Südkurier launched its internet presence in 1996 when the World Wide Web was still young, and in 2008 it “decided to offer advertising customers an extensive portfolio of online marketing services,” according to Michel Bieler-Loop, Publishing Director.
Bieler-Loop said Südkurier started its own digital services operations, as opposed to acquiring existing companies, and for the most part has continued with a strategy that emphasizes organic growth. Under the name “MediaFavoriten,” additional digital product and service offerings have been developed over the years, primarily internally.
The current range of product lines, each with its own branding, includes:
- Profi-Homepage, which builds and maintains websites for local businesses, manages their social media accounts, and does search engine optimization and search engine marketing for them;
- RegioStars, a regional directory listing more than 45,000 companies in the region, with coupons, customer feedback and contests, and boasting optimization for Google, integration with Facebook, and detailed user statistics;
- jobs-im-südwesten.de, an online employment market; and
- LieblingsLaden, an online “click and collect” marketplace (see below for details).
Those brands are closely tied to the media company, so “they profit from the customer contacts of the parent company,” Bieler-Loop said. Any one of them could become a separate company if it reaches a certain size, he said.
(Editor’s note: This post about providing Internet services to local businesses is excerpted from the upcoming WAN-IFRA Report, “Alternative Revenue Streams for News Publishers,” to be published in February 2016.)
In principle, services are fulfilled internally rather than outsourced; outside support is enlisted from time to time, and freelancers are employed, but most of the value is created within the company. Bieler-Loop considers it important to develop and maintain competence internally.
Profit margin from reselling deemed too low
There was a phase, before 2010, when Südkurier contracted with “white label” service providers and marketed and re-sold their services. That ended when the company decided it needed to develop expertise internally — and when it became determined to improve profitability; the profit margin earned from reselling was deemed too narrow, said Bieler-Loop.
As of late 2015, MediaFavoriten had about 20 employees, about half of them editorial staff members who also run the main website at suedkurier.de. The other half handle product and business development.
But MediaFavoriten is not responsible for all online operations; far from it. Within the parent company, some employees specialize in online ad sales and user engagement/support. Also, Südkurier marketing staff members handle both online and print aspects, “since they are already close to the market,” said Bieler-Loop.
To keep staffers up-to-date on technical and market developments, there is an internal coaching system comprising three aspects:
- Once a year a so-called “sales day” is held, at which new products and sales initiatives are introduced.
- Once a quarter, teams of 10 to 20 salespeople meet for intensive product demonstrations, discussion of sales aids and techniques, and campaign planning.
- Periodically, a series of joint sales visits to clients is held, in which a print-ad specialist accompanies a cross-media salesperson. The aim is to train each salesperson to sell the other’s speciality independently.
Bieler-Loop said the main lesson he has learned in the past eight years pertains to making online operations profitable. For Südkurier, he said, the key factor is to keep creation of value internal as much as possible. (He said that might not apply to other publishers.)
In the meantime, online is one of the most profitable areas at Südkurier, he said. Currently, online contributes about 10 to 15 percent of the publishing house’s total media sales revenue, he said. That contribution is growing significantly and will soon reach 20 to 25 percent, he predicted, partly because print revenues are shrinking and partly because the company has developed some digital areas that can be relied on to grow continuously and strongly.
The digital marketing services have a few regional competitors in specific areas, said Bieler-Loop, but “we take a 360-degree approach. If you want to do online marketing, we want to be the premier provider. In this regard we are pretty much alone.
“There are of course other agencies, concentrating on areas such as search engine marketing (SEM), who market Google-related services. Those include, for instance, yellow-pages publishers and small agencies in our region… But the complete package of media services, Facebook, Google, regional platform, click-and-collect, websites… is offered by no one else,” he said.
LieblingsLaden (“favorite shop”) is a new product, officially launched in December 2015. The concept began with web pages for local retail merchants that had been created by Profi-Homepage. Then a “click and collect” system was implemented for merchants who join the initiative. The result is a website where numerous local merchants offer visitors information about specific pieces of merchandise and the chance to reserve them for later pickup – with in-person payment – in the shop. Shops are listed in apparently random order; users can sort them by city and/or type of business if desired.
Initially, shops in only the 20 largest cities in Südkurier’s circulation area are listed, in order to build up concentration in those cities. The aim is to make LieblingsLaden attractive to web users by covering as many types of retail goods and services as possible, if possible with a choice of two or three merchants per business segment.
The press release extols the advantages of the “click and collect” concept for shoppers: no shipping costs, individual advice, avoiding mistaken purchases, and a generally pleasant shopping experience. For the merchant, of course, the concept attracts customers into his or her physical shop – where he has the chance to establish lasting relationships and to sell them additional items.
The release also cites a study that found that 87 percent of consumers research products via the internet, but 69 percent of local shops do not offer their merchandise online. LieblingsLaden “offers the chance to address customers in the media they frequent the most heavily – online [desktop] or smartphone, in addition to the newspaper.… LieblingsLaden enables merchants to enter the field of e-commerce without the need for internet-capable merchandise management and distribution logistics systems.”
Need to enter transactional business
The brand was born not from the media perspective but rather from a perceived need for Südkurier to enter the field of transactional business with its retail business customers. “We wanted to use our good contacts to retail outlets in the region, and prepare our region for e-commerce,” he said. “Of course we did in-depth market research and consulted many experts in advance… and found that for many local merchants, the hurdles to entering online business are very high.”
He continued, “So we decided the business model must be as simple as possible for merchants. The primary goal is to give the merchants visibility when customers look for products or services on the internet. At the very least, the merchandise on offer at the shop around the corner must be made public.”
LieblingsLaden has gone surprisingly well and has proved “very successful,” with 150 merchants online as of late 2015; 50 more were expected by the end of that year. Bieler-Loop said, “We are very satisfied with that. We had no special expectations… One indication that it is working well is that in the past, especially with online business concepts, we had to sell very heavily in the market, really convince the customers. With LieblingsLaden, for the first time, customers simply come of their own accord… They ask, ‘How can I join?'”
The other project resulting from the extensive investigation of e-commerce about two years ago is Südkurier Inspirationen (“inspirations”), a full-fledged online shop. The media house acquires products directly from manufacturers around the region and sells them online.
Inspirationen is the more challenging of the two operations, said Bieler-Loop. While to an outsider, the offer available on the site is impressive, he said “far too few” producers are represented. The goal is to double the size of the offering each year in order to reach profitability.
For LieblingsLaden, Bieler-Loop has bigger plans. “We offer LieblingsLaden under a license model. We have had inquiries from other publishers in Germany who find it interesting. We license the brand, the marketing model, and offer the services, that is, the platform.”
He said licensing should prove more lucrative than the regional operation itself: “I don’t have to pan for gold myself – I sell shovels.”
Asked when that business will likely become profitable, he said, “Let’s see how receptive the market is. At the moment we are only reacting to inquiries, not actively marketing it. It would be nice additional revenue. I think it could have potential.
“I firmly believe that if they want to be successful online, publishers must offer such services. And the question of time-to-market arises. We needed about one and a half years to develop this solution. Somebody starting with this model could shorten that considerably – but he still has to sell it,” Bieler-Loop said.
At this writing, negotiations over license terms and services for other publishing houses are under way. Starting in the second quarter of 2016, Südkurier will execute the first projects.
“Starting with the first customer, that makes our business more profitable, because then you can scale upward, with the model that we have developed,” he said.
The next steps
“At the moment we are working with a pure ‘click and collect’ model, but other models will establish themselves, such as same-day-delivery. Some cities in Germany are already experimenting with that model. Not in our region yet, but of course we want to get prepared for that,” said Bieler-Loop.
Südkurier is also preparing to let merchants connect their inventory systems directly to its platform. That would allow direct transmission of inventory information, which could be displayed on the web where relevant.
All told, for a forward-thinking media house, being situated in a “digital follower” country like Germany, as opposed to a “digital leader,” has both advantages and disadvantages, said Bieler-Loop. On the positive side, because traditional business models remain fairly successful, there is less pressure to act, he said. On the other hand, he finds few discussion partners with whom to exchange ideas about innovative business models. In search of inspiration, fresh ideas, and guidance, he has to travel to the USA or to other European countries, such as Poland.
Sooner or later, of course, the winds of digital change will sweep with full force across Germany as well, and then Südkurier will be well-positioned – even more so than it is now. That is the company’s aim.