The newspaper and publishing industry is arguably the hardest hit by the proliferation of the internet. Between 2006 and 2012, the number of working journalists in the United States decreased by 17,000 while advertising revenue fell a staggering 53% in the same time. A decline so extreme that the Newspaper Association of America (NAA) stopped releasing industry-wide revenue data in 2014. As the newspaper product is effectively only virtual with limited value associated to the physical product, news was one of the first products to go online. Over the past years, newspapers have been struggling with two main problems. On the one side, virtually all newspaper companies started to offer their product online for free thereby accustoming readers to free online news, while on the other side the decoupling of articles made readers less loyal to one particular media house. In addition, more and more new news online-only websites are emerging, starting with the Huffington Post and now ranging from Buzzfeed, Vox or Quartz to Mic.com. Axel Springer, the largest European media house, publishing – among others – BILD, the most read German and European newspaper with a daily circulation of 2.6 million copies and reach of about 12.3 million daily readers, was faced with these very same threats to its core business. A declining readership, decreasing circulation revenue and advertising sales as well as increased competition from emerging news sites. <\/p>\n
Faced with these challenges, Axel Springer\u2019s long-time CEO Matthias D\u00f6pfner was re-evaluating Axel Springer\u2019s offering and how to adapt to the new and ever more rapidly changing business environment. Axel Springer\u2019s revenue \u2013 like most newspapers \u2013 was traditionally split between circulation revenue (sales of the physical newspaper), B2B display advertising revenue and classifieds revenue (small advertisements for real estate sales, cars sales, job postings or service offerings). While D\u00f6pfner wanted to counteract the decline in the first two categories by building a strong online presence (BILD.de is the most read German news website) and gradually establishing a pay-wall and selling advertising, he believed classifieds could actually have growth potential. As classifieds were directly connected with the sale of a product or service, the propensity to pay for this direct lead generation was much higher compared to general display advertising. In addition, the first classifieds portals in Germany and Europe started off with a free offering for private users but paid services for professional users such as real estate brokers or car sales (wo)men thereby conditioning users to a paid product. <\/p>\n
Determined to double-down on classifieds on profiting from the shift from offline to online, D\u00f6pfner started to aggressively invest in an online classified offering both through organic growth (creation of own websites) and M&A. Between 2009 and 2012, Axel Springer acquired majority stakes in Immonet (real estate, Germany), Stepstone (job postings, Germany) and Seloger (cars, France) as well as a range of smaller websites. In order to finance future acquisitions and get support in the continued M&A activities, Axel Springer partnered with the American growth equity fund General Atlantic, who invested \u20ac237m for a 30% stake in Axel Springer Digital Classifieds (the classifieds subsidiary) in 2012. Over the past years ASDC has continued the acquisition path and invested in eleven additional classified websites across Europe and the Middle East. D\u00f6pfner\u2019s strategy paid off both on operational metrics and market perception. Between 2009 and 2015, Axel Springer\u2019s revenue grew from \u20ac2.6 billion to \u20ac3.3 billion, while EBITDA increased from \u20ac333 million to \u20ac559 million, with classifieds now contributing 55% of group EBITDA. Consequentially, the share price improved from \u20ac32 in the beginning of 2010 to \u20ac59 in April of 2015. Astonishing results for a newspaper company in times where others are filing for bankruptcy or being bought by media conglomerates or billionaire patrons (e.g. Financial Times or Washington Post).<\/p>\n
While D\u00f6pfner\u2019s strategy was a clear success and Axel Springer has many reasons to be proud, the main challenge for the future will be to constantly stay open to change and adapt accordingly. While Axel Springer as the largest European media house arguably even has the moral obligation to continue its core and historic business of newspaper publishing, also the highly profitable classifieds business will need to adapt to the continuously changing industry landscape. While the rise of mobile is creating new players and changing user behavior patterns, the real threat is the new wave of start-up companies focused on facilitating the entire transaction online compared to only creating \u201cleads\u201d, offering end users to buy products, cars, services and even real estate online (e.g. Beepi, Carvana). Axel Springer will need to constantly evaluate its value proposition and business model and not shy away from radical changes to remain relevant.
\n(777 words)<\/p>\n
\u2022\tAxel Springer SE, \u201cAnnual Report 2015\u201d (http:\/\/www.axelspringer.de\/dl\/22446733\/Axel_Springer_Annual_Report_2015.pdf)<\/p>\n
\u2022\tAxel Springer SE, \u201cAnnual Report 2010\u201d (http:\/\/www.axelspringer.de\/dl\/431754\/Annual_report_2010_Axel_Springer_AG.pdf)<\/p>\n
\u2022\tAxel Springer SE, \u201c Axel Springer and General Atlantic establish strategic partnership for growth initiative in digital classifieds business\u201d(http:\/\/www.axelspringer.de\/en\/presse\/Axel-Springer-and-General-Atlantic-establish-strategic-partnership-for-growth-initiative-in-digital-classifieds-business_2243681.html)<\/p>\n
\u2022\tAxel Springer SE, \u201cChronic\u201d (http:\/\/www.axelspringer.de\/en\/chronik\/cw_chronik_jahrzehnt_en_99742.html)<\/p>\n
\u2022\tBain & Company, \u201cPublishing In The Digital Age\u201d (http:\/\/www.bain.com\/bainweb\/PDFs\/cms\/Public\/BB_Publishing_in_the_digital_era.pdf)<\/p>\n
\u2022\t性视界 Politics, \u201cThe Future of Print: Newspapers Struggle to Survive in the Age of Technology\u201d (http:\/\/harvardpolitics.com\/covers\/future-print-newspapers-struggle-survive-age-technology\/)<\/p>\n
\u2022\tPBS, \u201cNewspaper In The Digital Age\u201d (http:\/\/mass.pbslearningmedia.org\/resource\/f32bcaf2-4fb0-4371-8d2c-bee22c58f765\/f32bcaf2-4fb0-4371-8d2c-bee22c58f765\/)<\/p>\n
\u2022\tPew Research Center, \u201cNewspaper Fact Sheet\u201d (http:\/\/www.journalism.org\/2016\/06\/15\/newspapers-fact-sheet\/)<\/p>\n
\u2022\tReuters, \u201cAxel Springer and General Atlantic\u201d (http:\/\/www.reuters.com\/article\/axel-sprngr-ma-general-atlantic-idUSFWN13X01O20151209)<\/p>\n
\u2022\tStatista, \u201cBILD Zeitung\u201d (https:\/\/de.statista.com\/statistik\/daten\/studie\/221651\/umfrage\/entwicklung-der-auflage-der-bild-zeitung\/)<\/p>\n","protected":false},"excerpt":{"rendered":"
How Europe’s biggest media house adapted to the digital age and created a digital classifieds success story<\/p>\n","protected":false},"author":2288,"featured_media":18574,"comment_status":"open","ping_status":"closed","template":"","categories":[2617,916,2148,2618,628,643,786,1123],"class_list":["post-18573","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-axel-springer","category-classifieds","category-converged-media","category-digital-age","category-europe","category-germany","category-newspaper","category-publishing"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/digitization-challenge-2016\/","yoast_head":"\n