EUROPEAN MEDIA: Germany - Beyond the headlines. Elke Low describes a buoyant media market, although TV negotiations have become tougher

Reading the headlines of Germany's business press these days, you

could be forgiven for thinking the German media market has ground to a

halt somewhere between crisis and disaster. After years of sizeable

growth, in the first six months of 2001, ad revenues went down by 3.5

per cent. Trade magazines were worst hit by the slump - their ad

revenues declined by 11.7 per cent. But daily newspapers and radio

followed, with ad revenues dwindling by 8.3 per cent and 5.9 per cent

respectively. Yet TV seems to have fared quite well so far, with a less

dramatic decline of only 1.6 per cent.



Yet compare these figures with last year's AC Nielsen advertising

statistics, which broke all existing records, and they don't actually

look so bad.



Last year, flotations, the liberalisation of the German power market and

massive adspend from the dotcom and telecom sectors meant that the media

market ballooned.



Looking at the two-year period overall, there will still be growth in

revenue, even if the climate does not improve noticeably by the end of

this year.



"We are not in a recession - it's just that the media isn't doing as

well as it did last year, for once," Alexander Ruzicka, the manager of

Germany's biggest media agency, HMS-Carat, comments. Klaus-Peter Schulz,

the manager of OMD, agrees: "After a boom year like 2000, a decline was

on the cards."



So have the media agencies noticed any trends in where money is being

spent?



Ruzicka says: "We have noticed a shift of budgets to below-the-line

advertising, as well as to innovative patterns of advertising and

cross-media campaigns."



As an example, daily newspapers don't normally pay much attention to AC

Nielsen's statistics, which take into account display advertising while

ignoring the bulk of their revenue from classified ads. Yet a survey by

the newspaper trade body ZMG confirms the decline in classifieds.

Whereas the job and real estate ad markets continue to perform well,

newspapers are losing national clients. Small wonder, though, seeing as

the advertising battle between Mannesmann and Vodafone is over, and the

telecoms have cut their budgets by up to a third.



In the magazine sector, the specialist magazines, as well as IT and

economics periodicals, have been worst hit and, like elsewhere in

Europe, three e-business magazines - Business 2.0, Wirtschaftswoche

E-Business and Netinvestor - have folded.



In TV, RTL and RTL2 are on a winning streak, while Sat.1 and ARD are

losing advertisers. TV advertising rates for 2002 have increased only

moderately in the main, although some stations have recognised when

they're on to a winner: a spot placed around Who Wants to be a

Millionaire? (RTL) will cost 7.5 per cent more next year.



The current decline in ad revenues could seriously impact on how much

media owners are charging agencies. The managers of German media

agencies agree that negotiations are now conducted in quite a different

manner to previous years.



In the TV sector, the two leading agencies, SevenOneMedia (Pro7, Sat.1,

Kabel1, N24, Bloomberg TV, Ballungsraumfernsehen) and IP Deutschland

(RTL, RTL2, Super RTL, RTL-Shop, Vox), provide solid negotiating ground

for their clients along the lines of: "If you are not prepared to offer

favourable conditions, we'll make a deal with the competition."



Sat.1 has already felt the effects of this new approach: Its major

client, Masterfoods (formerly Mars Effem), distributed its 2001 media ad

budget of $175 million among RTL and Pro7, leaving Sat.1

empty-handed. The Sat.1 balance sheet consequently shows a loss of about

$50 million in advertising revenues for the first half-year 2001

- a deficit of 6.1 per cent - while RTL noted a growth of 6.6 per cent

for the same period.



Now the planning phase for 2002 is already under way. While it is early

days yet for detailed comments on individual stations or magazines,

media owners and the managers of the media agencies for 2002 expect

solid growth.



Klaus-Peter Schulz speculates that growth might be between 2 and 3 per

cent, while Ruzicka's forecast is even better: "Between 4 and 5 per

cent." So perhaps recent headlines proclaiming "slump" and "crisis" have

been a little dramatic.



JUERGEN BLOMENKAMP - COO, MEDIACOM, GERMANY



What is the brand with the most influence in your country?



Brands such as Audi and Nokia are the new stars setting the trends and

cornerstones in communication (both are handled by MediaCom)



What has been the most talked-about campaign this year?



The new Audi TV campaign ("Elvis", below) was the most talked-about

campaign this spring



What has been the biggest surprise TV hit this year?



The success of the new programme Quiz Show Mania was a surprise,

although the absolute clear market leader has been Who Wants to be a

Millionaire?



What's the latest must-read marketing book?



Sorry, I am a convinced non-reader and like to learn from my own

mistakes



Who are the best media sales team in the country?



The ad market has had to face a very weak year and I don't see any real

winners this year



Which media personality gets the most column inches?



Christiane zu Salm and her very brave new TV approach for tm3. The first

real interactive TV concept in Germany has generated a buzz



Who is the most feared person in the industry?



Allan Greenspan because everyone is desperately hoping for a quick and

substantial recovering of the US economy



What's the biggest media party of the year?



The TV presentations in Dusseldorf in August



Where's the best place to meet clients?



The TV presentations in Dusseldorf, as well as MediaCom's conference

room



What is the biggest single issue facing Europe's media industry?



The vanishing power of mass media is the biggest issue we all have to

face. The whole media scene is crumbling into smaller and smaller

pieces.



Over the past decade, communication became more expensive and less

effective.



The end of powerful mono campaigns is near. In the future, push

advertising must be transformed into pull advertising, which is valuable

and, therefore, welcomed. In the end, we have to create touching moments

for the consumer.



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