencies to P and to ensure that they do not outsource even more tasks to P, but that they provide the service themselves again because it is worthwhile for them. That is clearly the most important point for us. We also hope to see a slight increase in directly booked orders. However, there will hardly be any major shifts or even additional turnover as a result.
Do you also want to reduce costs with the discount? After all, you pay the agencies less than the P.
If you do the math honestly, it will be more expensive for us, at least in the short term. After all, we now have to compensate those agencies that have already booked directly. Conversely, we did not ask any agencies to promise that they would change their booking behavior. This is therefore not a cost-cutting measure, but a longer-term measure for market liberalization. It would not make sense if everything ended up going through the P.
Why is Tamedia trying to stop the migration of orders to P on its own? The independent publishers have often discussed possible measures, including within the Swiss Press Association (VSP). Ultimately, however, a company can only ever act as a single entity.
Specifically: Have you spoken to Ringier or Jean Frey about this in the last six months?
Of course, but more informative. Because otherwise there are just discussions about a model, that's all that happens, and nothing happens on the market. That is precisely the advantage of P: it operates as a stand-alone company and can present everyone with new facts. But I do know that other publishing houses are thinking along similar lines to us. I don't know whether they will do the same.
I have made enquiries (see box above), but nothing seems to be moving. The VSP is also cautious.
The P is an important market player, even for the VSP. It is an associate member and also sponsors events. I understand that you don't like to mess things up with a good sponsor.
Did 13 of the 15 media agencies approached actually sign the agreement with Tamedia?
We could have introduced the compensation without any formalities. But in the interests of transparency, we wanted to make a commitment. We approached the SWA just as openly. I can't blame SWA Director Jürg Siegrist for saying that the compensation was a discount and belonged to the customer. However, he did not take into account the fact that P does not pass on its commission to customers.
Some agencies accuse Tamedia of having communicated naively in this case.
One agency or another would have preferred it if we hadn't said anything. Other publishers do it that way, I know. But that's not in the interests of the necessary market transparency.
Tamedia may also have been unofficially granting agencies direct booking compensation for a long time. So the only new thing is that you are now officially offering it?
I have to disagree with that. We didn't have that.
Otto Meier says that the agencies are giving up their neutral, fiduciary stance with the agreement.
(laughs) I would say the same if I were him. He obviously fears that agencies will now increasingly book directly. But the agencies act in the customer's interest first and are professional enough not to be influenced by us.
Publimedia is threatening to provide fewer services to these agencies. It is also considering abolishing the delcredere at Tamedia, or "measures" regarding payment deadlines or in the processing area. How are you reacting?
I don't think the threatening gestures against the agencies are sovereign. The P is admitting that it wants to influence them and make them dependent on it. And if it rejects the delcredere, we will just have to talk about the level of the commission. We didn't actually want to touch this. We will have to discuss the other points with Otto Meier in due course. But I do want to emphasize something: Our compensation offer was not a declaration of war on the P. We simply want to prevent one party from ending up booking everything on its own.
FuW and 20 Minuten with special regulationAlthough Finanz und Wirtschaft (FuW) and 20 Minuten are also Tamedia titles, they do not grant direct booking compensation. Jürg Brauchli explains this as follows: When the compensation was launched at the end of 2004, 20 Minuten was not yet a 100 percent subsidiary of Tamedia and negotiations for the complete takeover were still ongoing.
FuW is different: this publishing house is deliberately run as an independent division. In addition, the marketing and booking mechanisms for this title would be completely different to those elsewhere. "But it cannot be ruled out that one of these titles - or both - will also grant the compensation at some point in the future," says Brauchli.
Cautious interest and restraintFor the time being at least, Tamedia is not finding any imitators among other large independent publishers. "We are observing what Tamedia is doing and find their impulse interesting. However, a direct booking discount is not an issue for us at the moment," says Myrta Bugini, Head of Communications at Ringier. It sounds very similar at Förrlibuckstrasse: "For Jean Frey AG
there is no need for action as a result of Tamedia's measure," says CEO Filippo Leutenegger.
And what does the Swiss Press Association think about Tamedia's initiative and the P reactions? "We have to exercise restraint, for better or worse, when it comes to such potential conflicts between members. In this sense, it is not an issue at the moment," says Managing Director Daniel Kaczynski. (mk)
At loggerheads with the P: Jürg Brauchli, Head of Newspapers at Tamedia.
Interview: Markus Knöpfli