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Axel Springer to Forge Advertising Alliance with ProSiebenSat.1

September 10, 2010

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German publishing house Axel Springer has announced it will cooperate with Munich-based broadcaster ProSiebenSat.1 to enhance its online video advertising strategy. In January 2011, ProSiebenSat.1 will become exclusive partner for selling Axel Springer's surplus online video inventory. The deal encompasses more than 20 online portals, including Axel Springer's flagship news portals and WELT ONLINE. ProSiebenSat.1 will offer Axel Springer's video inventory as a series of combination packages in the context of its own online video network.

The deal intends to better monetise the mounting advertiser demand for professional video content. Its form is determined by three premises: reach, targeting, and sovereignty.

Firstly, bundling Axel Springer and ProSiebenSat.1 inventory allows advertisers to generate significantly higher reach for online video campaigns as a one-stop solution. This not only facilitates the ad-booking process, but also permits better planning and post-campaign analysis because performance metrics can be delivered in a comprehensive manner.

Secondly, the wider reach allows for more accurate targeting, be it via thematic packages, so-called 'verticals' (e.g. sports-related content) or more sophisticated targeting models. Media owners' individual online audience frequently lacks the scale to implement reliable targeting models which rely on statistical inference across a wide range of target groups. This shortcoming has been one of the core motivations behind an online sales house alliance between RTL, ProSiebenSat.1, Gruner and Jahr and Tomorrow Focus, which launched in 2009. Having combined their individual reach, the participants were able to improve the accuracy of their targeting. The Axel Springer/ProSiebenSat.1 deal can be seen as an equivalent for the online video space.

Thirdly, it is noteworthy that Axel Springer does not permit ProSiebenSat.1 to sell all of its inventory, but only those advertising spaces which the publisher has not sold itself. Ad sales cooperations pose the threat for premium publishers to lose control over their inventory and in the case of Axel Springer, to foreclose opportunities for in-house cross-media sales, e.g. between print and online video. Reach gains therefore come at a cost and striking a balance with hedging inventory is crucial to steering and controlling growth.

The cooperation consolidates ProSiebenSat.1's position as leading player in the German online video market. In 2009, the overall German online free-to-view online TV market was worth €37m, of which ProSiebenSat.1 commanded a 38 per cent share. All publishers combined, including Axel Springer, had a share of 10 per cent. Apart from the cooperation with Axel Springer to sell surplus inventory, the broadcaster is also pursuing ambitions to act as exclusive online video sales house for other content operators. Furthermore, ProSiebenSat.1 is working to increase the reach of its proprietary content. Within the next months, its long-form TV content will also become available on affiliate partners' websites. For instance, casting-show 'Popstars' will on appear on T-Online and portals operated by the VZ-Group, a leading social network company in Germany. In contrast to Axel Springer, however, ProSiebenSat.1 will retain all ad sales in-house.

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