Next Digital Strategy: Be Number One

Michael Hedges March 22, 2012 Follow on Twitter

Media people continue searching for that oft promised digital dividend. So far, the major beneficiaries have been techies, telecoms and, of course, investment bankers. In the real world the difference between analogue euros and digital pennies is well understood. There is, though, a digital strategy.

The digital economy does not have Schibsted chairman Ole Jacob Sunde and CEO Rolv Erik Ryssdal wringing their hands and scratching their heads. “It’s no wonder we focus on digital,” said Sunde at Capital Markets Day in London (February 29). “We pick up more than half our profit from online and have a revenue growth of 20% from classified ads initiatives. It has not always been like that.”

When the classified ad business migrated to the Web, publishers were apocalyptic. Schibsted invested NOK 450 million online businesses in 2011 with more on the way.  “In three to five years' time we will become the largest player in the world in (online classified advertising), said CEO Ryssdal. It’s “a game where winner takes all and it is better to have one number one position instead of having three to four second positions. It is our goal to have as many number one positions as possible.” The company owns online classifieds portals Blocket.se (Sweden), LeBoncoin.fr (France), tutti.ch (Switzerland), DoneDeal.ie (Ireland) and subito.it (Italy).

Mobile advertising is considered another high growth opportunity. Coins are jingling among media buyers, at least. To get in on the early fun – and profit – Schibsted in Sweden launched Ad-Gateway, a mobile ad management platform. “Last fall, when our almost unbelievably strong mobile traffic growth took a further leap, we saw ourselves forced to act on their own,” said Aftenbladet online product manager Johan Åsén, quoted by Dagens Media (March 14). “An advertiser can reach all the users who visit any of Schibsted's mobile sites or applications from Gotland in week 28. If the sun also shines, they might wish to offer everyone a mobile discount coupon while pointing the way to the nearest store.”

Like most of Scandinavia’s big media houses, Schibsted’s roots are in publishing, owning Norwegian dailies Aftenposten, Stavanger Aftenblad and Bergens Tidende, Swedish dailies Dagbladet and Aftonbladet and the 20 Minutes franchises in Spain and France. Home market expansion in publishing has reached its limit. Investment opportunities near Scandinavia and beyond, particularly in the online trade, are there for the taking. Last year the company acquired Latvian news portal tvnet.lv (March 2011) followed by Russian language news portal novonews.lv (October 2011). If Poland’s biggest local web portal Onet.pl is sold by owner ITI, as expected, Schibsted figures among potential buyers, reported Puls Biznesu (March 9).

A-pressen CEO Alf Hildrum seems to be taking a more traditional approach, buying in-market cash flow rather than reaching too far afield. When the Norwegian Competition Authority finally approves its takeover of Edda Media, A-pressen will officially become Norway’s second biggest media house. Another Norwegian publisher, Polaris Media, continues to object to the takeover citing out-of-date circulation and market share figures from which the Norwegian Media Council determines allowed plurality.

In Sweden, Schibsted tops Modern Times Group (MTG) and Bonnier in revenue and market capitalization. MTG is primarily a pay and free-to-air television company with several large radio networks. In January MTG moved to acquire Latvian free-to-air channel LNT, yet to be approved by regulators. Bonnier holds broadcast and publishing assets across Scandinavia and beyond. Its last major acquisition was the US magazines group from Time, Inc. in 2007.

Schibsted launched a bid in February for shares it did not already hold in internet services company Aspiro. While there was notable resistance from some Aspiro shareholders, Schibsted bought a sufficient number of outstanding shares to give it a 74% holding. The Aspiro board “unanimously” recommended the Schibsted buy-out offer.

Aspiro does a number of internet and mobile things but it’s most known for video and music streaming portal WiMP, a significant competitor to Spotify. Loss making Aspiro (SEK 40 million in 2011), had net sales of SEK 230 million, up 25% over 2010. Paid subscribers to WiMP jumped to 350,000 from 100,000 in 2010. WiMP has expanded into the Netherlands and started a beta-test in Germany.

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