Stephan Obwegeser*
WW: When it comes to automated trading, or real-time advertising (RTA), Tamedia has so far been reluctant or even dismissive. What is your stance on this and when will something happen?
Stephan Obwegeser: Real-time advertising is a topic that we are looking into and are generally open to. For us, it is crucial to have control over our inventory and transparency about our customers on digital trading platforms and marketplaces. We do not blindly place our advertising inventory in any networks where it is not clear who is buying what and at what price. We want to know what price our customers ultimately pay for their presence on our platforms. And we want to know who our customers are. From today's perspective, the private exchange approach seems to make sense to us. To this end, we are seeking and exchanging ideas with the relevant market participants. In my view, it makes sense to find the broadest possible consensus in the Swiss market as to where and how which volumes are traded. We need to ensure that we meet in the same marketplace, because a transparent market can only be created if supply and demand meet in the same marketplace!
Publishers in France are already working successfully with private exchange platforms, and media companies in Denmark have also recently organized themselves in this way. The experience of PPN, a similar initiative that is now only supported by Tamedia, does not bode well for joint solutions in the Swiss market.
There are certainly examples of well-functioning joint solutions in the Swiss market. Take IG SwissAdServer, for example - here, many publishers have decided to work with the same ad server solution. As a result, measurement differences in delivered advertising media have been significantly minimized. Or online research. Together we agreed on Net Metrix as the official institution for the certification of online reach. With regard to private exchange platforms and the topic of RTA/RTB, the starting position is similar. And I am sure that we are in agreement with other publishers on the relevant points and that the signs are therefore good for a joint market solution. The question is what is possible with such systems and what individual requirements publishers have in terms of transparency, pricing, etc. I think that there is still far too little understanding in the market of what is actually possible. If someone simply wants the cheapest traffic, different rules will apply than if a customer is looking for a certain reach or a targeting offer. We don't want to sell our inventory below value or find ourselves in a market in a few years' time whose rules we don't want to play by.
This is a concern often voiced by publishers, that they then sell below the value. But nothing is sold below the specified floor price...
...yes, exactly. Being able to set a minimum price, for example, is one of the requirements we have.
So if there is no trust in the providers that they will undercut an agreed minimum price. If you can trust them, then everything is fine...
...no. We have no interest in creating a market in Switzerland in which an extremely large number of beneficiaries are involved in the value chain and draw margins from non-transparent services and business models.
Is this really your problem or is it not rather the problem of the advertisers who pay for it in the end?
This is one of the problems. Although customers pay a premium price, this does not end up with the publishers, who have to use it to finance their sites, but with some intermediary. Another problem is the complexity, which increases with every additional intermediate step. Digital advertising is already challenging enough for advertisers and agencies. Our claim must be that the services we offer directly to our clients and agencies are so good and efficient that there is no need for another intermediary in between. Then, even if the end customer price is in line with the market, the publisher retains a sufficient margin - in contrast to bookings from blind networks and trading platforms.
A private exchange supported by the media companies would make all the difference here...
I am convinced of that!
When will there be a discussion about this?
We are already actively discussing this with various market participants. The central question is what the expectations of clients, agencies and publishers are. I have noticed today, and I am not excluding us as Tamedia, that many different opinions are held, that there is a lot of discussion, but that very few people have dealt with this in concrete terms. Can I set a floor price? And if I set it, am I still competitive? What can I set? Can I see the client behind a booking or do I, as the client, know where my advertising will be delivered? What is the difference between a private exchange and an open bidding platform? What targeting options can I offer? What does the market demand? What transparency should there be and what not? This requires a lot of educational work.
And here in Zurich, as with PPN, it will be the other two big media houses that will either join in or not and it will either work or not...
The advertising market is huge. Of course Tamedia, Ringier and NZZ have large volumes, but there are not just these three providers. There are many networks, some of which can also be used to buy volumes from other large media companies. I doubt that all publishers are aware of where and at what price their inventory is already available today. However, they all have a common interest in marketing their inventory in the best possible and most efficient way.
From Tamedia's point of view: Who is the biggest competitor in digital advertising sales?
We are in the midst of change. In the past, it was other publishers or other websites with the corresponding reach. Today, we have network providers and marketers who buy inventory cheaply, re-bundle it and offer it as their own products at higher prices.
What market share does Tamedia have in digital advertising in the Swiss market?
It's difficult to say, as there are no figures on the advertising market inventory, only on the reach of the relevant platforms. If you look at the reach of the Tamedia portfolio, we reach around 75 percent of all Swiss Internet users. I estimate that this corresponds to around 10 to 20 percent of the Swiss advertising inventory.
...and of the volume sold?
These two figures are quite close to each other, as we commercially exploit practically all of our advertising inventory for all of our titles. The question is: how much is sold and at what price? I would venture to say that in Switzerland, a maximum of 30 percent of the available inventory is sold as premium products with a CPM of more than ten francs. The rest disappears today at much lower prices in remnant networks - and there premium inventory is sold at the same conditions as the inventory of the cheapest spider platforms.
Where do you stand today with PPN?
The Premium Publishers Network PPN was launched just over a year ago and has established itself well as a marketer of performance and targeting advertising in the premium environment. Tamedia plans to take over PPN's activities and merge them with the Digital Advertising & Services division, thereby continuing to consistently implement its strategy of marketing its own products. The entire marketing of the inventory not sold by the titles as well as Tamedia's network, targeting and performance offerings will be managed by this team. The existing product portfolio will remain on the market until the end of the year. During the second half of 2013, we will define the product portfolios with which we will start 2014.
How exactly will it be continued? Are NZZ and Ringier still involved in the reach?
That is still open. We are holding constructive talks about whether and in what form certain joint products should be offered in future, and would of course be delighted to continue to have NZZ and Ringier on board. However, it is clear to us that we will only offer exclusive products in this container. In concrete terms, this means that PPN products cannot be purchased anywhere else except, of course, from the media themselves. In other words, self-marketing. Marketing via other networks is therefore excluded. This enables us to ensure clear framework conditions and create transparency regarding price, market, providers and clients in the interests of our customers, but also in our own interests.
This claim to exclusivity was the stumbling block why NZZ and Ringier have now left the sponsorship?
Correct. NZZ and Ringier have decided to have their inventory, which is not sold directly, marketed via several networks. In principle, we are open to including other partners in the PPN network. We are in active talks with Ringier and NZZ - because we are already in agreement regarding exclusivity in the area of performance advertising. All marketing in this area is already carried out via PPN, and there is no reason why this should not continue.
It won't be so easy for other potential partners to guarantee exclusivity either. Is that even a viable model?
I do believe that this is a viable model. I am a firm advocate of self-marketing. If you think along the same lines, you've come to the right place. This could be publishers or operators of regional information or special interest platforms, for example, who already have their own sales organization but cannot sell their entire inventory directly.
When it comes to digital advertising today, there are three aspects that can lead to a loss of traffic and therefore revenue: the paywall, mobile, which is difficult to monetize today, and SRG. Which one is the worst?
The biggest challenge for me is SRG; I see paywall and mobile as opportunities!
And why is the SRG so bad?
Fortunately, the Federal Council has decided that SRG cannot also market its digital offerings. In my view, this would have clearly led to a distortion of the market.
What potential would SRG have in the digital advertising market?
A difficult question, but the range and therefore the potential are considerable.
Can a paywall also be an obstacle for the advertising market?
At best, the paywall can be a threat to the advertising market. However, experience from foreign markets shows that the drop in traffic following the introduction of a paywall is rather modest. The question for media companies is whether paid content can be an alternative to advertising. However, this does not even have to be the crucial question. In all other familiar media, paid content goes hand in hand with advertising - just think of your daily newspaper or your last trip to the movies.
You should have an answer to that...
My answer is of course very opportunistic. Of course, every user who is behind the paywall and no longer consumes advertising (assuming they actually don't) is no longer attractive to the advertising market. But this is not a negative impact for the publisher. Let's do it well and set the paywall in such a way that it more than compensates for the loss of advertising. That must be the idea. The paywall can't be set in such a way that we end up earning less than if we had refinanced its use through advertising. In the case of the Tages-Anzeiger, Tamedia has opted for a so-called metered paywall, which is used depending on usage by an individual reader. This model allows for both paid content and ad-financed areas.
...but you will lose reach.
At best, this reduces the available inventory, i.e. the ad impressions. But certainly not reach, i.e. people who can potentially be reached on our media. The reach therefore remains the same - and that is the most important indicator for me. We also believe that well-designed, intelligent and targeted advertising will definitely be accepted within a paywall. If the paywall works, it can be refinanced via paid content, advertising or a combination of both.
There is some hope there. But things are looking less positive for mobile. More and more traffic is coming from mobile, and it's hard to achieve much with conventional forms of advertising. Where do you see opportunities there?
I am convinced that mobile has the potential to be at least as attractive for the advertising market as desktop is today. And it can be even more attractive. I also believe that today's formats are not yet optimal - the development of devices and screen sizes has been too fast. The formats commonly used in mobile advertising today tend to be too disruptive, too small or difficult to access. In addition, too many messages are often still packed into mobile advertising media or landing pages are not made suitable for mobile devices.
So what do you have to do with Mobile?
...bring other formats...
A big word spoken calmly.
Yes, I am firmly convinced that this is the solution for the mobile advertising market.
...it should be. But the concrete design is not yet in sight. Will Tamedia show the world how to deal with mobile?
It would probably be a little too ambitious to want to present the world with the holy mobile grail. But we will introduce mobile formats that are attractive to both the advertising market and the user. Then the advertising market will also reflect the shift in usage! The past has shown that the Swiss market also allows innovation independently of foreign markets. At 20 Minuten Online, for example, we succeeded in introducing a new online format with the Monsterboard, which later became the standard and is now one of the highest-volume products on the market.
How are these formats created? Is there a previously unknown, highly innovative development team at work at Tamedia?
There are clever minds, and there are ideas that simply cannot be implemented today because the exchange, the platform or the driving force does not exist. I see it as my job to bring together the clever minds inside and outside Tamedia to find the right solutions. But my team is not alone either: 20 Minuten Online, Newsnet and the Search.ch team are also working on further developing this market and testing out new formats and campaigns.
When will we get to see something?
2014 will be very different from 2013.
Interview: Christoph J. Walther
*Stephan Obwegeser (38) has headed the new Digital Advertising and Services division at Tamedia since April. He was previously Managing Director of the Tamedia subsidiary Search.ch and Publishing Director of 20 Minuten Online and Head of Online Development at Tamedia. He is Co-President of IAB Switzerland.