WW: What has been your biggest surprise in your hundred days at the helm of PubliGroupe?
Arndt Groth: (reflecting) That was with the Publicitas team, where the average age was much younger than I had expected. And the willingness to change was also much more pronounced than I would have expected.

That's positive - because from the outside, Publicitas is actually a restructuring case - not in the sense of bankruptcy law, but in terms of the depth of the measures that need to be taken...
...I wouldn't call it a restructuring case, but in any case Publicitas is still facing drastic changes because we still can't say that the turnaround has been achieved.

In your presentation for the Investors' Day, there is a slide that says Publicitas, or Media Sales, is only a quarter ready for 2020. Since the traditional advertising markets are declining, does that mean that Publicitas will be three quarters smaller?
Our share of the traditional newspaper business will continue to fall. However, this quarter was due to the fact that we had not yet positioned ourselves properly and lacked a clear strategy. In recent years, we have mainly acted reactively and reduced costs in order to stem this loss. We need to become more proactive...

They will certainly reduce the number of branches in the country. From how many today?
...that's still well over thirty. The aim is to centralize. And then it depends on the individual negotiations with the publishers as to which physical presence on site we will continue to maintain.

In your documents you also refer to the "portfolio sales approach". What exactly do you mean by that?
In future, we will not only be able to operate monothematically with each individual title. Customers expect to be able to book at least a portfolio of newspaper titles or, even more broadly, magazines, cinemas, out-of-home or even digital or, ideally, mobile solutions.

But your typical local contract partner is a single publisher, and they want to sell their product above all else...
...yes, but even regional customers, where the downturn is not as severe as in the national press, are increasingly expecting a different offer than we used to have. Even a local garage knows that it can no longer reach its customers with a newspaper ad alone.

Your local contract partners hardly ever offer this variety of products themselves. Why should they be interested?
In a product development from Publicitas, Ad4MaxGeo, we bundle the reach of local and regional newspapers with the regional reach of Google and Facebook. This product has been very successful and proves that such solutions lead to higher overall sales for publishers than "print standalone solutions". And it enables sales staff in the regions to approach customers with a different product approach.

In your documents, you also talk about a new IT solution. What is that about?
On the one hand, this involves our infrastructure in terms of the normal order processing of print ads in the back office area. This is the replacement of our old Pub2000 system in order to become faster and more efficient. And then we want to go beyond the actual print infrastructure and add automated trading options for digital media. This will enable us to offer all our partners, not only publishing and portal partners, but also agencies and customers, an end-to-end solution.

Does this also mean that there will be automated trading opportunities, so-called programmatic buying, for print products?
Yes, it's not just about digital winning, but also about digital business models finding their way into the handling of traditional media. Of course, the processes for advertising orders are not yet perfectly digitalized at the moment. But the planning approach is very similar, and that's why I see the whole thing happening in exactly the same way for other types of media, including newspapers and print. We hear from our Publimedia and AdMarket customers, a processing system, that print booking, processing and monitoring is now almost better and more efficient than online.

How specifically are you already moving in this direction? Is it just about the back office or about bringing programmatic buying to the front?
We are taking one step at a time. The first is now the launch of the premium supply-side platform from Publicitas, "The Mark". We then want to systematically expand this into other areas. That is the goal.

Is programmatic buying the same as Real Time Advertising (RTA)?
No, that is a very important point. And many people haven't understood that yet. Programmatic buying or automated action is the basis, and real time advertising is the finishing touch. The first is linking supply and demand via a platform, which works for all types of media. Meanwhile, RTA, i.e. real-time processing, is only possible online. In many markets, this is not yet available in this form because data is a mandatory prerequisite. And if this is not available, I can still do programmatic buying, i.e. automated trading, but real-time advertising is not yet possible. In most cases, we should therefore not be talking about real-time advertising, but rather enabling our partners to get started with programmatic buying.

And do you see this as an important future aspect for media sales? When? In three or five years?
This should be the case in a maximum of three years. However, the proportion of automated trading will never reach 100 percent. My guess is that we will reach 60 or 70 percent relatively quickly in the online sector. In addition, there will continue to be a premium segment with significantly higher CPMs, and this will continue to require personal sales in the long term.

Can you then handle the business centrally, or do you still need regional branches?
It is true that we are striving for automation and centralization in certain areas, especially in back office functions, but also in many cases in sales, in order to make this portfolio approach possible. However, this does not mean that we will no longer operate regionally in the future. We already have very, very profitable marketing partnerships in the regions today. And if a contractual partner says they are prepared to continue to provide us with this exclusivity in marketing, but we still have the entrepreneurial freedom I mentioned, then there is nothing to stop us continuing to operate in the regions. It is undoubtedly clear that in a declining market we will always be more efficient with the organization of a Publicitas than a publisher in its region, in its canton. I therefore assume that we will continue to have a very, very close relationship with publishers in the future.

What does the development towards comprehensive automated trading processes mean for media agencies?
Our idea is to provide agencies in particular with tools so that they can book not only digital advertising but also various other channels through us. In many cases, these tools serve to simplify booking and planning and also to reduce costs on the planning side.

Let's switch to the online sector, which is closer to you. The keyword here is currently RTA. How do you see this developing in the long term? Will only two or three big players remain and divide up this business?
There will certainly be several providers. Competition stimulates business, and so all market participants welcome the fact that there are several providers and not just one monopolist that dictates prices and technology. There are now three big ones from the US, and then there is a leading provider in Europe, and that is Improve Digital. One of the reasons why we chose Improve Digital [note: PubliGroupe completed the acquisition of 85 percent of the Dutch company Improve Digital in mid-December] is the realization from the last few years, especially from the development of Digital, that we have a different view of things in Europe. Be it the issue of data protection, be it the consideration of customer interests. European providers have increasingly reflected these wishes and have not necessarily rolled out a uniform technology for the sake of optimization and efficiency. And having a provider here that is in the same time zone and has its development team in Europe is a huge advantage.

What is "The Mark", which we have already mentioned briefly? Is this your private exchange solution for RTA?
Publicitas developed this product within the p-Digital department. "The Mark", based on the SSP technology from Improve Digital. With "The Mark", Publicitas will in future market the digital inventory of media providers using the real-time process and give advertisers the opportunity to buy digital inventory in an automated and data-driven way. Our subsidiary Local.ch is one of the first companies in Switzerland to use Publicitas' real-time advertising solution, enabling it to monetize and manage its digital advertising inventory even better. But of course it is up to each individual publisher to decide for themselves whether they are big enough and want to do this themselves.

To what extent are you aiming to become possibly the only private exchange in Switzerland in which all publishers participate?
Of course, that is where we are heading. And it would certainly be good for the market in Switzerland if that were the case. We'll have to see whether that actually happens, and I don't want to make this claim to be the only one. But it would certainly be good for the market. And "The Mark" would be suitable for it.

How do you see prices developing? In Switzerland, we have a special situation with cheap cross-border traffic, which is increasingly undermining the high prices in Switzerland.
You're absolutely right, this should drive the speed with which Swiss content providers open up to the topic of real-time advertising and programmatic buying. I would like to initiate a study from our company, but also together with the IAB, to really test campaigns with market research that run with German publishers and on Swiss sites. The assumption is that conversions are higher and branding effects are better on Swiss content compared to others. If we can prove this, then the higher price is justified.

However, this does not answer the question of price trends... As long as this is not proven, prices will continue to fall over the next few years because customers will tend to book cheaper content. Prices in Switzerland will come under pressure due to bookability and comparability with other countries.

Publishers are generally very cautious about RTAs, especially in Switzerland, because they fear that prices will come under pressure if they participate. Isn't it much more the case that if they don't participate, prices will come down all the more? Is that how you see it?
Absolutely yes. We see in all tests that CPMs soar with real-time advertising...

...because of the "B"the bidding... ...because of the "B" and because of the added value of the data. Then the only question is whether there is enough volume, otherwise you have a high CPM but few impressions, and then of course that doesn't help either. But the mechanics work in any case.

Now you have mentioned an important keyword: data - in America it is on a par with providers and consumers in the entire RTA structure. In Europe and Switzerland in particular, there are still interesting development opportunities, and you are very well positioned to become a data provider thanks to your market position.
Yes, I think we are very well positioned. In Europe, we actually have the situation that there is almost no provider that makes data available for campaigns. It's completely different in the USA, where there are companies like BlueKai and others. We have an enormous amount of data available within our Group. And we see this competitive advantage not only through our companies like Local.ch, but also through a company like Zanox, which has access to a wealth of information every day through billions of anonymous data points. Because Zanox, as a performance provider, is heavily involved with merchants, we know what users are interested in and what they buy. And we will continue to refine this data in the future. However, we still need to do our homework. Simply having access to data is not enough; we also need to build a data management platform.

And this is where you want to focus your activities - also as a data exchange?
Absolutely. Data exchange would then mean that we sell data to third parties. However, there are so few providers in this market because there is not yet a functioning business model for it. This is secondary for us because we want to use the information within the Group. Making it available to agencies or end customers is a key advantage in order to develop a USP and make campaigns successful with this data.

How far along are you? I'm sure you'll be buying in and not developing it yourself.
We are currently licensing a tool. This is Visual DNA, an English company that we work with and that helps us to use this data. It is very important and essential for the future to have such a data management platform in-house. That is the linchpin for success.

How do you rate social media when it comes to communication and advertising?
Social media is a major challenge in the digital sector. This is due to the three-way split: paid media, earned media and owned media. There is a tendency among advertisers to develop owned and earned as much as possible. Earned and owned come very close to us as a company that is close to content. With Denon, for example, we have an offering in our portfolio that comes from the corporate publishing sector and therefore also creates content that is relevant. This will definitely be an important building block in our medium-term digital strategy to offer such editorial services to customers and advertisers.

Speaking of content: Are you a newspaper reader? What do you read?
I am a newspaper reader. I'm still a fan of my regional newspaper, the Hamburger Abendblatt, as I only moved at the beginning of the year. And I read the NZZ, but on the iPad. I am a passionate Financial Times Germany reader and very much regret the end of the FTD [note: the interview took place on December 7, 2012, the last day the FTD was published] and will now get used to the Handelszeitung.

Interview: Christoph J. Walther
 
In a nutshell
Arndt Groth has been CEO of PubliGroupe since September 1, 2012. Born in Hamburg, he previously held various management positions, initially mainly on the publishing side at the Georg von Holtzbrink and Handelsblatt publishing groups. Since 1998, he has worked for leading Internet companies and marketing organizations with a digital focus, such as DoubleClick in Germany, InteractiveMedia, a marketer for digital media, and the globally active marketing network Adconion. In addition to his operational tasks, Groth has been President of the BVDW (Bundesverband Digitale Wirtschaft), one of the strongest industry associations in Europe for interactive marketing, digital content and interactive value creation, since 2003.

WW: What has been your biggest surprise in your hundred days at the helm of PubliGroupe?
Arndt Groth: (reflecting) That was with the Publicitas team, where the average age was much younger than I had expected. And the willingness to change was also much more pronounced than I would have expected.

That's positive - because from the outside, Publicitas is actually a restructuring case - not in the sense of bankruptcy law, but in terms of the depth of the measures that need to be taken...
...I wouldn't call it a restructuring case, but in any case Publicitas is still facing drastic changes because we still can't say that the turnaround has been achieved.

In your presentation for the Investors' Day, there is a slide that says Publicitas, or Media Sales, is only a quarter ready for 2020. Since the traditional advertising markets are declining, does that mean that Publicitas will be three quarters smaller?
Our share of the traditional newspaper business will continue to fall. However, this quarter was due to the fact that we had not yet positioned ourselves properly and lacked a clear strategy. In recent years, we have mainly acted reactively and reduced costs in order to stem this loss. We need to become more proactive...

They will certainly reduce the number of branches in the country. From how many today?
...that's still well over thirty. The aim is to centralize. And then it depends on the individual negotiations with the publishers as to which physical presence on site we will continue to maintain.

In your documents you also refer to the "portfolio sales approach". What exactly do you mean by that?
In future, we will not only be able to operate monothematically with each individual title. Customers expect to be able to book at least a portfolio of newspaper titles or, even more broadly, magazines, cinemas, out-of-home or even digital or, ideally, mobile solutions.

But your typical local contract partner is a single publisher, and they want to sell their product above all else...
...yes, but even regional customers, where the downturn is not as severe as in the national press, are increasingly expecting a different offer than we used to have. Even a local garage knows that it can no longer reach its customers with a newspaper ad alone.

Your local contract partners hardly ever offer this variety of products themselves. Why should they be interested?
In a product development from Publicitas, Ad4MaxGeo, we bundle the reach of local and regional newspapers with the regional reach of Google and Facebook. This product has been very successful and proves that such solutions lead to higher overall sales for publishers than "print standalone solutions". And it enables sales staff in the regions to approach customers with a different product approach.

In your documents, you also talk about a new IT solution. What is that about?
On the one hand, this involves our infrastructure in terms of the normal order processing of print ads in the back office area. This is the replacement of our old Pub2000 system in order to become faster and more efficient. And then we want to go beyond the actual print infrastructure and add automated trading options for digital media. This will enable us to offer all our partners, not only publishing and portal partners, but also agencies and customers, an end-to-end solution.

Does this also mean that there will be automated trading opportunities, so-called programmatic buying, for print products?
Yes, it's not just about digital winning, but also about digital business models finding their way into the handling of traditional media. Of course, the processes for advertising orders are not yet perfectly digitalized at the moment. But the planning approach is very similar, and that's why I see the whole thing happening in exactly the same way for other types of media, including newspapers and print. We hear from our Publimedia and AdMarket customers, a processing system, that print booking, processing and monitoring is now almost better and more efficient than online.

How specifically are you already moving in this direction? Is it just about the back office or about bringing programmatic buying to the front?
We are taking one step at a time. The first is now the launch of the premium supply-side platform from Publicitas, "The Mark". We then want to systematically expand this into other areas. That is the goal.

Is programmatic buying the same as Real Time Advertising (RTA)?
No, that is a very important point. And many people haven't understood that yet. Programmatic buying or automated action is the basis, and real time advertising is the finishing touch. The first is linking supply and demand via a platform, which works for all types of media. Meanwhile, RTA, i.e. real-time processing, is only possible online. In many markets, this is not yet available in this form because data is a mandatory prerequisite. And if this is not available, I can still do programmatic buying, i.e. automated trading, but real-time advertising is not yet possible. In most cases, we should therefore not be talking about real-time advertising, but rather enabling our partners to get started with programmatic buying.

And do you see this as an important future aspect for media sales? When? In three or five years?
This should be the case in a maximum of three years. However, the proportion of automated trading will never reach 100 percent. My guess is that we will reach 60 or 70 percent relatively quickly in the online sector. In addition, there will continue to be a premium segment with significantly higher CPMs, and this will continue to require personal sales in the long term.

Can you then handle the business centrally, or do you still need regional branches?
It is true that we are striving for automation and centralization in certain areas, especially in back office functions, but also in many cases in sales, in order to make this portfolio approach possible. However, this does not mean that we will no longer operate regionally in the future. We already have very, very profitable marketing partnerships in the regions today. And if a contractual partner says they are prepared to continue to provide us with this exclusivity in marketing, but we still have the entrepreneurial freedom I mentioned, then there is nothing to stop us continuing to operate in the regions. It is undoubtedly clear that in a declining market we will always be more efficient with the organization of a Publicitas than a publisher in its region, in its canton. I therefore assume that we will continue to have a very, very close relationship with publishers in the future.

What does the development towards comprehensive automated trading processes mean for media agencies?
Our idea is to provide agencies in particular with tools so that they can book not only digital advertising but also various other channels through us. In many cases, these tools serve to simplify booking and planning and also to reduce costs on the planning side.

Let's switch to the online sector, which is closer to you. The keyword here is currently RTA. How do you see this developing in the long term? Will only two or three big players remain and divide up this business?
There will certainly be several providers. Competition stimulates business, and so all market participants welcome the fact that there are several providers and not just one monopolist that dictates prices and technology. There are now three big ones from the US, and then there is a leading provider in Europe, and that is Improve Digital. One of the reasons why we chose Improve Digital [note: PubliGroupe completed the acquisition of 85 percent of the Dutch company Improve Digital in mid-December] is the realization from the last few years, especially from the development of Digital, that we have a different view of things in Europe. Be it the issue of data protection, be it the consideration of customer interests. European providers have increasingly reflected these wishes and have not necessarily rolled out a uniform technology for the sake of optimization and efficiency. And having a provider here that is in the same time zone and has its development team in Europe is a huge advantage.

What is "The Mark", which we have already mentioned briefly? Is this your private exchange solution for RTA?
Publicitas developed this product within the p-Digital department. "The Mark", based on the SSP technology from Improve Digital. With "The Mark", Publicitas will in future market the digital inventory of media providers using the real-time process and give advertisers the opportunity to buy digital inventory in an automated and data-driven way. Our subsidiary Local.ch is one of the first companies in Switzerland to use Publicitas' real-time advertising solution, enabling it to monetize and manage its digital advertising inventory even better. But of course it is up to each individual publisher to decide for themselves whether they are big enough and want to do this themselves.

To what extent are you aiming to become possibly the only private exchange in Switzerland in which all publishers participate?
Of course, that is where we are heading. And it would certainly be good for the market in Switzerland if that were the case. We'll have to see whether that actually happens, and I don't want to make this claim to be the only one. But it would certainly be good for the market. And "The Mark" would be suitable for it.

How do you see prices developing? In Switzerland, we have a special situation with cheap cross-border traffic, which is increasingly undermining the high prices in Switzerland.
You're absolutely right, this should drive the speed with which Swiss content providers open up to the topic of real-time advertising and programmatic buying. I would like to initiate a study from our company, but also together with the IAB, to really test campaigns with market research that run with German publishers and on Swiss sites. The assumption is that conversions are higher and branding effects are better on Swiss content compared to others. If we can prove this, then the higher price is justified.

However, this does not answer the question of price trends... As long as this is not proven, prices will continue to fall over the next few years because customers will tend to book cheaper content. Prices in Switzerland will come under pressure due to bookability and comparability with other countries.

Publishers are generally very cautious about RTAs, especially in Switzerland, because they fear that prices will come under pressure if they participate. Isn't it much more the case that if they don't participate, prices will come down all the more? Is that how you see it?
Absolutely yes. We see in all tests that CPMs soar with real-time advertising...

...because of the "B"the bidding... ...because of the "B" and because of the added value of the data. Then the only question is whether there is enough volume, otherwise you have a high CPM but few impressions, and then of course that doesn't help either. But the mechanics work in any case.

Now you have mentioned an important keyword: data - in America it is on a par with providers and consumers in the entire RTA structure. In Europe and Switzerland in particular, there are still interesting development opportunities, and you are very well positioned to become a data provider thanks to your market position.
Yes, I think we are very well positioned. In Europe, we actually have the situation that there is almost no provider that makes data available for campaigns. It's completely different in the USA, where there are companies like BlueKai and others. We have an enormous amount of data available within our Group. And we see this competitive advantage not only through our companies like Local.ch, but also through a company like Zanox, which has access to a wealth of information every day through billions of anonymous data points. Because Zanox, as a performance provider, is heavily involved with merchants, we know what users are interested in and what they buy. And we will continue to refine this data in the future. However, we still need to do our homework. Simply having access to data is not enough; we also need to build a data management platform.

And this is where you want to focus your activities - also as a data exchange?
Absolutely. Data exchange would then mean that we sell data to third parties. However, there are so few providers in this market because there is not yet a functioning business model for it. This is secondary for us because we want to use the information within the Group. Making it available to agencies or end customers is a key advantage in order to develop a USP and make campaigns successful with this data.

How far along are you? I'm sure you'll be buying in and not developing it yourself.
We are currently licensing a tool. This is Visual DNA, an English company that we work with and that helps us to use this data. It is very important and essential for the future to have such a data management platform in-house. That is the linchpin for success.

How do you rate social media when it comes to communication and advertising?
Social media is a major challenge in the digital sector. This is due to the three-way split: paid media, earned media and owned media. There is a tendency among advertisers to develop owned and earned as much as possible. Earned and owned come very close to us as a company that is close to content. With Denon, for example, we have an offering in our portfolio that comes from the corporate publishing sector and therefore also creates content that is relevant. This will definitely be an important building block in our medium-term digital strategy to offer such editorial services to customers and advertisers.

Speaking of content: Are you a newspaper reader? What do you read?
I am a newspaper reader. I'm still a fan of my regional newspaper, the Hamburger Abendblatt, as I only moved at the beginning of the year. And I read the NZZ, but on the iPad. I am a passionate Financial Times Germany reader and very much regret the end of the FTD [note: the interview took place on December 7, 2012, the last day the FTD was published] and will now get used to the Handelszeitung.

Interview: Christoph J. Walther
 
In a nutshell
Arndt Groth has been CEO of PubliGroupe since September 1, 2012. Born in Hamburg, he previously held various management positions, initially mainly on the publishing side at the Georg von Holtzbrink and Handelsblatt publishing groups. Since 1998, he has worked for leading Internet companies and marketing organizations with a digital focus, such as DoubleClick in Germany, InteractiveMedia, a marketer for digital media, and the globally active marketing network Adconion. In addition to his operational tasks, Groth has been President of the BVDW (Bundesverband Digitale Wirtschaft), one of the strongest industry associations in Europe for interactive marketing, digital content and interactive value creation, since 2003.