The SWA annual meeting was dominated by the economic downturnBy Daniel Schifferle The current advertising market crisis was the main topic at the SWA annual meeting. Albert P. Stäheli, CEO of Espace Media Groupe, provoked that nothing would ever be the same again after the crisis. For his part, SWA Managing Director Fredi Schwab castigated the short-term thinking to which long-term success strategies were being sacrificed in a panic.
Fredi Schwab, Managing Director of the Swiss Advertisers' Association (SWA), opened the event with a rebuke. Schwab did not have a good word to say about short-term thinking during the economic downturn. Quarterly and half-year figures have become the measure of all things, especially for large companies. Success targets formulated yesterday were simply swept under the carpet and sacrificed. "A selfish box-ticking mentality has taken hold," said Schwab.
Albert P. Stäheli, CEO of Espace Media Groupe, trumpeted the exact opposite direction. "Anyone hoping that the next upturn will put an end to all problems will be wrong," he said. His main reason for this perspective: "Our industry is stuck in outdated business models that prevent us from adapting quickly to market changes."
Shot across the bow of PubliGroupe
In this context, he immediately fired a shot across the bow of PubliGroupe. Through its strategic equity investments in publishing houses and its key position with the client, PubliGroupe strongly influences "the logical development of the market", sometimes even thwarting or delaying it. "Should the company in question be forced to abandon its investment strategy, we would have to brace ourselves for an earthquake in the press," explained Stäheli. "Our media markets would be dynamized to an almost unimaginable extent."
Ernst Grab, still head of PubliGroupe, did not simply let this hostility pass. "Such statements are a relapse into the ice age between PubliGroupe and individual publishers."
According to Stäheli, three forces of change will increase the cost and competitive pressure on newspaper publishers in the future. The first: the continuing trend from small-scale to large-scale structures in Switzerland as a result of better transportation links and the increasing trend towards mobility. "All business is local - but local is getting big and bigger," he said, summing up the development. Regional print media are being forced to expand along with the ever-growing living spaces. The result of this expansion is a "dramatic intensification of competition, as media companies that were previously geographically separate are suddenly becoming competitors."
Stäheli cited publishers' Internet strategies as a second problem, which had caused high costs and led to an erosion of advertising rates. "The online price structure in the classifieds business, which is lower by several factors, will not result in an increase in demand, but rather a shrinking of the market potential in terms of value," said the CEO of Espace Media Groupe.
According to Stäheli, the third problem that is making life more difficult for the print media is the ever-increasing demands placed on daily newspapers. "Today, people are demanding the very latest full-service newspaper. However, this is only possible with ever more cost-intensive editorial teams. As a result, the cost-income gap is widening."
Stäheli's prescription for the dilemma: in addition to "substantial improvements in the cost-performance ratio", market consolidation and cooperation are unavoidable. Publishing houses would find it increasingly difficult to avoid aligning themselves with one of the large conurbations.
Ernst Grab reckons with a dozen newspaper regions
According to Stäheli, the number of regional newspapers with independent full editorial offices will continue to decrease. In the longer term, the newspaper systems will converge towards the seven large regions defined by the Federal Statistical Office (see image). "With one or two regional newspaper systems in each of the bilingual areas, some of which can also cooperate."
Only SWA President Gérard Stalder was obviously pleased with this scenario, which is favorable for advertising clients because it is easier for bookings. "It's in our interest that this concentration doesn't happen too slowly," he said with a laugh.
However, Publicitas boss Ernst Grab did not agree at all with Stäheli's model of seven regions. He did agree that regional newspaper systems would continue to be in decline, but not to the extent proposed. "There will certainly be more than seven newspaper systems. In five to seven years, I reckon there will be around a dozen regional systems in Switzerland," said Grab.
Another topic that was the subject of much discussion at the SWA annual meeting: the extreme cost pressure on media agencies. "The choice of media agency based on the criterion of lowest commission does not work. Please check the fees according to the work done," Schwab urged those present. The increasing existential pressure into which the scene has partly maneuvered itself can lead to strange blossoms. In this context, Schwab once again brought up the case of the bankruptcy of OMD Zollikerberg, which became public in January. In this case, a senior employee had engaged in large-scale speculation on his own and contrary to business guidelines (WW 1/02). "Free space granted by the media does not belong to the agent, but to the client," said Schwab. Anything else is against the law.
SWA insists on radio advertising
Advertising on SRG radio stations remains a top priority for the SWA. The advertising client association is calling for SRG radio stations to be gradually opened up within five years. In support of its demand, the SWA calculates that all radio stations, including the private ones, would benefit from this. The total market potential for radio advertising in Switzerland is CHF 280 million. However, local radio stations are currently only exploiting CHF 130 million, of which around CHF 80 million is spent on local advertising. As soon as SRG radio stations introduce advertising, the potential of private radio stations will also increase by CHF 50 million. The SWA estimates the advertising potential of SRG radio stations at around CHF 90 million.