Seznam searches for expansion opportunities

Czech company Seznam is a global rarity in being one of a handful of Internet search engines which have fended off US giant Google on their local turf. The website, tv streaming and classifieds company has evolved around the core search engine. It is increasingly developing its media activities and putting more video content on both TV and computer screens.

Michal Heisig, photo: archive of Seznam

Czech search engine and Internet company Seznam has grown from a collection of pages put together by is its university student founder to a multifaceted, but still largely web based, media empire. Sales director Michal Heisig is tasked with maximising the revenues from an increasingly buoyant Czech advertising market and plotting the media combinations and ventures to grow cash flow even more. I asked him first of all where the company made its money.

“Basically our money comes from our clients. We in Seznam.Cz service around 40,000 clients in the Czech Republic from SMEs to our key clients and this is the source of our money. One of the biggest thirds is from PPC, pay-per-click paid advertising, and this is the biggest part of our revenues. Then comes display, this means banners, and this is around a third, and the rest is our verticals, real estate, cars, and our classifieds, like yellow pages, we call it firmy.cz, which is the biggest in the country, of course.”

Your turnover last year was around three billion crowns and the net profit just over one billion crowns. That’s quite an improvement on the previous years. Is there some reason for that…is it you or the upturn in the market?

“Well, I have to start with our experience, the good job and effort we have put in, and finally there was definitely a better situation on the Czech market. The investments of our clients increased significantly because they had more money in 2014.”

Google threat

When Seznam’s name comes up, the name Google comes up as well, where are you in the battle over the Czech market with Google?

Our video advertisements are sold out for months ahead, I mean 15 months.

“You mean they are still here [laughs]. That is nice to know. Well, I have to say that we have not practically noticed them in recent months. Two or three years ago there was a strong advertising push on the first television channel, Daemon conferences and so on… Now we practically cooperate on the market which is half Google and half Seznam. We try to do the best for our clients and they do the same. We will have to see what happens in two or three years. But they focus on their services, searching, maps on so on, and we have 40 or 50 services of which we strongly monetise about 20 of them and our strategy is a bit different. So we can service the market together, I think.”

One of the areas where they were stronger, or you lagged behind a bit, was mobile applications…

“Lately, one of the good ways for us has been, well, how to say it? … adaptive design. Not to focus on apps but to make our websites universal, independent of devices. This is the best way to monetise advertising because you sell apps and display advertising on two sites but altogether with one version for the website. And its simpler for our clients, for our sales reps, and for me, definitely.”

And the future for Seznam seems to be road of more media, tv stream, making short programmes or serials for Internet television. Is that the future?

Photo: Kristýna Maková

“Well, our video advertisements are sold out for months ahead, I mean 15 months. We increased the prices, but they are still sold out. So we need more space, more series, more material, more coverage. Our product department is trying their best, well I hope, to try and triple or quadruple the content for us to sell and for our users to watch. But we still have very small coverage compared to terrestrial television. We have to do something about that this year because there is astill a lot of money on the Czech media market and that’s a big opportunity even for us. To increase our revenues by a further billion, the way could be some tv cooperation or some powerful increase in our video views.”

What do you mean by tv cooperation? Do you mean cooperating with some of the normal terrestrial television companies or would you launch your own tv, the costs are a lot lower than they were 10 or 20 years ago and the capacity is out there… Is that something the company is looking at?

“What do we do on the tv market as I call it? First of all we try to increase our Internet video space. Secondly, together with TV Prima since January of this year we sell together a bundle, that means they sell together their tv space and our video space. It is not as successful as we expected in the first five months but the money is increasing month by month. We hope that this year we will test this and that next year, next season, we will officially take a big part of the tv market with this bundle. And once we can add more video space to this we will be stronger and there will be money waiting for us, I hope. “

Content challenge

So what is the main problem, you don’t have enough content of your own or you don’t have your own television channels?

To fight with television, which has been here for decades, a lot more content will be needed.

“I think both of them are problems for us. So we are thinking what to do on terrestrial television market, whether to test some frequency because we have a lot of content, but specialised content for the Internet. So we can see what the consumption of this content will be on terrestrial, if we test it, and I think we are ready to sell once there is content and space but I think we have to produce more and as I said we are tripling or quadrupling. To fight with television, which has been here for decades, a lot more content will be needed.”

People are talking about international expansion, can you say something about that?

“The international point of view from me, from the sales department, is that we have many clients - I would like to say there are thousands but there are only hundreds - from countries which are close to the Czech Republic; Germany, Slovakia, because Seznam reaches their users here in the Czech Republic or which are close to the border. We sell adverts to these clients and because they have been with us for years, I think it helps them and it works for them. As to expansion, we have maps and search which are customised for this part of Central Europe and I don’t think that with the current services we can reach much more, but we will see. Perhaps one day from the business development department there will be one, I don’t know, adaptation of one of our services which is successful here in the Czech Republic and we will export it to some country or countries.”

I get the general impression that Seznam is a cash rich company that is looking for opportunities. Does that sum up the situation as it is now.

“For years we would like to invest this money and well, firm up our position in this part of the world and perhaps in the world.”

In conventional media you are already a shareholder in [the newspaper Právo] or the company that owns Právo. Many people write conventional media off, but is that a way to go or not really?

Photo: archive of Radio Prague

“For me, I am 43, so I am not so much of the young generation. Last Friday I went from a conference in Ostrava by train with newspapers, so I am an old school type of manager. But for me, it makes sense because there will still be people over 43 in the Czech Republic among users who read newspapers and I am glad we have this investment in Právo. I think one day, well, we will find a useful way to bundle it with the Internet. Historically, we have always sold Internet in the way ‘Hey, this is not a newspaper, it is interactive and you can buy clicks and all this stuff. And this only newspaper. This is nothing.’ But now we have a partial investment in a newspaper, so we have to change a little bit our thinking and ask our clients what is good for them and try to find some combination of these media types, maybe with tv. In that way we can be a media house, which is what [Seznam board chairman] Pavel Zima says from time to time.”