Exclusive Interview: MTG’s Hans-Holger Albrecht

July 31, 2012 World Screen Top Stories
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PREMIUM: Hans-Holger Albrecht, who is stepping down from Modern Times Group this September, tells World Screen Newsflash about how the company has been working with advertisers amid challenging economic times across Europe.

 

WS: How has MTG been working to maintain and increase ad revenues?
ALBRECHT: Demand is still higher than supply and we have a “media house” offering, consisting of multiple channels which are sold on a bundled basis to advertisers in nine countries, which benefits them both in good and bad times.
 
We are as always focused on increasing the reach and popularity of our offering, and continue to selectively invest in our programming schedules in order to maintain or strengthen our market positions during the tougher part of the economic cycle.
 
In Sweden, the TV3 free-TV channel expanded the number of regional broadcasts from 6 to 19 at the end of February. This means that same programming content is broadcast across all of the regions, while part of the advertising inventory is sold at higher priced rates on a local basis. We have also combined our sales forces to offer a unique and powerful combination of TV, radio and online advertising for the national, regional and local market customers.
 
WS: Is recovery in sight? How will MTG be positioned in these emerging markets once the recovery starts?
ALBRECHT: At this stage, there has been no trend shift in the development of the emerging advertising markets. However, it is a matter of when rather than if these markets return to high growth levels, and the investments that we have been making position us well to benefit from the recovery when it comes.
 
The advertising spend per capita is still significantly lower in Central and Eastern Europe while TV viewing is significantly higher than in Western Europe, providing us with significant growth potential going forward, especially considering our high incremental margins in these businesses.  
 
WS: You are the largest shareholder in CTC Media. What has been fuelling the growth of the Russian advertising market?
ALBRECHT: The growth in TV advertising market was primarily driven by price inflation in 2011. Television is one of the cheapest advertising media in Russia and is the only medium with nation-wide reach and therefore in high demand by FMCG companies and other advertisers who are interested in a good reach and value for money.
 
So far in 2012 there has been a rise in television viewership in Russia, so the overall amount of inventory on the market is increasing. CTC Media is so far 85 percent sold out for the year, at higher prices than in 2011. The Domashny and Peretz networks, which are part of CTC Media, both recorded all-time high quarterly target audience shares in the first quarter.
 
WS: Tell us about the strategy of selling advertisers the MTG media house of multiple channels on a bundled basis. How did that strategy start and in which territories are you using it now? What are the benefits?
ALBRECHT: Scandinavia was the first region in the world to digitalize its terrestrial TV broadcasts, starting with Sweden in 2007. The shift in technology meant that MTG could launch clearly positioned complementary channels that offered incremental reach for differentiated audience groups to advertisers, and sell advertising on a bundled basis. This in turn allowed us to increase the overall price for our advertising inventory, and decrease the discount between us and incumbents.
 
MTG now has established multichannel media houses in Sweden, Norway and Denmark, as well as Estonia, Latvia, Lithuania, Bulgaria, the Czech Republic and Hungary. Eight out of these nine media houses also include online on-demand catch-up services as part of the offering. This provides us with access to a new segment of the advertisement market and extends our reach even further. Online advertising is typically sold at significantly higher rates on a like for like basis, which of course provides us with incremental sales and profitability.
 
WS: What do advertisers want,  beyond the 30-second spot?
ALBRECHT: Advertisers want effective and measurable impact as well as extensive reach, in order to be able to run both wide national campaigns as well as more narrow targeted campaigns. We have taken a number of additional steps in 2012 to continue to drive innovation and the customer offering to new levels. The broadcasting of TV3 in Sweden has been extended from six to 19 regions, and we have also merged the sales teams for free-TV, radio and online in order to implement the ability to optimize advertising campaigns both locally and nationally as well as between different media and times of day like drive time, daytime and prime time.
 
WS: How successful is product integration?
ALBRECHT: Production integration is an on-going revenue stream for us. We broadcast a lot of our channels from the U.K. The regulations for product placement were changed in 2011 by Ofcom. We are now able to offer our clients not only traditional product placement, but also the possibility to digitally embed product placement in TV programs and web content. The benefit of doing it digitally is of course that it can be done at a later stage in the production cycle.
 
WS: Have advertisers been willing to move online? How are they adapting to catch-up online environments, such as Viaplay?
ALBRECHT: The Viaplay online pay-TV service is a subscription-funded service and as such doesn’t show or generate revenues from advertising. However, our free-TV channels offers online on-demand catch-up services that we sell advertisement for, either as stand-alone web campaigns or as part of bundled media house sales. Online TV advertising is a growing field, and we expect it to continue growing in the future, but at present it is still represents a very small proportion of our overall advertising sales.
 
WS: What has been the demand for and reaction to Viaplay so far?
ALBRECHT: The reception has been very positive. It is clear and has been for a while, that the TV industry is changing and that it is changing faster than ever before. Viaplay is changing the way people watch TV by making premium sports, movies and hit-TV services available anytime anywhere basis as it can be accessed on any Internet-connected devices such as computers, smartphones and connected TVs in the Nordic region, and now also Russia, which is Europe’s biggest market.