For more than thirty years, Mediamix has been working very regularly with the German agency Manage Media in Hamburg. Specialised in planning and ad purchasing for the German TV market, Manage Media also calls on Mediamix when it needs expertise to cover other international markets.
The German TV market is particularly dynamic and diverse and has much to teach us. We asked Jens Merheim, owner and CEO of Manage Media, about the current situation in this market and the emergence of new opportunities in terms of VOD, Smart TV and Addressable TV.
How would you describe the situation of the German TV market?
The German TV market is still dominated by linear usage. We notice some decreasing shares in the younger segments (< 39 years), as they have a different media usage behaviour focused on digital devices for the consumption of video-contents. But due to the Covid-19 situation, we witnessed two developments 1) younger target groups found their way back to TV 2) we saw a significant increase of digital alternatives like Netflix, Amazon Prime, or the German VOD portals TV NOW (RTL Group) and JOYN (SevenOneMedia Group).
Do you see any fundamental changes in TV usage?
To be honest, not really. As the Germans have no Pay-TV culture, the free TV offers have the highest usage and reach. And with regards to content, we see that younger people don’t turn towards TV, but prefer to watch the same series and shows on another device. So it’s a huge task to measure the total (T)Video reach since it spreads over different devices.
What is the situation with regards to SMART TV / ADDRESSABLE TV?
Right now, we have about 22 Mio. households with a connected TV, which is a steadily increasing number. The technical situation is very good, but there is still much to do in terms of acceptance and added value for both the users and the advertisers. There are some very interesting developments in the technical infrastructure to retarget the households which have seen / or not seen a TV spot. This opens new possibilities for incremental reach optimisation or to identify some more purchase-oriented contacts.
What are the benefits of SMART TV / ADDRESSABLE TV for advertisers?
We see the biggest advantage in the localisation of TV advertising, which was not possible before. It´s interesting for clients with specific focus areas. With addressable TV, those ads can be placed locally to support such areas. We also had some usage cases like “back to school” campaigns, which clearly highlight the mechanism. Due to the different holiday periods, advertisers with special “back to school” offers are now able to target the relevant period. This might also be interesting for wheel changes during the winter period and other similar topics.
And what about the VOD market?
The big TV publishers have started their own VOD platforms some years ago, mainly focusing on the same content (like linear TV) on different devices. This was not really interesting for a huge number of users. The result: a large number of users for the free accounts, but a limited number for the payable access with some extras like previews. Since two years, they have started to create content just for the platforms, which increases the users’ interest and the number of subscribers. A relevant approach for further developments.
What kind of developments?
The long-term perspective for publishers is based on three pillars:
- Increase the total (T)Video reach via different platforms
- Increase the number of subscribers and users to obtain a higher inventory for ad capitalisation
important pour la valorisation publicitaire; - Collect personal data to offer tailor-made solutions to TV advertisers.
Today number 2 and 3 are still “in progress” and are very much intertwined. The German data restrictions with regards to third party data are very strict, the main goal for the next period is to increase the number of first party data.
But it’s a really incredible way to create tailor-made TV campaigns and to better target group segmentation. So we are really looking forward to this development.
Can you explain the buying mechanism?
For addressable TV and VOD, the mechanism is like online advertising. The client buys impressions for specific target groups.
Regarding the ads, addressable TV is restricted. Therefore, the most used ad is called “switch in XXL”. It will appear while the user changes from one station to another. The usage of “normal” spot formats is very limited.
The VOD ads are instream and spot length (max. 20”) is also limited. The acceptance is quite high since the user behaviour is very similar to the TV usage one (lean back). The end consumers are indeed used to have ad breaks.
And what about the pricing?
Looking at the CPM, Linear TV is still the cheapest option for video advertising. This might change when the inventory for addressable TV and VOD increases significantly. As for the target group, we see some campaigns with a CPM 3 to 4 times higher in the addressable TV and VOD segment than in linear TV. To drop some numbers, the gross CPM for addressable TV and VOD ranges between 60 – 80€ (ratecard).
Compared to other digital alternatives like YouTube, the price difference is really high.
How do you see the German TV landscape compared to other countries?
In countries like the UK, the development is far away from the current situation in Germany. BUT publishers have a masterplan and work very hard on the inventory and data topic, so that we expect them to be much further in 2 years.
For clients with smaller budgets, it is a good approach to generate some insights and grow together with the publishers.
Nevertheless, it will take some time to replace linear TV on a short-term basis.
You have been working with Mediamix for many years. How would you describe this collaboration?
My first contacts with Martin Gentsch, Managing Partner of Mediamix, date back more than thirty years. This illustrates our close relationship and shows that we have learned to work together. Mediamix is a particularly reliable partner for all my international media projects. Their global knowledge of classical and digital media is a highly valuable asset.
