European Ad Network in Asia Deal Following U.S. Launch

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VIENNA, Austria -- Ad Pepper, a 2-year-old, European-owned and operated marketer of online advertising, concluded a cross-selling agreement last month with BMC Media, a leading Australian Internet marketer.

"It was the best way for us to get into Asia, the world's third-largest online market," said chief operating officer Jochen Rabe here on a visit to the company's Austrian offices, "because we won't enter this market alone in

the next few months."

Rabe said Ad Pepper opened U.S. offices during the summer and started operations in the fall.

"The U.S. market is the oldest, the largest and the most competitive, and you have to be very careful coming in," Rabe said.

Ad Pepper, he said, has committed substantial resources to its U.S. venture and saw the BMC strategic alliance as another way to expand globally. "You can't go into the U.S. the way you would [go] into a smaller European market," Rabe said.

"This will give us access to a portfolio of 2 billion advertising contacts a month with a network that is already well-established in the Asia Pacific region and that will provide sales from ground zero without spending six to eight months building up our own team."

Rabe found, unexpectedly, that Asian Web sites were far more interested in marketing their wares in Europe than European customers were in getting Asian exposure.

"We estimate that two-thirds of revenues we generate will come from Asia Pacific and only a third the other way around," he said. "European companies just aren't as interested as Asians are in both Europe and U.S. markets."

Rabe believes that Asians think more globally than Europeans or Americans and that they are more aware that successful exports must be accompanied by marketing and advertising endeavors.

"They have a tradition of advertising and marketing beyond their home market, which you don't find very often among American enterprises," he said.

Initially -- and Rabe emphasized it was still too early to discern substantial trends -- most interest came from Japanese and Australian IT companies. In Europe, firms in the United Kingdom, France and Germany are most interested in Asia.

Internet launches, he said, are much faster than those involving conventional trades, "where you have to lift heavy goods and move them from left to right."

Once a contract is signed and payment modalities agreed upon, you can begin.

"Given our technologies, it doesn't make much difference whether we launch a campaign in Austria, which is next door to us, or launch the same campaign in Asia," Rabe said. "Resources needed are the same."

Ad Pepper -- which built a network of 22 offices in 13 countries that manages 470 Web sites since its 1998 launch -- began training country managers in the intricacies of Asian Web sites as soon as the agreement was signed.

"BMC has 400 Web sites," Rabe said. "Our people have to know what they are, who the large players are and the specialists, how the work flow is handled and how we can best sell them."

Payments will be handled in global currencies, mostly U.S. dollars and euros, although local Web sites will pay bills in local currencies -- from Singapore dollars to Austrian schillings.

"We don't plan any print or billboard campaigns, because they aren't targeted enough and we have a good enough overview of our client base," Rabe said.

Ad Pepper, he noted, is loosely structured, with the holding company setting business plans and earnings targets.

"But how they attain those goals is up to the individual country managers," Rabe said. "We don't tell them to wage large or small campaigns or how to contact customers. They act on each market as local companies do."

That's one thing very few U.S. companies have been able to do, Rabe said.

"I'm in the U.S. a lot, and I keep hearing companies say, `Now that we're so successful here, let's go to Europe,' and if you go to London a lot of them are there," he said. "Go to Paris or to Hamburg, however, and you don't find very many. It is a wrong assumption to think that once you are present in London you are present in Europe.

"As soon as language barriers play a role, the real problems of a U.S. expansion emerge, and only a few U.S. firms have been successful in overcoming them. It isn't just language, but cultural differences.

"The Austrian market is not as well developed as the U.S. market, and if you come here with the same ideas it won't work, because you are making more demands on the market than it can handle.

"In France, traditional media planning is very important, with clearly defined principles of selling and buying that you have to accept and which many U.S. companies don't. You have to live inside the culture so that you can perceive the market the way a French company does."

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