As one of the largest publishing houses in Europe, Axel Springer does not run its e-commerce strategy with major commodity risk.
“It is not our core business,” says Maximilian v. Richthofen, senior investment manager. “The soul and spirit of Axel Springer is journalism. We serve our readers with independent and critical information and advice as well as entertainment.
“Through our media offerings, we are making a contribution to the strengthening of freedom and democracy. The prerequisite for this is our economic success. We are working every day to improve our journalistic, technological, and commercial competence.”
In the second quarter of 2014, Axel Springer’s operating results continued the dynamic growth trend of the first three months, thanks largely to consistently strong growth in its digital activities. Consolidated revenues were up 6.2% year on year, and EBITDA up 10.6%. The group’s digital activities accounted for more than 51% of consolidated revenues and more than 65% of consolidated EBITDA in the first half of 2014.
Axel Springer is divided into three journalistic segments as a company:
- Paid models: This segment includes all business models that are predominantly funded by paying readers.
- Marketing models: This segment includes business models that are predominantly funded by paying advertising customers.
- Classified ad models: This segment includes all business models that are predominantly funded by paying job, real estate, or car advertising customers.
The e-commerce strategy is grouped under the marketing models segment, which is sub-divided into performance-based and reach-based services. These performance marketing activities are bundled within the Zanox Group, a leading provider of success-based online marketing in Europe.
Zanox brings advertisers and publishers together, giving advertisers an efficient way to market their products and services on the Internet. In 2013, Zanox expanded its portfolio to real-time advertising by purchasing a majority in the performance display provider, Metrigo.
Axel Springer’s reach-based e-commerce portfolio, in partnership with Zanox, includes:
- Idealo.de: Germany’s No. 1 portal for product searches and price comparisons. Idealo lists more than 1.5 million products and more than 130 million offers by online dealers (as of yearend 2013). Furthermore, its success is increasingly international.
- Under the roof of the Bonial International Group, kaufDA.de is Germany’s leading consumer information portal for local shoppers. kaufDA distributes digitised advertising brochures of retailers on a regionalised basis, mainly via mobile devices. These services are also offered in France (Bonial France), Spain (Ofertia), Russia (Lokata), Brazil (Guiato), and the United States (Retale).
- Finally, through Visual Meta’s platforms such as ladenzeile.de, online shops provide consumers with visual and text search options to browse through the product range of online stores. Revenue is generated through success-based compensation for product views.
The revenue from these marketing models e-commerce streams amounted to approximately EU€716 million in 2013, with an EBITDA margin of 14.4%. The advertising revenues have particularly increased due to a very strong performance of Idealo in the reach-based services and the Zanox Group in performance-based services.
“We do not pursue majority investments in pure e-commerce business models with inventory risk,” Richthofen clarifies. “Those models have never been the core of a digital publisher. Our goal is to become the leading digital publisher.”
Dr. Mathias Döpfner, CEO, adds that the revenue and earnings contributions of the company’s digital activities are growing.
“They are still the main driver of sustainable, profitable growth. The fact that consolidated EBITDA for the first six months of 2014 rose by an amount in the low double-digit percentage range is completely in line with our positive full-year forecast — and we anticipate a much greater increase for our classified ad models.”