"Classic director contracts are outdated"
Erwin Bachmann on the new form of cooperation between Neuer LZ and Publicitas
Erwin Bachmann on the new form of cooperation between Neue LZ and PublicitasAfter two years of negotiations between Neue Luzerner Zeitung (Neue LZ) and Publicitas (P), a model has emerged that puts the publisher in charge of the advertising business. Erwin Bachmann, Chairman of the Board of Directors of LZ Medien Holding, explains why his company wanted this.Why did Neue LZ want a new cooperation model with P?
Erwin Bachmann: The advertising business is generally the most important thing that we and other publishers do, because two-thirds of our revenue comes from this business. That's why it's been our intention for some time to get closer to this business.
But why this radical change from outsourcing to in-house processing?
Bachmann: I believe that the classic management contract is outdated, with which you pass on such a business practically via a piece of paper. We need to have a much stronger influence on this key business and be able to exert much more influence, both in terms of customer contact and in the corresponding strategic and operational decisions.
We are talking about a form of cooperation based on parity. What does that mean?
Bachmann: Parity means that we work together on an equal footing in two different bodies: At the strategy level we have something like a board of directors, and at the operational level something like a management board. The model is structured in such a way that we jointly bear the basic costs that arise, for example, for processing, for the billing systems and other things. We have a direct influence on these costs. In this way, we help decide how to solve a problem and which services to buy. For Publicitas, on the other hand, the model amounts to a share of the profits after payment for its services.
Are you going to start a joint company?
Bachmann: No, there is no company in the legal sense. Only the construction is similar to that of a company. But the legal form remains: two different companies, but working much more closely together. For us, the decisive factor is that P Luzern will move its location to the LZ Medien site, so that the distances between the ad and the publisher, between the ad and the technology, and to some extent between the ad and the editorial office are very short. Ultimately, this will also be very convenient for customers.
What will be the composition of the quasi-VC and the quasi-GL?
Bachmann: At the strategic level, we have a team of four, which I chair with a casting vote. Our managing director Jürg Weber and Bruno Hegglin, the director of P Lucerne, and a representative of P Switzerland are also part of the team. At the operational level, a team of six is planned. There, the managing director of Neue LZ will be in charge, and on the part of Publicitas, the advertising manager and the key account manager will be there. But in terms of personnel, this is not yet definite.
The fact that the lead will be at Neue LZ gives the impression that you don't quite trust Publicitas. Have there been problems in the past?
Bachmann: No, otherwise we wouldn't be working with the P, but would go in-house. The aim was to find a more advantageous model. P is a very good advertising company. This should be bundled with the publishing business to form a sensible combination, actually similar to what is possible with self-directed newspapers. There can be no question of distrust towards P at all. The fact that the chairmanship is with us merely shows that we really want to take this business seriously.
But you were in a hurry with that. After all, the previous lease was terminated prematurely.
Bachmann: It was merely replaced by the new model a year before it expired in order to immediately introduce the better solution.
Will the new model make it easier for advertisers to influence the editorial team in the future?
Bachmann: Neither easier nor more difficult, because we have a clear separation between the advertising space and the editorial space. But when it comes to placing ads, our closer coming together - also locally - will shorten the paths between ad sales and editorial. This will benefit customers, but will not affect the content of the newspaper. Incidentally, I believe that in terms of ad placement, we already have an excellent offer and very good cooperation with our editorial team.
As the market-dominating newspaper in central Switzerland, is it image-wise clever for the Neue LZ to be even more closely allied with the market-dominating advertising salesman in the future?
Bachmann: We don't see any problem with that at all, because it doesn't change anything for the other competitors. The cooperation between Neuer LZ and P already existed, but in a different form.
How does your cooperation model differ from what has existed in Chur with Südostschweiz Publicitas AG for some time?
Bachmann: Essentially, only the legal form is different.
And why did Neue LZ and P Luzern choose a less clear legal form?
Bachmann: We are by far P Luzern's biggest customer, but they also serve other providers in Central Switzerland. That's why it would be problematic for them to be an advertising seller for third parties in the same area at the same time via a company that is also legally joint.
Interview: Markus Knöpfli
Erwin Bachmann: The advertising business is generally the most important thing that we and other publishers do, because two-thirds of our revenue comes from this business. That's why it's been our intention for some time to get closer to this business.
But why this radical change from outsourcing to in-house processing?
Bachmann: I believe that the classic management contract is outdated, with which you pass on such a business practically via a piece of paper. We need to have a much stronger influence on this key business and be able to exert much more influence, both in terms of customer contact and in the corresponding strategic and operational decisions.
We are talking about a form of cooperation based on parity. What does that mean?
Bachmann: Parity means that we work together on an equal footing in two different bodies: At the strategy level we have something like a board of directors, and at the operational level something like a management board. The model is structured in such a way that we jointly bear the basic costs that arise, for example, for processing, for the billing systems and other things. We have a direct influence on these costs. In this way, we help decide how to solve a problem and which services to buy. For Publicitas, on the other hand, the model amounts to a share of the profits after payment for its services.
Are you going to start a joint company?
Bachmann: No, there is no company in the legal sense. Only the construction is similar to that of a company. But the legal form remains: two different companies, but working much more closely together. For us, the decisive factor is that P Luzern will move its location to the LZ Medien site, so that the distances between the ad and the publisher, between the ad and the technology, and to some extent between the ad and the editorial office are very short. Ultimately, this will also be very convenient for customers.
What will be the composition of the quasi-VC and the quasi-GL?
Bachmann: At the strategic level, we have a team of four, which I chair with a casting vote. Our managing director Jürg Weber and Bruno Hegglin, the director of P Lucerne, and a representative of P Switzerland are also part of the team. At the operational level, a team of six is planned. There, the managing director of Neue LZ will be in charge, and on the part of Publicitas, the advertising manager and the key account manager will be there. But in terms of personnel, this is not yet definite.
The fact that the lead will be at Neue LZ gives the impression that you don't quite trust Publicitas. Have there been problems in the past?
Bachmann: No, otherwise we wouldn't be working with the P, but would go in-house. The aim was to find a more advantageous model. P is a very good advertising company. This should be bundled with the publishing business to form a sensible combination, actually similar to what is possible with self-directed newspapers. There can be no question of distrust towards P at all. The fact that the chairmanship is with us merely shows that we really want to take this business seriously.
But you were in a hurry with that. After all, the previous lease was terminated prematurely.
Bachmann: It was merely replaced by the new model a year before it expired in order to immediately introduce the better solution.
Will the new model make it easier for advertisers to influence the editorial team in the future?
Bachmann: Neither easier nor more difficult, because we have a clear separation between the advertising space and the editorial space. But when it comes to placing ads, our closer coming together - also locally - will shorten the paths between ad sales and editorial. This will benefit customers, but will not affect the content of the newspaper. Incidentally, I believe that in terms of ad placement, we already have an excellent offer and very good cooperation with our editorial team.
As the market-dominating newspaper in central Switzerland, is it image-wise clever for the Neue LZ to be even more closely allied with the market-dominating advertising salesman in the future?
Bachmann: We don't see any problem with that at all, because it doesn't change anything for the other competitors. The cooperation between Neuer LZ and P already existed, but in a different form.
How does your cooperation model differ from what has existed in Chur with Südostschweiz Publicitas AG for some time?
Bachmann: Essentially, only the legal form is different.
And why did Neue LZ and P Luzern choose a less clear legal form?
Bachmann: We are by far P Luzern's biggest customer, but they also serve other providers in Central Switzerland. That's why it would be problematic for them to be an advertising seller for third parties in the same area at the same time via a company that is also legally joint.
Interview: Markus Knöpfli
