WW: Mr. Kaiser, what does the new partnership look like? Are you setting up a new company together?
Thomas Kaiser: Both partners - Ringier and Seven Ventures - maintain an intensive exchange with regard to possible investments and decide on a case-by-case basis in what form and in what proportion they will become involved in individual start-up companies. This means that neither a joint company nor a fund will be founded.
As you know, this is how Seven Ventures works: The company looks for young companies that offer a product or service in the B2C sector. It then offers these companies advertising time on the channels Pro7, Sat1 and Kabel 1 as well as on their online platforms and receives either a revenue share (media-for-revenue) or a company share (media-for-equity) in return. - Can you name a company that has become big thanks to Seven Ventures?
A good example is the online fashion store Zalando: Here you can see the scale on which the model works and what could be achieved in a relatively short time.
What role will Ringier now play? Do you want to offer additional advertising space in print, radio and online?
Exactly, and also with an investment focus on B2C. The media reach of both partners to achieve the branding or sales targets of the investments is very complementary. The marketing mix can change significantly depending on the orientation of the portfolio company. The interaction of offline and online channels significantly increases the effectiveness of campaigns. Print and radio channels can also be used to increase the regionalization of advertising.
What is the goal from Ringier's point of view?
First and foremost, it is about getting in touch with young online entrepreneurs and working with them to develop their companies. However, our aim is also to introduce these companies to traditional media and their impact. Experience has shown that many only start using traditional channels at a very late stage. Prior to this, they often only use online channels for several years - where they are usually slow to build awareness and reach.
What criteria are used to select the companies?
The company must already be active on the market and have an existing "infrastructure": a strong founding team, an existing basic technology, a functioning mobile app, customer service, logistics, etc. An ideal candidate has already demonstrated on a manageable scale that its business model is attracting market interest (measured, for example, by the number of downloads of the mobile app). Now it is a matter of quickly building awareness and a market position. This is precisely where the cooperation between Ringier and Seven Ventures comes in. Ideally - but not necessarily - there is also potential for international expansion in Germany, Austria and Switzerland. Interested start-ups can contact us at www.ringierdigital.ch/ventures.
Why is Ringier Digital, of all companies, taking action?
Ringier Digital has the appropriate "environment" and offers numerous "points of contact" for the young entrepreneurs: marketing, technology and process know-how. In addition to media reach and financial resources, the exchange between experienced online entrepreneurs and young start-up entrepreneurs represents an invaluable asset for both sides. Ringier Digital also keeps its eyes open for the other Ringier business areas of Publishing and Entertainment. The Ventures business is therefore not limited to Ringier Digital's business models (classifieds, e-commerce, digital marketing).
Ringier will therefore become a kind of bank that grants media loans. What enables Ringier to take on this new role? And how much money will be made available each year?
Ringier Digital has experience in the development of online business models thanks to its own history (e.g. through the establishment of the Scout24 Switzerland Group) and speaks the language of founders. We have not set a fixed ventures budget. It is clear to us that in some cases media volumes alone are not enough, but that cash will also be needed for investments in technology, sales staff or customer services, in the sense of traditional financing.
Do you agree pre-emption rights with the start-ups?
This can be agreed on a case-by-case basis if it is clear at an early stage that this will develop into a strategic investment or the interlocking with existing Ringier investments is obvious. As a rule, however, this will not be the case at the beginning of the cooperation. A financial participation in a potential sale of the company to third parties (trade sale) at a later stage is also an option.
When does the partnership apply?
The partnership is already underway. Initial investment options are currently being analyzed. In addition to options that are new for both partners, we are also analyzing the transfer of models to Switzerland that have already been successfully developed by Seven Ventures in Germany.
What is the focus in Switzerland: the media-for-equity or the media-for-revenue business?
This cannot yet be estimated. We are therefore actively communicating both models. Which model makes sense for a company and how high the revenue share is must be discussed on a case-by-case basis.
Is a revenue share fair? Ringier and Seven Ventures skim off the top even in loss-making years.
It is more than fair. It's not about giving away media services, but about keeping the entry barrier to media channels extremely low, which would otherwise not be available to these young, up-and-coming companies in this development phase. We have also made the experience - also internally at Ringier - with media cooperations that the media channels are only meaningfully optimized and success actively shaped if a "minimum payment" is made for them.
Will Ringier's existing investments (Geschenkidee, Scout24 portals, Qualipet, etc.) also benefit from the new partnership?
For example, Geschenkidee.ch - a Ringier company - has been running TV advertising on ProSiebenSat1 Group channels since August on the basis of a media-for-revenue agreement. We are thus demonstrating that this form of media cooperation is also a sensible marketing measure for us. Of course, we also want to gain initial experience in this way.
Why does Ringier rely on Seven Ventures for the Ventures model at all? Is the medium of TV so crucial for this?
In fact, we have repeatedly relied on TV advertising in addition to our own channels to build brand awareness for our own investments (DeinDeal, Autoscout24, Anibis) and have seen how useful this combination is.
However, ProSiebenSat1 and Ringier do not exactly have the same target audience: Print, Ringier's largest audience, tends to appeal to older people, whereas Pro7, Sat1 and Kabel 1 tend to appeal to younger people.
Blick am Abend and Radio Energy are just two examples that contradict this statement and show that Ringier also appeals to a young and urban audience. The complementarity of the channels is also quite intentional: by combining the reach of both media companies, the target groups should be addressed as broadly as possible. Precise targeting is carried out on the online platforms of both companies.
Who is in charge of media planning - an independent media agency or a committee of Ringier and Seven Ventures?
We have an internal coordination office that carries out professional media planning for all our investments via Ringier's media inventory. The same is done on the Seven Ventures side by the marketer Goldbach.
The channels Pro7, Sat1 and Kabel 1 are marketed in Switzerland by Goldbach Media. However, no money flows for the advertising of these start-ups. What are the consequences of the new cooperation model for Goldbach Media?
The marketer is involved as a partner. All planning of the TV placements and the handling of the campaigns are carried out by Goldbach. However, Ringier is not aware of the exact contractual aspects of the cooperation between Goldbach Media and Seven Ventures.
Goldbach Media and the advertising windows mentioned are known for (having to) provide a lot of free space. How much advertising time can you provide per year for these ventures? And how much space can Ringier provide in the print and online media and on the radio?
This is planned on a case-by-case basis.
The venture business is suitable for filling unused advertising space at ProSiebenSat1 and Ringier, even in difficult economic times. Is that one of the reasons for the new commitment?
If you go back to the origins of this idea at ProSiebenSat1, then this was certainly one of the reasons. On the other hand, we can't exactly speak of idle advertising space in the TV sector at the moment. With our print properties, the question is more about how big they are. We are therefore more interested in taking on additional forms of advertising and advertising partners.
Ringier Digital and Seven Ventures together have the largest media reach in Switzerland, writes Ringier. Is that really true? Tamedia has significantly more contacts in the online sector, as well as in print: Ringier is only better in radio and TV.
This is about the media reach that can be made available to young start-up companies as part of this cooperation. We are not aware of a more comprehensive media-for-revenue or media-for-equity package currently being offered on the market.
The Ventures business delivered triple-digit revenue growth for the ProSiebenSat1 Group in 2012. Since 2009, the Group has built up a ventures portfolio with over 50 partnerships and strategic investments. Were these figures decisive for Ringier to contact Seven Ventures?
We have been in contact with the ProSiebenSat1 Group for years, not least thanks to Ringier's investment in Sat1 Schweiz. Discussions have shown that we have very similar ideas in the ventures area and invest in the same models. This means that the combined media reach in Switzerland makes double sense.
Ringier's digital business generated sales of around CHF 195 million last year, or CHF 18% of Ringier's total sales. Turnover has grown by 29%. What push do you expect from the new partnership?
The figures you mentioned refer to the aggregated digital revenue of the Ringier Group (Publishing, Entertainment, Digital, Central Eastern Europe [CEE]), which is consolidated by Ringier. We want to grow to a digital share of 25% this year. However, the contribution from the cooperation with Seven Ventures will initially be marginal from Ringier's perspective, as we do not include the print and radio media volumes in the digital segment and will generally not consolidate the investments.
What about profits: Was Ringier's digital business self-sustaining or even profitable overall in 2012? And what share do you hope to achieve with the new ventures business?
The digital business was still in a strong development and investment phase in 2012. In 2013, however, we expect an EBITDA result in the double-digit million range. This will increase continuously in the coming years - even after taking into account further investments in the digital business.
The new deal with Seven Ventures is limited to German-speaking Switzerland. Could you imagine something similar for French-speaking Switzerland? With whom?
In terms of TV reach, this is correct. Ringier's reach in French-speaking Switzerland is already considerable and can be brought into the cooperation on a case-by-case basis.
As Ringier markets the TF1 advertising window in French-speaking Switzerland, you could implement the same model with this channel there.
We are starting with Seven Ventures. If this test is successful, we will of course discuss whether this business model can be expanded with partners such as TF1 who cover complementary areas. But there are no plans for this at the moment.
Am I right in thinking that this ventures model basically amounts to a kind of performance marketing: the start-ups become advertising clients who do not pay for media services, but allow Ringier and Seven Ventures to share in the additional (sales) success achieved?
Correct, although turnover is only one of the possible metrics. There are others, such as the gross margin in e-commerce or the growth of the customer base.
However, this model could change the mentality of Ringier's existing advertising customers: Because they could say that they too no longer want to pay fixed advertising or radio spot prices, but would rather cede a percentage of their turnover to Ringier. Is such a change in mentality even desirable?
No, this model is really only about supporting start-ups in the development phase. This is also ensured by our marketing departments, as they have a say in who is offered the model and who is not.
One question remains: If Ringier is so heavily involved in the economy in the future, promoting some companies and not others - how can the Ringier editorial teams still report independently on such economic topics and companies?
Editorial offices are just as free in their reporting as they have been in the past. Placing advertising in the media is not exactly a new business model. Nor is this about content integration.
Nevertheless, similar conflicts of interest can arise as with sports and cultural events and stars that Ringier markets: Ringier's editorial teams are biased - now increasingly also in economic matters.
The convergence of media and many B2C business models (e.g. online retail) is already well advanced. Now a media company can watch from the sidelines as others develop the markets, or actively participate itself. We have opted for the latter.
Interview: Markus Knöpfli
About the person
Thomas Kaiser, born in 1966, has been in charge of Ringier AG's digital business activities as CDO since June 2012. As CEO, he is also operationally responsible for Ringier Digital AG, which unites the leading Swiss online marketplaces, e-commerce companies and digital marketing services under one roof. Before joining Ringier, Kaiser was a member of the Group Executive Board of Publigroupe, where he was responsible for building up the Digital & Marketing Services business segment. Kaiser held management positions at Bertelsmann and Hubert Burda Media in Germany for twelve years and has been involved in the development of companies in the new media sector since 1995. Kaiser graduated with a degree in business administration from the University of St. Gallen HSG. Kaiser is a member of the board of the Swiss Chapter of the International Advertising Association.
The business division Ringier Digital combines the following business segments:
Marketplaces:
Autoscout24,
Motoscout24,
Immoscout24,
Jobscout24, Anibis.ch,
Jobcloud (Jobs.ch/
Jobup.ch)
E-Commerce:
DeinDeal,
Geschenkidee.ch/.de/.at,
Qualipet
Digital Marketing:
Competence Center
Omnimedia AG
Business Services:
In-house development and operation of online platforms and mobile applications, for example under the umbrella of Xmedia AG, Nhat Viet Group and Geomatic AG