Stroeer SE & Co KgaA
XETRA:SAX
Earnings Call Analysis
Q3-2023 Analysis
Stroeer SE & Co KgaA
In an economic environment where Germany experienced a minor recession, largely impacting export-driven companies, the company reported resilient performance with an 8.2% increase in sales from EUR 1.246 billion to EUR 1.348 billion over the first nine months of fiscal 2023. Organic growth mirrored this trajectory at 7.9%. Adjusted EBITDA also saw an ascent by 6%, reaching EUR 375 million up from EUR 354 million, a growth slightly outpaced by rising costs, notably for utilities and labor, evident from a modest 2% lift in the adjusted EBIT to EUR 158 million.
Striking strides in digital out-of-home advertising fueled the company's segment growth with a notable 28% upswing, contributing substantially to the out-of-home revenue which saw a 7% increase overall. The firm's foresighted expansion in digital portfolio, especially in programmable public video, resonates well with the market's shift away from traditional media. Consequently, the out-of-home segment's market share ascended to a historic 8.7%, solidifying the company's leadership status within this domain.
AsamBeauty, post-acquisition by the company, epitomizes a success story with a 33% surge in sales, reaching a new quarterly record of over EUR 54 million. The brand's growth is attributed to a blend of high-performance beauty products and the formation of a loyal customer base. Anticipated revenues are around EUR 200 million for 2023, projecting an increase to about EUR 270 million in 2024, hinting at a strategic focus on best-selling products to fuel further expansion.
The Digital & Dialogue segment observed an 18% climb in revenues from EUR 176 million to EUR 208 million in Q3, stimulated by robust programmatic sales and strategic acquisitions, adding about 1,000 agents to the workforce at minimal acquisition costs. The addition contributed positively to the EBITDA, and excluding the acquisitions, organic sales growth was approximately 6% for dialogue, reflective of a more stringent economic backdrop for call centers and door-to-door sales activities.
The company's leverage ratio has increased to around 2.5x, with sequential rise in net debt largely due to dividends paid. Free cash flow adjusted presented a slight negative at minus EUR 3 million, in line with expectations and strategic dispositions. A prospective improvement in Q4 is projected based on the previous year's comparative period.
Looking forward, the company anticipates a solid Q4 with about 10% organic growth. The initial indicators for 2024 are optimistic, suggesting not only a sustained top line growth but also a chance for the out-of-home segment to realize higher than proportional gains in EBIT and cash flow. The company is also well-prepared with measures that have improved the cost structure and strategic responses to the ad market and macroeconomic fluctuations.
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Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the Q3 figures 2023 of Ströer SE. [Operator Instructions] I would like to turn the conference over to Christian Schmalzl, please go ahead.
Dear ladies and gentlemen, dear analysts, thank you for dialing into our today's call on our Q3 2023 results as it is common practice from previous quarters, I would like to share with you highlights and developments of the just-ended quarter and discuss the most important strategic topics. Henning will then present the financials for the third quarter and the first 9 months 2023 before we give you a short outlook of what we expect for the remainder of the year. Afterwards, we are looking forward to your questions.
With that, let us start the call with a short overview of the key figures for the first 9 months of fiscal 2023. The economic environment has not become any easier in recent months, and Germany is technically in a small recession. But from our point of view, this is mainly affecting export-oriented companies and therefore, less likely to affect massively our customers and our business.
Against this environment, we were able to increase our sales by 8.2% and from EUR 1.246 billion to EUR 1.348 billion in the first 9 months of fiscal 2023. Organic growth was with 7.9% on a similar level. Adjusted EBITDA increased by 6% from EUR 354 million to EUR 375 million, only slightly under proportional when compared with a strong revenue development due to the cost increases, especially for electricity, external service providers, and labor. EBIT adjusted was up by 2% to EUR 158 million despite increased G&A, reflecting higher investments, i.e., in the past 3 years.
Net income adjusted came in at EUR 79 million, compared with EUR 104 million in the first 9 months of 2022 due to higher interest rates. Operating cash flow stood at EUR 225 million or EUR 8 million lower compared with the prior year period affected by higher interest and tax payments, which we will discuss later in the finance section. With EUR 98 million, CapEx was EUR 20 million lower compared with the first 9 months 2022, reflecting a step-by-step back to normal against an accelerated ramp-up of our roadside portfolio in 2021 and 2022. Looking at the developments in the first 9 months, the German advertising market declined by around 2.2% in gross, driven mainly via TV spend that fell by 7.3% year-on-year.
By contrast, according to Nielsen figures, which are, as I mentioned, also gross figures, out-of-home advertising increased by 8.2% and in the comparative period. As a result, out-of-home's share of the overall ad market rose to a new historic high of 8.7%. Our developments in the first 9 months of the year in net revenues, plus 8% for the group, plus 6% for our core out-of-home segment market place with plus 26% for digital out-of-home. We were able to accelerate the growth of H1 even a little bit further. The developments are outstanding against the German ad market and even the global digital platforms from the U.S. are at best on par with our digital out-of-home development in the period January to September.
Even if the difficult times during the pandemic jeopardize the developments of all media categories, the long-term developments show above all one, stir with a market share of over 60% in out-of-home advertising is the driver of continuous growth of the category out-of-home. The out-of-home market share almost doubled from 2013 to 2023 from around 5% to 9% today. It is also relevant to mention that the CSR movement between TV and out-of-home now opens up with tectonic shifts in the structure of the market. I think RTL net revenue estimations for the TV market yesterday were minus 11% to minus 12% in net for full year 2023.
One of the drivers here has been our consistent and continuous expansion of our digital portfolio that accelerates these developments while competing channels are facing more and more structural headwind, flexibility, visibility, the massive reach and audience coverage as well as the progress in programmatic out-of-home and automated sales systems are key to these developments.
Digital out-of-home today and i.e., our public video product has become rather a part of the overall digital marketing ecosystem and a digital version of the old out-of-home business. We have already seen a similar chart last quarter. It once again shows the success story of digital out-of-home in the current market environment. Despite reduced advertising budgets, Digital out-of-home was able to grow significantly in the first 9 months of the financial year, driven by major budget shifts from other media categories to out-of-home from leading national and international customers.
The examples here are just a small collection. Deutsche Telekom is increasing its advertising spending in the digital out-of-home channel by 4%, while at the same time, reducing its overall budget by 3%, especially at the expense of TV, which dropped by around 10%. A very similar picture can be seen at Amazon. The trend is much more pronounced at Telefonica, which is reducing its overall advertising budget by 12% and driving up digital out-of-home advertising spend by 81% over the same period. The same at H&M, in contrast to an advertising budget being reduced by 25%, the digital out-of-home category clearly outperformed all other advertising formats with an increase of 72%. This development can be hardly overestimated, taking the 47% reduction in the TV budget into account.
Considering the composition and the development of the advertising expenditures of the Peugeot vehicle manufacturer, you can say that they are real and convinced fans of digital out-of-home plus 211% for digital out-of-home.
So what is driving this development specifically? With its large audience reach of up to 75% in the largest German cities, public video can make a decisive contribution to closing the increasing performance gaps of TV campaigns and boost advertising effectiveness. Traditionally, most advertisers use TV to reach mass target groups. However, due to a high level of differentiation and target profiling and also in TV consumption and viewer behavior, the performance of a TV plan shows significant deviations in geography.
As you can see on the map on the left, the lighter areas are those where the TV plan has gaps in reach and frequency whilst the darker areas are covered well by a classical TV plan. Those areas with higher population density and higher mobility, mostly also reflected by younger target groups and higher levels of education and work status are not reached so well by TV anymore.
These areas, most likely urban are the strength of digital out-of-home, which is placed in high-density urban areas. That is shown on the second map in the middle that reflects reach and frequency of a digital out-of-home campaign. Both campaigns use video as format. The map on the very right demonstrates what happens if a TV plan uses digital out-of-home to cover its weak point even without increasing the budget. By shifting shares of the budget into digital out-of-home, the campaign can achieve national broadcast reach amongst all targets. So what we see in the overall media mix development is the rational decision of advertisers to respond to the changed media consumption of growing parts of their target groups.
Another very important effect of digital out-of-home is a capability to perform quickly. Most Boards are seen several times a day, e.g., while commuting. A classical TV campaign needs a couple of weeks to achieve its full reach performance. By using digital out-of-home, in addition to TV, this effect can be leveraged, especially in the first week of a campaign, digital out-of-home has a significant contribution to the performance and reach of a campaign and can reinforce the effect of a campaign launch. 100% TV was a common solution 15 years ago, 80/20 between TV and public video is what we see more and more and we are convinced that the general trend over time will lead to a constantly higher share for digital out-of-home.
TV is losing audience. It's losing over-proportionately fast in urban and more educated and higher income target group segments. Digital out-of-home addresses specifically dose audiences and is expanding its infrastructure and digital eyeballs for advertisers. With our broad portfolio across all relevant touch points of the consumer journey outdoors, we enable our customers to play out tailored, high reach, and efficient campaigns and ensure maximum contacts down to the point of sale. The mobile device has become the first and most private screen and digital out-of-home can interact as the only present public screen counterpart.
Ströer share of over 80% in digital out-of-home product categories such as digital giant formats, roadside products with its approximately 2,000 premium locations in Germany or the whole transport sector are globally unique. You can do digital out-of-home only with Ströer, but you cannot do it without Ströer.
In our last quarterly call, I already talked about AI at Ströer. In the meantime, we've worked out potentials and use cases, which are very promising and demos have convinced the test audience. With the use of AI, content and data generation is simplified, standardized, and accelerated. This enables us to provide our customers with more up-to-date and more precise data and to generate more use cases for our customers, thus maximizing stickiness or conversely minimizing churn.
We see 5 topics that are critical to Statista success. Number one, our strong global brand based on trusted and curated data at leading international companies trust every day and which is the foundation for strategic decisions of our customers. Number two, taking our productivity to the next level with our internal Statista AI. Data production is aided, accelerated and improved by our own AI engine. Three, research AI will massively improve the user experience and access to our 250 million data items. It does not need highly specialized data analysis to get the best data from Statista. Research queries can be entered into Statista formulated in natural language. The answers are also provided in natural language in addition to the familiar Excel or PowerPoint formats.
Four, customized solutions can be offered via AI interfaces that can be integrated seamlessly into individual customer applications; and number five, risks associated with the use of AI, such as a loss of proprietary data or brand-related risks when giving wrong answers can be mitigated by technology, e.g., having an own LLM without data leakage as well as by implementing automatic quality control routines.
All of what I just described to you is based on our current developments. We have already successfully completed the first phase, the so-called Alpha testing and are currently in Beta testing with a closed user group. The feedback we have received so far on the various KPIs such as user satisfaction, correctness of data are very promising especially when considering that the current version is trained only on a fraction of Statista's data. The next crucial step will be an Open Beta testing, and at this point, we will also share the progress with you in a webinar. Christoph is already aligning dates with a team around our new [ CEO ], [ Mark Berg ], who's already, since a couple of weeks, working closely with our 2 founders, Friedrich and Hubert, that have moved on into co-Chairman roles.
Let's stay in our third segment. If you look at the development of Asam since the takeover by Ströer, this is a prime example of a real success story, and we transformed AsamBeauty into high-performance German beauty brand with an international footprint. In the last quarter, we were able to increase sales by around 33% to a new quarterly record of over EUR 54 million. One of the reasons is that Asam is based on what we call high-performance beauty products, Asam delivers proven functional benefits, true value for money, and therefore, creates a very loyal user community. While more marketing-focused beauty brands are facing less demand or the need for higher marketing spend to defend their market share.
We are, therefore, seeing profitable growth in all channels in which we are active with Asam, online, retail, telesales, and our international business. We have also reached levels where we are seeing significant economies of scale. Having said this, we expect revenue of approximately EUR 200 million for 2023 with an EBITDA adjusted margin of around 20%. For 2024, we expect further revenue growth to around EUR 270 million with a further improvement in the margin. Furthermore, we continuously focus on the best-performing Europe products within the large portfolio to use them as a key driver for growth in the various channels.
The preorders for 2024 are approved for this blockbuster strategy and give us confidence to perform on or beyond 2023 growth rates and margins in the coming year, as mentioned before. Accordingly, we are very confident of creating significant value for our shareholders through a divestment. We are well underway with the preparations and the necessary extensive documentation.
So far in my remarks, and with that, I hand over to Henning.
Thank you, Christian, and a very good morning to everyone from my side. With the developments in the third quarter, we have seen the expected sequential acceleration in sales and earnings growth compared to the first half of this fiscal year. Revenue rose by 11% from EUR 436 million to EUR 484 million, and adjusted EBITDA improved by around 10%, almost in line with revenue from EUR 134 million to EUR 147 million. This against an overall still demanding geopolitical and macro context. The German ad market, however, showed some stabilization on a low level.
Organic revenue growth came in at 9% for the quarter and excludes especially sales from the opportunistic acquisition and integration of a few call center locations. Adjusted EBITDA increased by 10% to EUR 147 million, as just mentioned. Adjustments in the quarter stood at plus EUR 0.3 million and are mainly reflecting a book gain from the sale of a smaller non-core activity as well as some exceptional costs.
For the fourth quarter, we are expecting restructuring costs in the mid-single-digit million euro area for the streamlining and optimization of organizational structures in our content business and here, in particular, on the tech side of T-Online. We expect these one-offs to amortize over a period of around 3 years. Reported EBITDA came in accordingly at EUR 148 million compared to EUR 131 million in Q3 '22, reflecting an increase of 13%. Depreciation and amortization for the quarter increased to EUR 79 million. Underlying D&A excluding IFRS 16 developed more or less in line with the first half. Depreciation on IFRS 16 assets was up by around EUR 3 million, also including depreciation on assets recently recognized in the context of out-of-home contract prolongations in Poland and additional leases from the acquired call center locations.
Reported EBIT in the quarter was up by 20% from EUR 58 million to EUR 69 million. The financial result came in at around minus EUR 20 million compared to minus EUR 5 million in Q3 '22. The change is mainly attributable to 2 effects, just like in the previous quarters. Firstly, interest expenses for financing the business, which increased by around EUR 9 million after EUR 7 million in the second quarter. The reason being still rising rates as well as a higher level of net financial debt since our dividend payment at the beginning of Q3. In addition, we have the effects of IFRS 16. Here, we have an implication, if, for instance, there is a change in the parameters of an existing lease contracts where we then must apply the now higher rates on the recognized leasing debt. And at the same time, there is a reverse impact on the corresponding depreciation. IFRS 16 interest expenses, like in previous quarters, increased by roughly EUR 4 million.
Accordingly, EBIT came in at EUR 49 million compared to EUR 52 million in the previous year's quarter. And with that showing a lower decline than the EUR 28 million decrease we have seen in the first half. Including an expected tax rate of around 28% for the year, reported net income were EUR 35 million for Q3 '23. Adjustments to be considered in the quarter were EUR 3 million and related mainly to slightly positive exceptional as mentioned, PPA-related amortizations of EUR 4.5 million, and income taxes of minus EUR 1.6 million. With that, our net income adjusted amounted to EUR 38 million after EUR 46 million in Q3 '22.
Let me now make some brief comments on the cash flow development. The operating cash flow in the third quarter improved slightly mainly due to the improved EBITDA and the higher cash out for taxes in last year's Q3, following a true-up of previously to low advanced payments at the time. Looking at the full 9 months, the operating cash flow is still slightly short of the prior year. In that context, the improved EBITDA, which is some EUR 11 million higher than in the prior year, is more than offset by higher cash out for interest and here both effects, cash interest for our net financial debt as well as a higher interest component for all lease payments.
Free cash flow before M&A improved considerably to around EUR 50 million in the quarter, also supported by a strong decline in investments, which last year included the acquisition of our corporate center real estate here in Cologne.
With that, also the free cash flow before M&A in the 9-month period improved over the prior year. Excluding the effect of the acquisition of the headquarters, investments in the first 9 months were down by around EUR 9 million, including an increase of EUR 7 million in Asam and Statista, and thus reflecting a more selective expansion in digital out-of-home. The free cash flow adjusted, so including the full effect of paying for leases improved slightly to minus EUR 3.1 million in the quarter, thereby lease payments compared to the prior year were still impacted by phasing effects. For the first 9 months, free cash flow adjusted was minus EUR 19 million after minus EUR 5 million in the prior year quarter.
Please bear in mind that Q4 is always in absolute terms, our most cash generative quarter, and last year, Q4 was characterized by overall tough trading conditions and a heavy decline year-on-year in free cash flow. But this year, and Christian will give more color on that later. We remain constructive on Q4, in particular, for out-of-home as well as for Asam and Statista. From a free cash flow point of view, we should expect higher cash out for interest and taxes but at the same time, lower cash out for investments and lease liability repayments. Net debt year-on-year was up as expected by EUR 121 million from EUR 740 million to EUR 861 million in Q3 '23. This increase included returns to Ströer shareholders via our share buyback program of EUR 50 million as well as the dividend payment of around EUR 103 million.
Net debt sequentially, so from the end of Q2 to the end of Q3, has gone up by EUR 107 million including Ströer dividends of EUR 103 million, some 2 main dividends from minorities, a slightly negative free cash flow adjusted of minus EUR 3 million and some EUR 3 million proceeds from disposals. The remainder comes from roughly EUR 3 million of interest payables accrued until the end of the quarter and recognized as net debt. With that, and as indicated on our last call, the leverage ratio has increased to around 2.5x and based on what I just said about Q4 last year, we expect an improvement for this year's fourth quarter.
Let me now talk you through the performance of the individual segments, starting with our core segment out-of-home media. In the first quarter, out-of-home delivered higher sales growth than in the first half of '23. Segment revenues were up by 7%, and this against the backdrop of a still sluggish German media market. The consequence is a Ströer-induced market share gain for the entire out-of-home category to a new all-time high of 8.7% in the first 9 months or 9.4% in Q3, respectively. When taking out sales from tobacco advertising, growth even amounted to 8% in Q3 and 7.9% in the first 9 months, respectively. Main contributor for the strong revenue development was again our digital out-of-home business, which delivered growth of 28%. With that revenue of the digital out-of-home category increased from EUR 58 million to EUR 75 million or 34% of out-of-home revenues.
Within digital, our programmatic channel outperformed considerably. This reflects the demand for our digital portfolio and especially for programmatic public video from large national accounts. Sales from classic out-of-home were pretty much on prior year level when adjusting for tobacco at sales. EBITDA adjusted for the quarter increased from EUR 99 million to EUR 102 million despite still elevated SG&A cost inflation. We continue to work hard to bring our cost structures for the classical portfolio in line also in the context of a continuously strong outperformance from our digital products. Having said this, we are no means the declining margins as a recurring feature of our out-of-home business.
In Digital & Dialog, revenue increase accelerated significantly and compared to the second quarter was up by 18% from EUR 176 million to EUR 208 million, following a restrained development in H1, digital online advertising, including programmatic and content publishing showed double-digit revenue increase in Q3 of 19% to EUR 106 million. The strong development was driven by strong programmatic sales, but must also be seen in the light of low prior year comps in publishing. Our dialog activities showed a revenue increase of more than 16% from EUR 87 million to EUR 101 million in Q3. Main contributor for this development was the acquisition of a number of selected call center locations as part of an asset deal that had already been closed at the beginning of June.
The corresponding locations and teams represent a very good fit for our existing network and do not comprise central overhead functions. The transaction included 3 locations in the north and east of Germany, such as Itzehoe, [ North Brandenburg ] and Frankfurt Oder. On top of that, we integrated agents and customers into our locations in Munich, Thessaloniki, and Pristina.
In total, approximately 1,000 agents were added to our call center workforce. The purchase price amounted to less than EUR 500,000. Third quarter sales contribution amounted to slightly more than EUR 9 million with a positive EBITDA contribution. So excluding the transaction, organic sales growth was rather around 6% for dialog in a tougher trading environment for both our call center as well as our door-to-door activities.
Altogether, the segment delivered an increase in EBITDA adjusted, which rose from EUR 37 million to EUR 38 million. The strong sequential improvement compared to the earnings decline of the first half is, in particular, a function of lower comps following the downturn of the ad market in the second half of last year. The overall business context is still challenging for the entire segment so that the development in Q3 cannot be seen as an indication for Q4.
Moving over to our Data as a Service and e-commerce segment with Statista and Asam. In total, revenue growth accelerated further compared to the previous quarter and was up by 22% to EUR 90 million in the third quarter. In detail, Statista increased revenues by 9% from EUR 33 million to EUR 36 million, but somewhat dampened by negative currency effects.
Adjusted for FX effects, revenue growth even accelerated to 13%. Strong growth across all channels, telesales, e-commerce, retail and our international business accelerated Asam's revenue further, outperforming the already strong growth momentum in Q2. In total, revenue increased by 33% from EUR 41 million to EUR 54 million and marking a new record in quarterly sales in Q3 '23. Against this backdrop, earnings developed very positively and more than doubled from EUR 7 million to almost EUR 15 million. The EBITDA margin rose from 9% to 16%.
Let me conclude my remarks with some comments on ESG at Ströer. As you can see, we are doing very well overall and are practically always in the upper range compared to our peer companies and in the sector. Compared to the second quarter, we were able to improve our S&P Global score by a further 3 points to 41 points, putting us in the 92 percentile in our sector. But it doesn't come for free. It's thanks to the dedication of our teams, we are passionate about this topic and make us better every day.
Sustainability has now developed into a decisive success structure in the capital markets in the public space and for our entire industry. We are, therefore, very pleased that our efforts and above all, our progress are being recognized and rewarded. As one of the most sustainable companies in the media sector to has been nominated as a finalist for the German Sustainability Award.
With this, I would like to hand you back over to Christian.
Before ending the presentation, let me just have some comments on the outlook for the rest of the year, the general momentum 2024 and our financial calendar. When we had this call on the Q3 results exactly 12 months ago, we've been in a rather uncertain environment and a momentum that was going into a challenging direction on both ends of our business. The ad market decline accelerated and our sales momentum rather went towards a low single-digit number at the end of 2022. At the same time, cost pressure, especially on electricity and labor was growing massively and inflation was getting towards a double-digit number. The last stage of the tobacco advertising ban was ahead of us, another EUR 11 million impact equivalent to 1.5 points of our out-of-home segment for 2023.
Today, the macro is still anything but perfect, but we have worked another 4 quarters on our cost structure, and we have by far better feeling for the challenges of the ad market. The ad market is at least not getting softer, and our sales momentum is rather going towards double-digit growth, especially in the core out-of-home segment. And we get closer and we get our cost base better under control, while the inflation in Germany has come down to 3.8% in October. We have swallowed the final tobacco ad ban in our 2023 numbers and have strong confidence in how advertisers respond to our extended digital out-of-home infrastructure, especially our core out-of-home business is finishing strong this year.
As we expected, based on our order book for October and November, we currently see roughly 10% organic growth in Q4. And the first signs for 2024 are also very encouraging for the top line. And on the basis of stable CapEx and IFRS effects, we see good opportunities for an over-proportionate EBIT and cash flow development for out-of-home next year and the value crystallization process of Asam is well on the way.
So let me now close the presentation with a short look into our financial calendar for 2024. We will start the new year with the presentation of our prelims on March 5, followed by the publication of the 23 annual report, including the final figures on March 25. We will then report on the developments in the first quarter on May 8.
The Annual General Meeting is expected to take place on June 11. On August 8, we will release the half year report 2024. The year 2024 will then be concluded with the publication of our Q3 report on November 30. As always, updates, reports, and roadshow presentations can be found on our Investor Relations website. Thank you, everyone, and we are now very happy to take your questions.
[Operator Instructions] The first question is from Chris Johnen with HSBC.
I would like to do them one by one, if possible. First, how should we think about digital out-of-home specifically in 2024? I have a couple of questions that there has been a little bit of a slowdown in the rollout. That means our CapEx, but also fewer screens. And the question is whether that implies less growth? Or if 2024 is, let's say, more about a better sell-out. Any comment on that would be great.
Chris, thanks for your question. Indeed, what you see in our CapEx number. And as we said, we spend at the moment a little bit less than in '21 and '22. At the same time, I think it's fair to say that especially '22 but also '21 were years where we overinvested in the infrastructure because we wanted to use the momentum that we had on approvals with municipalities. At the same time, we also wanted to create a visible effect of more screens being out there and the daily life, also of marketing decision-makers. That said, I would say, with the current CapEx level, and that includes, I would say, not only '24 but also '25, we feel very comfortable with having an offering that matches exactly what the advertising market needs at the moment. I think we have enough capacity to take more revenue.
I think fill rates are still on a level where we say they are okay, but they are far away from being perfect and as we described, I think, in the first part of the presentation, the kind of audience coverage that we have at the moment is already very good. And we want to benefit here also bottom line-wise, by having more than enough inventory at the moment to also, let's say, swallow the next plus 25%, plus 30% years. So no need to worry about us investing a little bit less and therefore, making compromises on the top line potential, we would be any time able to, I would say, increased CapEx spend and screen rollout, I would say, by 30%, 40%, 50% within 4 to 6 months. At the moment, we don't see the need for it and benefit nicely from the investments we've made, especially in the last 2 years.
Okay. Great. That's helpful.
To make it may be a bit more concrete, we could digest another EUR 150 million, EUR 200 million digital out-of-home turn of without increasing our network at all. So it's a typical infrastructure saying it's a little bit like mobile phone operators. You have to build your antennas then you only add piece by piece where it's really necessary.
Great. That's clear. And then second question, I kind of have to try to see if there is any more color you can give on the Asam disposal. I'm just curious, obviously, if there is any feedback with respect to the impact that the operating or better operating performance has on the discussions. There is other beauty players in the play, there's been press speculation about [ Bowerstrom ], for example. Is that helping you in the comparison with respect to the multiples? Basically, I'll happily take any comment you may give on this beyond what you already said?
Well, I think multiple evaluations are not in our control. I think there's 2 elements, I think that we can control and that we are working on. The first one is the operational performance and organizing the business in a very sustainable way. I think that's what we've done in the last year, and that is also something where I think we had a very strong focus in the last 12 months. And I think you can see the results in our current trading. I think secondly, you need to get all the hygiene aspects right. I think that's what we've also initiated some time ago what we are working on, what we are completing.
And then I would say anything else is less controllable by us. All we can say is that we are very well prepared, I think we are very well prepared. And of course, we want to smart on the timing, but at the same time, we are fully committed to execute what we've promised. So I'm afraid that's maybe not exactly what you were looking for.
That's fine. That's fine. I had to try. And maybe a quick lap, if I may, on the current inflationary environment. I mean you gave a comment in your outlook statement, I'm just curious with respect to the running quarter, is it fair to assume that it has gradually come down, the inflationary pressure that is, and so we can expect a little bit more sales to EBITDA drop through even in the running quarter? Or is that too early?
Well, I think it's a bit too early because we are still in times where you get surprises here and there. A lot of the initiatives we've started take some time. I think all we wanted to do in the call is if you look at the bigger picture of what happened in the last 12 months, I think 12 months ago, we've been, yes, almost surprised overnight with electricity costs exploding. So it took us -- so what do we see at the moment. Prices are coming down constantly. At the same time, we've been working on how and where can we save energy, for instance, in our digital out-of-home network and the execution needs a little bit time.
So not everything we've initiated is already visible. But what we see in general that quarter-over-quarter, I think inflation comes down and our countermeasures start working. And I think if it's not visible, it doesn't mean that it's not happening, then there's maybe another counter effect. That's why I think I would be careful to always look at everything on a quarter-by-quarter basis, but rolling 12 months development is, I would say, very positive. So I think a year ago was really challenging because just 2 examples, I think we mentioned something like roughly EUR 10 million incremental cost on electricity. For the out-of-home segment that happened like within 3 months, and there is almost nothing you can do against it.
We had legally necessary increases of the minimum hourly wages. If you look at our service infrastructure for the out-of-home business, the people that do the papering and glue us and screwing, it's subcontractors. I think, the companies that we employ have roughly 1,800 people contracted. If you just take EUR 1, they are multiplied with 8 hours multiplied with 220 days multiplied with 1,800 people. You talked about double-digit millions, even if you're able to compensate that by acting smarter.
And I think that was, in total, a sum of money where we see now versus the development of the business that relative development comes down at the same time, we see that the ways where we try to improve the productivity of our organization are now slowly going in the right direction. And I think that gives us a lot of confidence for the coming year.
The next question is from the line of Annick Maas, Societe Generale.
So my first question is on digital out-of-home growth. I would like to understand how much of the growth I don't know if you have that numbers, but basically, I would like to understand how much of the growth is coming, if you would have taken your park of digital out-of-home screens from last year and just seen how the growth has developed to this year. I would like to understand basically how much is coming from the new screens that have been digitized over the year? That's my first one.
The second one is I would like to have a bit more clarification on margin. I mean if you look at consensus today, they had mid-single-digit organic revenue growth for the out-of-home bid for the fourth quarter that led to a EUR 566 million adjusted EBITDA for the full year. I mean given the operational gearing, I would expect EBITDA to go up on that? Or is there anything we need to bear in mind why it wouldn't go up as much as maybe it would naturally go.
And then the last one, just if you could elaborate a bit more on the digital bit in Q3 what has driven the growth there exactly and how sustainable that is?
Let me start with the first question Annick on digital out-of-home. I think it's difficult to precisely distill how much of the growth is coming from incremental screens and how much is coming from demand on the rest because new screens have some kind of ramp-up phase where it's probably -- where the impact that they have is a little bit underestimated. But in general, looking at Q3, we had roughly EUR 28 million growth -- 28% growth out of digital out-of-home. The first 9 months, 26%. So I would say 10% to 12%, in some quarters, maybe 15% at the moment of the growth is coming from new screens. That said, without the incremental screens that we deployed last year, the growth would be probably 3 percentage points lower roughly. And that is, as I said, one of the reasons that we are also a little bit more cautious with CapEx because we see the key driver for digital out-of-home is, at the moment, not exactly the incremental screens. It's meanwhile the overall product that we have.
And I think that's what we always wanted that we establish digital out-of-home as a almost stand-alone mass broadcasting category in the market, and that's what our product does. And we try to be smart in adding screens here and there where we see that the incremental revenue impact is reasonable. But for the moment, we see that it's mainly the category itself not adding more screens to the whole party.
Maybe on the second question, Annick, you were about to get more transparency on the margin, in particular, in light of now, I would say, quite constructive view on out-of-home sales expectation for Q4. I don't want to repeat what Christian said on costs. I mean we still see in a lot of out-of-home lines that costs are going in the wrong direction this year. I think there is a chance -- I would say there's a bit of upside risk, depending on trading in Q4. At the same time, I mentioned in my speech that we should be probably a little bit more cautious on the earnings development in the second segment. The sales development was very nice in the third quarter, driven also by external growth. Earnings improved, in particular, as a function of very low prior year comps. But if you look at the underlying trading conditions particularly on the dialogue side of things, it's kind of tough at the moment. We see some customers actually holding a little bit back on money. So the year, I would say, net-net, I think our outlook for Q4 is, I would say, not changed too much compared where we were like 2 months ago, right?
At the same time, yes, we want to surprise positively. And I mean, yes, it's only 7 weeks to go until the end of the year. But in general, that's the most crucial weeks in the year and there's still a lot of work to be done. As always, I think we have the potential to outperform current numbers. I think the most important point that we wanted to make, looking at the outlook, is 2 things. We see that against an almost more negative development in the TV market, we see our core business getting even stronger and especially the digital out-of-home business. That becomes more and more robust and even better predictable also in its current growth momentum. And secondly, I think the general logics of top line versus cost challenges, inflation is just getting beneficial for us month-over-month. And I think that's just something we wanted to highlight so that you have it in mind when you think about the coming quarters and years projecting our revenues.
Obviously, it's important for what is happening in this year but I think one of the key -- what it's doing -- where we're doing very well. But I think the key message here is, if you look, the key message from the quarter and also from this year, that we are talking for years about the structural change in the market. We always said that we see structural growth driven by digitization, driven by all the structural movement of eyeballs in the market. And the pandemic actually was a kind of setback here for a short period of time. And what we see now, I think, and that's from our point of view, is the key message is today, we see a very, very positive sign for the upcoming years because digital out-of-home, don't forget that it's still in the beginning.
We are in a very early phase. But we see that the structural growth is coming through what we said since 10 years when we acquired Deutsche Städte Medien in 2004. The out-of-home market was a 2.7% market share in the advertising market. And these days, we said that we expect the market to grow up to 8% in the upcoming 10 years. Now it took a bit longer, but we are now 9%. That is a very historic figure since I entered the business, 2.7% to 9%. And we are convinced that we're going to see double-digit figures sooner or later, so 10%, 11%, 12%, 13%. Maybe even 14% in the next years should be possible because our historic competitors in terms of building high reach like print and free-to-air TV are struggling because the eyeballs are moving away to other offers.
And I think this is, for us, really what we worked for at least now almost 20 years to be prepared to this development. And we have a market share from almost 90% in digital out-of-home in Germany. And I think this is really, for the upcoming years, the key information that we want to get through. This is something where we were talking now for 10 years about it. And we are investing in that since 1998, where we started to build up the first [ scorers ], paper [ scorers ] to secure the locations for future digitalization of our business. So I have to say also for me personally because since these days, I'm talking about that this year and also outlook for the next year is something which makes us really happy that we're actually putting our efforts on the right cards here.
The next question is from the line of Marcus Diebel with JPM.
Fantastic results. It really shows, as you said, the structural shift is actually happening. I have 2 questions. AsamBeauty, that as well, very strong. I still don't understand fully why that really is. Is it because of more volume in China? I mean is it because consumers see it as a must-have? Because from a high level, you would think macro would even hurt this business a little bit more. So if you can maybe elaborate a little bit more why it's actually so strong, in particular. Also still on the margin side, I just want to really understand it.
And then secondly, similar also to the good performance in outdoor, the national seem to really go into a digital out-of-home. Could you talk a little bit more about the small and medium-sized companies? Because again, from a high-level point, this segment struggles. Would be great to hear about the resilience in that part of the outdoor business.
Yes. Maybe let me answer the first one. When we bought Asam, it was a TV brand, it was a mono TV brand, so no retail, no online, not really any businesses from abroad. So now in the last years -- and Marcus Asam, actually, when he founded the business, the business was already based on efficiency of the products. And then you realize that actually, the market you can divide it in marketing brands so you invest a lot of cash in building a brand world, and this is a selling point. And Marcus decided to create a performance brand, less marketing [ shishi ] but better performance for more reasonable price. And then he decided that to move it from a TV brand in a multichannel brand, that's when we came in because he was looking for a partner. And we were convinced that also our marketing power in the beginning could help him to do that. And that's why what we see now is a combination of all of what you were saying. So we are -- Asam is now -- because it's simply working, the product becoming a very successful multichannel brand. And there's also growth coming from gaining ground in all these channels. So we get, for next year, 1,000 more retail touch points. So then we are finally in all the big drugstore chains, and this is creating growth. And on the e-commerce side, we are gaining ground because Asam actually is a challenger now of existing, let's say, marketing brands. Asam is delivering performance for a very reasonable price, and the market is realizing that. And on top of that, we have also very positive development in China, where we see strong demand for German beauty products, especially for one of our products.
And so it's actually coming all together. And the margins -- the 20% margins is where Asam was always. Last year, there was, let's say, a onetime impact from inflation from China, from the pandemic and whatever. As with China, I mean, from the pandemic in China, so this was not Asam-specific. So Asam was always very profitable. And that's what we see also this year, EUR 200 million turnover, the margin from 20%. And we see another very strong year ahead of us next year. But it's actually a combination of a couple of different products, different effects here.
Well, Marcus, on your question on the performance in out-of-home, so what is coming from sort of the local business vis-a-vis the national accounts. I think we still see throughout the year, I think, a very robust, resilient performance from the small and medium-sized clients. However, it's fair to assume that at the moment, the national accounts are outperforming. And I just look back to the presentation, what Christian has said about the TV boost and things like that. So I think the performance in nationals, at the moment, outperforming the local and regional business.
But looking sector by sector, in the small- and medium-sized things, I think that's -- given the overall macro environment, that we see in some industries that delinquencies here and there are going up a bit, but nothing concerning and absolutely under control.
Yes, perfect. Could you maybe, since I have you, also talk a little bit about your views on cash distribution at this point, given that the business is doing well?
Well, I think usually, let us finish the year. And I think our policies are firmly in place with regard to that one. I think from today's perspective, I think there's nothing new to add. I said in the speech that we are quite constructive on the cash flow development in Q4. And I would say, let's move over the water once we get to the bridge. All the policies with regard to dividend are firmly in place, and I think there's no news on that one from our perspective.
And we are happy that the business is doing well, so should put us into a position where we are well in control and have all options on the table. That's why. So sorry, we haven't really thought about it yet so.
Yes. Is there an option -- again, is there an option, let's say, if there was a disposal and let's see if that comes through, to run the business at some point on a net cash level because what we've seen -- I'm asking because what we've seen is that so far, in this environment and then rates for longer, usually there, these names have been outperforming because they are implied less risk. Is that something you even discuss? And again, I think it's probably a bigger discussion only if disposals come through. But is that something that is on the table or not at all?
No, I mean, of course, we discuss these kind of things. I mean, the rates level where -- at the level where rates are at the moment. But in general, I think our policy hasn't changed. I mean, we believe that the 2.5 leverage is our sweet spot. Now we're now there. Do we want to see it now going up to big time more? Of course, not. So we somehow -- I think we're still within the line of our targets. And at this point in time, I think there's no need to change that as we believe.
As I said, Marcus, so from a risk perspective, but if you look back in the last 30 years of out-of-home, we see very, very little volatility even in huge crises. So I think risk is also always related to the risk of your individual business model. And so that's why we don't see really a reason here to adjust our position, like Henning said.
The next question is from the line of Nizla Naizer with Deutsche Bank.
My first question is on the German ad market. You mentioned that you're seeing stabilization. Just wanted to understand on the ground, is it really an underlying macro improvement that's sort of helping that? Or it's pent-up budgets that are now being spent by the advertisers? So kind of there, on really what you're seeing on the ground because it's so different to what we're hearing from, for example, the broadcasters. So any color there would be great. Secondly, on Statista, when do you think we could expect a return to double-digit growth once all of the sales force restructuring, et cetera, is completed? And could you remind us again what the steady-state margin expectations are for Statista? And by when do you think that could be reached? Those are the 2 from my end for now. Thank you.
On the ad market, I would say, if you look at Nielsen numbers, and then you see quarter-by-quarter a constant improvement. So if you look at just the Q3 Nielsen number for the total ad market, I think it was up by 1%. The quarter before, it was minus 3% or something like that. And in Q1, it was, I don't know, minus 8% or minus 7%, just like Q4 last year. So of course, those gross numbers are always inflated in our view, by 3, sometimes 4, percentage points. So I think if you look at the gross TV number year-to-date, I think Nielsen shows minus 7.5% or so. So I think what RTL yesterday said is minus 11%. So you see whatever Nielsen shows, you have to take the numbers down by 3%, maybe 4%. So the minus 1% at the -- sorry, the plus 1% by Nielsen at the moment is probably rather minus 2%, minus 3% net for the total market. But I think that number was 7, 8 points worse at the beginning of the year.
That's why we think what we see is a gradual stabilization, and maybe Q4 could be net numbers roughly stable versus prior year. And that's why we also think that sidewards development is something we rather see at the moment. That said, yes, I think there's different dynamics inside the total advertising market. I would say the online market is improving again. That's also what you see reflected in our numbers. You see also that global platforms, and they are also part of the advertising market, they are also doing by far better at the moment than 9 or 12 months ago. I would say, even the print decline has become softer.
But yes, what you see at the moment, the most challenging environment is clearly for TV stations. And there, I would say, and I think at least that's what they said, they don't see that it is improving. But I think that is more true for the TV segment than for the total ad market. There, at least, based on what we feel, there is by far less headwind and definitely no tailwind. But having no negative distractions from the overall market development at the moment, I would say it's already rather positive for us. And that's how we see the market.
Well, on Statista, I'm not sure whether I got the first part of the question right, but you probably have to repeat it. But you were asking about the margins, what is our midterm margin expectation. Also here, I think that hasn't changed. We believe that in the medium term, Statista is absolutely in a position to deliver, let's say, around 30% EBITDA margin. And it's not just that we say this. This is also what we can derive from looking at the business and, in particular, in the profitability in those areas where Statista is already represented for a longer time so at the moment, your geographies such as Germany. So we have absolute visibility that this margin is achievable. At the same time, I think the platform itself has now more and more retained critical mass so that in the future, it is more about just scaling on a cost base that is, let's say, growing below the speed of the top line. And giving you a little bit of color on '24 already, we believe that there's a good chance that we will see an acceleration of the top line again throughout the next year. As we all know, over the last 18 months, we were heavily engaged in improving things in the platform, in rearranging a lot of things on the sales organization, introducing sales force. So a lot of things that not necessarily help to keep 100% focus on the client. So we are quite positive here regarding the medium-term outlook. But what was the first part of the question, Nizla, again?
That was the first part, like when we would like to see sort of an acceleration in the growth, so that was quite helpful.
The next question is from the line of Julien Roch with Barclays.
Questions on out-of-home. You are mentioning that the strength is coming especially from programmatic public video from national accounts. So can you remind us how much public video was of your out-of-home revenue in '22 and broadly where it would finish in '23? And then how much of your digital out-of-home, as a percentage, is programmatic in '22 and broadly where we will finish in '23? So that's 4 numbers. And then on out-of-home margin, the first year in the new segment breakdown was 2019 and EBITDA margins were 49.2%. They've been coming down more or less every year since, and they'll be down again this year. So what's the path of margins in coming years? Up, flat, down? And where do you think we can get to in a couple of years?
Very rough numbers, Julien, on your first question, just checking. I meant -- I think in the first 9 months, we had roughly -- and we meanwhile integrate all our digital out-of-home products under public video. So I think we had EUR 190 million revenue in the first 9 months this year versus EUR 150 million last year. I think last year, we've had roughly EUR 60 million to EUR 65 million in Q4. I think we can do at least EUR 10 million to EUR 15 million more, maybe EUR 20 million. So we should finish at 100 -- sorry, at EUR 265 million to EUR 270 million roughly, and delivering EUR 50 million to EUR 55 million more on public video than last year.
And if you just then go back to our segment revenues and estimates this year and last year, you would see that the classic part of the business is roughly stable, taking into account that we've probably lost 1.5% or 1.7%, 1.8% through the tobacco advertising ban. I think it shows that in a declining ad market, we keep our classic business stable. Without tobacco advertising effects, I think we can still grow a little bit in a normalized ad market. I think we can still grow low in good quarters, up to mid-single digit in the classic part. But the momentum on public video is, I would say, at the moment, above 20%, equivalent to plus EUR 50 million, plus EUR 55 million, maybe plus EUR 60 million in absolute terms. And that, I think, sets a little bit the scene for the midterm assumptions that we have in mind.
And Julien, on the question on the margin, I think I just would like to repeat what I said in the speech. We don't see declining margins as a recurring feature of out-of-home because we hear you walking through the margin development since '19. But you also know that in 2022, we have seen a nice increase in the margin vis-a-vis '21, so I think there's a good chance. And with the development that Christian just outlined on public video, in particular, there is theoretically a very nice drop through of that to the bottom line. At the same time, we need to make sure that we keep our, let's say, cost on the classical portfolio in check with the development there. And we need to do more, I think, to maintain productivity on the portfolio side. So we are quite optimistic that the margin can show a better development going forward than it shows this year.
Maybe just one technical comment on the margin. I think just to be precise, when this -- like the segment grows 7% and 8%, I think under such conditions, when I look at next year, maybe the EBITDA only also grow 7% or 8%. Why? Because the IFRS effects are not growing but are stable. The other way around, I think that's what I think what makes sense to focus on when we discuss margin improvements, given the fact that we are -- that we've been over-proportionately spending on CapEx the last 2 years and normalize that now.
I think on the one hand, that D&A doesn't go up again, rather down. And if the IFRS effects remain stable and the EBITDA nevertheless grows in line with top line, it means that the EBIT is growing over-proportionately. At the same time, if the CapEx remains, in absolute terms, stable while the top line grows, I think our cash flow could even grow a little bit more than our EBIT. And I think that's what we have in mind regarding our midterm margin development. So I think the adjusted EBITDA number is not showing the full margin development. That would be my only comment.
Okay. Coming back on your first answer on public video, you said under [ 99 ] months, [ 159 ] months, but those are the -- that's 100% of digital out-of-home. So public video historically was screened in the train stations. So what's -- is this store out-of-home 100% public video now because surely, you must have some roadside digital screen that don't show video, right? So I don't...
Sorry, that's maybe because that's how we work with it internally because that's how we position it in the market, and that's how the advertisers use it as one integrated network. If you would split it out, I would say the roadside portfolio this year is around somewhere between around EUR 55 million revenue, EUR 50 million to EUR 55 million, and that number goes up to probably EUR 65 million next year, EUR 68 million or so. If you want to deduct that from the total numbers we mentioned before, then you know roughly what the mix is between indoor and outdoor.
Okay. And then I had a question on programmatic. What percentage of your digital revenues is programmatic maybe last year and this year?
So I would say in total, if I look at the national ad market, that's where the majority of the programmatic volume sits. I would say this year, we get to 55%, maybe even 58%, coming last year from roughly 50%. Even on the regional side, we meanwhile see that the regional customers, and that's the ones that book more audience-based, they allocate 1/3 of what they are doing via trading desk even if it's our own DSP because they prefer that kind of digitally managed play-out system. So if I put that together, the 2 sales channels, I would say in combination, across all our customers from the smallest local one to the largest national one, by the end of this year, we should be around 50%. And looking at next year, when I see the dynamics in the last 3, 4 quarters, I would assume that 70%, 80% of our public video growth is coming via the programmatic channel. And that's, I think, a little bit what we've been working on for years and what we mentioned in the speech. We see at the moment that the digital out-of-home inventory, the eyeballs there are more seen as an element of the digital advertising landscape and not so much as seen as a digital version of an out-of-home display.
[Operator Instructions] The next question is from the line of Jörg Philipp Frey with Warburg Research.
Well, in your presentation, you already alluded on the superior socio-demographic profile of out-of-home as one of the reasons for gaining market share. And have you seen any analysis regarding what's actually the [ truth ] for the back for advertisers in terms of efficiency of our dollar spend in digital home public video relative to TV? Or how to say otherwise, can we have some time in the future dream scenario where actually, we talk about, well, public video being the lead marketing tool rather than TV? And what can you do to promote that, this efficiency of out-of-home, even further?
Well, I think what advertisers normally do is working with their own marketing attribution models to measure the impact of their marketing activities on their sales or whatever their KPIs, their store traffic, sales, orders, leads, whatsoever. And I think what they normally do, they integrate all of their marketing initiatives and that starts with pricing. It goes via promotion and ends up with traditional advertising. So when you see the current development, I think it's a combination of 2 things. To somehow ring fence the right media for the advertising plan, you look at region audience development. And I think that all audience measurement panels show that classic television, for instance, is losing eyeballs, while digital out-of-home is winning. Why? Because we have a more and more mobile urban society, and you have more and more inventory. So you suddenly have an historically under-penetrated digital out-of-home opportunity. So what advertisers do in the first step, they look at the pure eyeball development and then start integrating digital out-of-home in their media plan. What they then see after 6, 9, 12 months is how is the performance of my overall marketing budget allocation working? And they see, normally, yes, that's not what we do. That's what advertisers do internally with research companies or with their own marketing attribution specialists. They distill the impact of digital out-of-home. And when they see that it works, they keep it in the plan and increase it. So what we see now, at the moment, is probably the result of many advertisers testing and increasing digital out-of-home carefully over the last 2, 3, 4 years and finding out that meanwhile, if it becomes even a substantial part of the plan, not only a nice add-on, but maybe medium #3 in the plan after digital and still TV or as part of digital, they now have digital out-of-home. And I think just looking at the logics of is that medium over or under-reflected in the media plan? And are the eyeballs rather growing? And are -- is the performance relative to alternatives improving or getting worse? I think all the signs show in a very positive direction. I think on the very long run, it would be nice if public video is a lead medium, and I think we've muted Udo to not to interfere because he would have said yes. But I personally think on the very long run...
But I'm not on mute.
Okay. It's still great. But I would say everything that can become digital will become digital, and everything that you can trade in an automated way will be traded automatically sooner or later. That's what you could see at the stock market. So ultimately, on the very long run, I think marketing will be predominantly or almost exclusively digital. There might be smaller niches like printed coffee table books and so on, yes. But ultimately, everything will be done digitally. So the question is, what share does the alternate get in that fully digitized world? And if you just look at where are people open for advertising, where do they spend the time, then I would say there's only 2 main screens that will be relevant in the future. The first one is you're very personal and private screens. That what you see if you look at the media consumption of 16-year-olds, yes, I think 95% of their private screen time is happening on their mobile device and maybe a little bit of gaming consoles on top. And any other opportunity you have is then the alternate. And I think you will, in the long run, rather balance the combination of screen consumption. And there, my feeling is having, at the moment, 9% of the advertising market. If you would include Google, Facebook and so on, in total, I think that maybe the full picture share is rather 4% or 5% for out-of-home. I think we have all potential to triple or quadruple that.
Is it the lead medium? To be honest, I don't think that advertisers in the future will think about any lead medium. The lead medium will be digital. And I think given also our market share in out-of-home and digital out-of-home and who in the out-of-home business can really benefit from such a development, then I think we will be definitely one of the winners. Our medium will grow eyeballs. We will have more digital inventory. I think we've adopted early to that programmatic development. So I think thinking in media silos is the past. It's all about your role in a digital world. And that's where we feel quite comfortable for the moment.
That sounds very, very well. May I present another question on the very short term, which is a bit more mundane. I think many people have more or less some concerns regarding the ad market in what is basically a recession. And well, I'm thinking a bit, coming from a sporting goods fashion industry right now, that many industries, what we are seeing is an excess stock situation we've seen in 2023 with basically price being the marketing tool of choice rather than advertising. And do you see basically a chance, moving into 2024, once this excess stock situation has cleared that freshness and newness and, in response, advertising recovers actually even in a recession? Any indication that you see from the behavior of your customers?
Well, you see that the ad market is less challenging overall. If you look at Nielsen's numbers today than 12 months ago and if you look at the real GDP development and the response of the ad market this year, I think it was an overreaction. So people were expecting a worse economic development, especially at the beginning of the year, and have cut back advertising spend maybe a little bit overcautious. So maybe there is a counter-development next year.
In general, I think on the long run, you always have phases when people focus either on sales, just to take out everything that is more long-term oriented in their cost behavior, and then have phases where they see if you're just trying to milk the same old cow, it doesn't work anymore. So you need to find new customers to make more money again, and new customers can be only found by promoting your products and making advertising. That's why I think '24 was definitely a year where people were looking at the lower advertising funnel. It was all about performance converting stuff immediately into sales and leaving out everything that is not ultra necessary short term. But I think sooner or later, we will also see the counter-trend again. As always, in the past, will that already happen next year? I don't know. Our feeling is based on what we see at the moment. It's not getting worse. And if things don't get worse, I think the momentum starts to get positive again. And I think that's our current best estimate.
And maybe reflecting, Jörg, on your coverage universe, like fashion retailers, and I mean, these guys were not driving our top line in the first 9 months. And they're probably not the ones that are big time in the book for Q4.
There are no further questions at this time. I hand back to Christian Schmalzl for closing comments.
Good. Thank you very much for your time, your questions. Much appreciated. And well, good luck for the rest of the year, and talk to and see you soon. Take care. Bye-bye.
Bye-bye.
Thank you.
Ladies and gentlemen, the conference has now concluded, and you may disconnect your lines. Thank you for joining, and have a pleasant [Audio Gap]