Michael Kleindl, founder of Adlink, on the future of the online advertising marketBy Bruno Amstutz Michael Kleindl is a child of the internet boom who has survived in business. The 33-year-old founder of online marketer Adlink is now the market leader in Europe and wants to take his company into the black this year. To support his plans, Kleindl has initiated a new industry association, which was presented in London this week.
Until now, the Interactive Advertising Bureau (IAB) was regarded as the industry association for online advertisers. Why do we need another one?
Michael Kleindl: All members of the EIAA are media sellers, i.e. providers of online advertising. There are no clients and no agencies involved, which distinguishes us from the IAB. We believe that certain things need to be initiated and financed from the publisher side. As providers, we have the common goal of increasing online advertising from the current market share of one percent to four to five percent. I think that is absolutely realistic. We want to lay the foundations for this in the EIAA. However, we do not see ourselves as competitors to the IAB.
How do you intend to tackle this ambitious goal?
Kleindl: Through public relations work and a study that examines how effective internet advertising is in addition to advertising in other media. We are investing a high six-figure euro sum in this study and expect the results in the second half of the year. Another topic is the standardized measurement of reach on the Internet.
Could the IAB not fulfill these tasks?
Kleindl: No. Resources were not made available there to the same extent. Our association is characterized by the fact that the relevant players in the European market are represented, which combine a high market share. All companies are involved with their top management, which was not always the case with the IAB.
A few years ago, you yourself were a member of the IAB Advisory Board. What did this association do wrong?
Kleindl: In Europe, the IAB has also failed in the past because it had no central structures. The commitment of some members was also not one hundred percent. In addition, the constellation with publishers and advertisers in the same association is difficult. There are fundamental differences of interest on certain topics.
In view of the huge losses in banner advertising compared to the same months last year, one wonders whether online advertising still exists.
Kleindl: Why so critical? Agreed, the hype was there in 2000 and everyone thought it would go up faster. But a medium that captures one percent of the entire advertising budget in three or four years is unprecedented. Outdoor advertising, cinema and other supplements are still at two to three percent after decades. The importance of the Internet as a medium is constantly growing.
Are there differences in the growth of European online markets?
Kleindl: You can observe a temporal progression. The Nordic countries were the first to be affected by the slowdown last year, but they are also recovering the fastest at the moment. In Sweden, things are picking up again relatively quickly. In the major markets, the UK and Germany, we are now also seeing double-digit growth rates on a monthly basis compared to the previous year. France is still a little cautious. Adlink expects sales of 50 million euros in Europe in 2002. The entire European market will exceed one billion euros in 2002.
Where does the Swiss market stand?
Kleindl: The wave of cooling came later than in other countries, and the recovery also started later. We are currently seeing a very clear upward trend in Switzerland. At least that was the case for Adlink even before the Qualiclick transaction. Companies that we have been working with for a long time are now releasing large budgets. Switzerland is definitely a top 5 country for us in Europe - small but nice.
So is the crisis in online advertising over?
Kleindl: We have bottomed out. Ultimately, the problem was that the money had to be spread across too many players. This is a normal phenomenon in a young industry. In 2000, everyone thought they could get rich with Internet advertising. In the meantime, consolidation has progressed and the market is a little healthier. The money is spread across fewer players, which is a clear trend.
Has the market in Europe consolidated in the meantime, or will there be further mergers?
Kleindl: I believe that the European market is not yet fully consolidated. Particularly in the larger countries, we can assume that further mergers will take place and companies will disappear from the market.
Can only the large networks survive today, or is there room for national marketers?
Kleindl: There may be national marketers who survive in specialized niches. But if you want to build a serious, sustainable and profitable business, you need an international organization.
What does the future of online advertising look like?
Kleindl: The market will probably develop in three ways. More investment will flow into branding solutions, i.e. pure advertising on the Internet that is planned, booked and processed in the same way as traditional advertising. In relative terms, however, the share of branding solutions will decrease. The Direct Marketing Solutions segment, where performance-based components are often part of the business, will record an increasing share. We also see Permission Marketing as a growth segment. In three years' time, direct marketing and permission marketing together will account for over thirty percent of Adlink's turnover.
Who belongs to the EIAA?
Eight major European online marketers have joined forces in the new online industry association European Interactive Advertising Association (EIAA): T-Online, AOL Europe, the RTL Group via IP Web Net, Tiscali, MSN Europe, Yahoo Europe, Adlink and Lycos Europe. Together they want to lay the foundations for the rapid expansion of online advertising and promote its image. The first chairman of the EIAA is Michael Kleindl.