On the buy-and-build course in affiliate marketing
ADZINE: Hello Daniel, you have a very varied CV – you started at Axel Springer, went into the retargeting business with Xplosion Interactive, then continued under the umbrella of Telekom with Emetriq. How did you end up in affiliate marketing?
Daniel Neuhaus: If you look at the last almost 15 years of my career, there are two very clear constants: deep tech and data. The development of technology companies that collect large amounts of data and their optimization with AI or machine learning is a common thread for me. First at Xplosion Interactive, then at Emetriq, Yieldkit and now at all companies belonging to the YK Group – i.e. Digidip, Shopping24 and Yieldkit. These are primarily advertising technology providers and they all deal with mass data. In the case of Xplosion Interactive and Emetriq, user data was the basis. At the YK Group, it’s the performance and context data.
ADZINE: You started two years ago as managing director of Yieldkit, you are now CEO of the YK Group and, thanks to Waterland, you also have private equity behind you. How has that changed your view of the market?
Neuhaus: In performance advertising in particular, there is an enormously fragmented market worldwide made up of many small players and with high dynamics of change. I am convinced that under these conditions you simply have to be very fast in order to be successful. A high tempo within a company quickly reaches its limits. In addition, tech and digitization investments in the further development of a company are usually underdeveloped and not aggressive enough in Germany. Under these conditions, it is difficult to build up a leading company in an international comparison.
With private equity, the general conditions are changing. A buy-and-build strategy offers the opportunity to operate much more efficiently in a highly fragmented market than just building the company organically. It is particularly important for Waterland to create a defragmentation through acquisitions in highly fragmented markets and to shape a global champion. The chances of this are particularly high in a fragmented market.
ADZINE: With the fresh capital you first took over Digidip and then Shopping24. What are you still missing in your portfolio?
Neuhaus: If you ask like this: The sky is the limit. What we are currently missing and what we are actively looking for are companies with programmatic advertising technology aimed at performance advertising, commerce content solutions, influencer platforms and mobile advertising solutions. Geographically, we are looking for add-ons in Tier 1 countries with a focus on the USA – this is already our largest market with around 25 percent of sales – Great Britain, France and Germany.
In general, we aim to expand our portfolio of monetization solutions for publishers while building more direct connections to the advertiser. For example, providers of white label solutions and commerce content represent an extremely exciting development for us.
Commerce content, i.e. content about products and services that is explicitly produced to increase revenue and contains monetized links to these offers, is increasingly becoming a central revenue pillar for publishers. We believe that we are still at the beginning of the development here. There are publishers who are able to produce commerce-oriented content, which on the one hand creates added value for the user, on the other hand works well in terms of SEO and has a high click and conversion probability. But there are also many publishers who do not have the necessary resources. That’s why we’re looking for companies whose solutions give our publishers access to perfectly coordinated commerce content.
ADZINE: Do you need capital today to be successful as a company in performance marketing? Or are the right ideas enough?
Neuhaus: Our core belief is that size is absolutely paramount in performance advertising. This is the virtuous cycle, self-reinforcing: the more good traffic we can provide, the more closely we can work with advertisers, which in turn puts us in a better position with publishers. That’s why we want to achieve greatness, and greatness requires capital and rapid growth.
Our success over the past year has been based on private equity and the buy and build strategy and this is how we develop speed. This is how we achieve greatness – it would not have been possible through purely organic development.
ADZINE: What developments do you currently see in the affiliate marketing sector?
Neuhaus: We firmly believe that Commerce Content has room for further development. The way affiliate marketing provides access to many advertisers is the nucleus on which commerce content and publisher monetization rests and has fueled a major growth spurt. This will continue over the next few years with ever more intelligent solutions.
But we don’t see the YK Group in a sector-specific way and only in affiliate marketing. Everything we do is rooted in commerce advertising. We will continue to leverage the affiliate channel as we have access to many advertisers through it. Our range in turn includes all possibilities that lead to monetization of publishers.
ADZINE: What will the market look like in five years?
Neuhaus: Our vision is called commerce advertising, i.e. advertising that aims to generate an action such as sales, sign-ups or leads, and that in the right context. We believe that advertising is efficient and performant when it takes place close to or in the content that creates added value for the user. And the most important thing: the advertising itself must create added value.
ADZINE: Thanks for the interview, Daniel!