Germany is the most developed internet market in Europe and one
that continues to grow rapidly. Recent market research from GfK found
that one in five Germans between the ages of 14 and 59 use the net.
This follows a 40 per cent growth last year, to around 8.5 million
Germans using online services, with companies such as Deutsche Telekom’s
T-Online and AOL/Bertelsmann leading the way in connecting consumers to
But despite the fast-swelling ranks of cyberspace surfers, it remains
difficult for media owners to make money from their online properties.
Revenue from banner advertising on German websites last year was
estimated at just DM50 million (pounds 17.3 million) and the projection
for 1999 is about DM150 million.
In July 1996, six major German publishers, having discovered how tough
it was to generate enough online ad revenue to make internet versions of
their regional newspapers viable, decided that the best way forward was
to combine forces. The group, which includes the giant Gruner + Jahr,
created a sales network called Online Marketing Service (OMS) in which
all were equal shareholders.
Although the publishers’ individual websites remained separate entities,
the creation of OMS allowed for ads to be sold across all of them,
making the medium more attractive to advertisers seeking to reach an
aggregated audience across Germany. Ad revenue is divided between the
publishers based on the percentage of total impressions each has
generated, impressions being the number of times a web page with a
particular ad on it is shown to a consumer.
’The founder companies came to the conclusion that the national ad sales
market needed a critical mass of impressions,’ Peter Schmandt, the OMS
chief executive, says. ’Today we are well known in the market. One
publishing house alone would not be able to sustain such a sales
The economies of scale offered by OMS have persuaded other publishers to
become involved. There are now 24 OMS shareholders who between them own
34 online regional newspapers.
Online penetration is nowhere near as good, but it is moving in the
right direction. In February this year, the 34 online properties shared
almost five million visits between them. These visits generated around
16.5 million impressions. The number of visits and page impressions for
each participating site in the previous month are displayed by OMS on
its own website (www.oms-kombi.de).
’We had no alternative to OMS,’ says Wolfgang Hubner, chief executive of
new media at Medien Union, an OMS shareholder which owns two small local
titles that have gone online: Rheinfalz-Online in Ludwigshafen and Freie
Presse in Chemnitz. Medien Union also has a minority stake in the larger
Stuttgarter Zeitung/Stuttgarter Nachricten publications.
Hubner adds: ’At the beginning we recognised that the big advertisers
were looking for the biggest and most important platforms. No publisher
was able to fill those requirements alone.’
Schmandt claims that the aggregation of the OMS titles provides the
’largest homogeneous content offer’ on the German market, ahead of the
online version of the news magazine, Focus.
This is undeniably attractive to advertisers looking to reach a national
audience online. About 100 advertisers have bought space so far,
including Lufthansa, Deutsche Bank, the insurance group, Allianz, BMW,
IBM, Microsoft, Siemens, the retailer, Karstadt, and Beck’s Bier.
Ad space is sold on a cost per thousand (CPM) impressions model. OMS
quotes a CPM of DM40 (pounds 14) for a standard banner ad (468 by 60
Schmandt says OMS turnover has fully met the revenue targets set by its
shareholders. Turnover for 1998 was DM1.6 million (pounds 554,000) and
the aim is to double this in 1999. OMS employs five staff at its
Dusseldorf headquarters and six sales reps dispersed across other major
’OMS is the right approach for the online field. You need a kind of
syndication,’ Andreas Jud, managing director of the Hamburg-based
new-media consultancy and buying agency, Millemedia, says. ’It saves
calling every single publisher. I think the printed versions of the
newspapers should also think about such strategies.’
In this vein, Germany’s local radio stations have a similar collective
sales operation, RMS, and this shared approach seems to be paying off
for both buyers and media owners.
Millemedia has booked campaigns through OMS for Allianz and the consumer
publisher, Milchstrasse, to promote its magazine Tomorrow. Jud says the
campaigns have been successful at generating response, describing the
cost per click-through level as ’good’. He also praises OMS for the
quality of data it supplies to help Millemedia assess campaign
All the partner publishers are still free to sell advertising locally
for their websites. Any disagreements between the partners in OMS have
been forestalled, Schmandt says, due to the hard work of a six-strong
decision-making board. However, Hubner thinks that more turbulent times
’I expect the advertisers to become more interested in cherry picking,’
Hubner says. ’I fear they will be interested in the biggest services in
the biggest cities. The smaller parties in the group would be left out
of this. This is the biggest problem we have to tackle.’
OMS continues to grow as more publishers seek to join. What its current
partners will have to decide is whether to allow more small titles in,
or to restrict future offers of membership to titles that command
But if these issues can be overcome, OMS should thrive. One of its
future objectives is to set up ’national brand names’ for classified
advertising in the areas of motoring, recruitment and property. If OMS
teaches us anything, it is that local media can compete for advertising
revenue on a national footing if publishers are prepared to set aside
their differences and co-operate.