’2013 and 2014 Was A Period Of Transition, 2015 Will Be A Different Story’
Established in France during the mid-90s, HiMedia Group can lay claim to being one of the leading lights in the European ad tech scene, and more recently has begun to foray into alternative services such as online payments (HiPay) in an attempt to reduce its reliance on the whims of the (often fickle) advertising market.
The French ad tech firm announced its latest financial results earlier this month, reporting turnover of €38m, a fall of 9% year-on-year, amid an even steeper (12%) tightening of its profit margins, but it did note that its ad business was in a period of transition. ExchangeWire caught up with Cyril Zimmerman, HiMedia Group, CEO (pictured left) on how he envisages this transition process.
EW: In your most recent financial trading statement, you mentioned that HiMedia Group would focus on mobile as an area for future growth, plus ‘alternative solutions’ as areas of future growth in the year ahead. Can you explain the reasons for focusing on mobile as a particular growth area, especially when yields on mobile are traditionally low?
CZ: Mobile will be a real advertising revolution. Far deeper than programmatic has been. It will change the ad paradigm in the same way desktop internet did 20 years ago.
Mobile internet is now more important than desktop in terms of time spent in the US. The trend is here, usage will be massive and the ad industry will adapt.
Geo targeting will be key, tracking functionalities will be different (probably less by cookie and more by user ID), privacy and data collection consciousness will change users’ behaviour towards ads. More content will be willingly paid by subscription or micropayment, m-commerce will soar. And ad formats, handled programmatically or not, will have to adapt to a smaller device.
So the yields we have today mean nothing about the real future potential.
EW: Also, can you elaborate on the phrase ‘alternative solutions’ you mentioned in the call? Is this an alternative to ‘traditional display’ mentioned in the note note? Is this an attempt to diversify the business, as pure-play media revenues are declining so rapidly?
CZ: It has to do with formats. The overall digital market grows but there is and will be a shift in terms of devices, formats and value proposition to the advertiser. Display and search will probably keeping on losing ground but new ways of handling digital advertising will soar. Some form of native ad, and surely video advertising will be key in the mobile media ecosystem.
EW: Also, the reporting period also saw a drop in profits of 12% year-on-year, in your note you referenced “tightening conditions”, can you elaborate a bit further? What exactly was forcing this downward pressure on the media side of the business?
The European digital market is not growing as it used to, so the scene is harder for most of the players already in place.
Besides, as we said above, some segments like display, on which HiMedia has been positioned for more than 10 years and which used to represent €100m of yearly turnover for the group, are now mature, or decreasing. The new segments like mobile (Mobvious) and video (Fullscreen) are soaring and contribute more and more to the group’s top line.
So, we were in a period of transition in 2013 and 2014, with these aggressively growing new businesses (mobile and video) and a decreasing legacy business (display). Thus far, the new business lines were not big enough to compensate for the drop in our display business, but 2015 will be a different story.
EW: On a related note, you also mentioned, that several months would be needed for the mobile, RTB and video to take over traditional display. Can you explain what you think will drive the acceleration of revenues from such formats, both in terms of volume, as well as average revenue per ad unit?
CZ: It is a shift. It is just a matter of time before these growth relays become powerful enough. As for mobile it will be driven by m-commerce and the ROI the mobile advertising can provide to advertisers and merchants. It has to start with advertisers and merchants developing their respective mobile offerings.
As for video, I think the progressive merging of publishers’ and tubes [sites’] inventory will provide a boost to the scale, and thus the need, for programmatic. Here as well the move toward RTB depends on the supply side.
EW: Can you offer any insights in recent developments in the French market in the past 12 months, or even the year to come, that will make it a standout market in terms of ad tech across Europe, plus your reasons for saying so?
CZ: I think programmatic functionalities have accelerated the commoditization of digital ad inventory. It is now obvious the value lays in the targeting capacity and the product design. It terms of targeting French companies like Criteo, Ezakus have shaken the market and led the game.
As for product design, companies like TVTY offering second screen synchronisation, Shopmium for mobile couponing or Fidzup for collecting data from retail stores and using them on line show how boiling the French ecosystem can be so to invent the next wave of added value services.
