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Felix Erken has transformed old advertising models“Don’t ever think you are ahead… or that you have lost – you can change tomorrow. We are in the most opportunistic era of classified business.”
These are the words of Felix Erken. He is a man whose business philosophy underpins 13 years of excellence. Managing director of Junk Mail in South Africa, he joined the company in 1998.
Since taking over, he has propelled the classified advertising company from sales of 60 000 to 100 000 copies per weekly edition. A total of 1.2 million online visitors weekly surf to read the Junk Mail columns.
And if you are a print media junkie with an intimate appreciation of numbers in the classified business industry, these statistics would be mind-boggling.
Erken presides over an empire with a total number of 70 000 advertisements per week, while the unique visitors on mobile are 500 000 per week.
It is little wonder a leading magazine has dubbed Erken the “King of Classifieds”.
The Junk Mail business model was simple: Unlike the newspaper classifieds that charged per line and for the number of days you ran the advertisement, Junk Mail offered free advertisements to private customers.
The organisation recovered the costs by selling the newspaper, and offered paid-for advertising to traders, as they had a targeted buyer audience that could be reached – as with the weekly car advertisements per week from private customers.
The timing of the launch of Junk Mail, however, left much to be desired; and the name did not quite inspire confidence in the quality of
the product.
Founded by a French businessman Gerald Coniel in 1992, Junk Mail challenged the newspaper giants in a tumultuous political period, as the new dawn of the first democratic dispensation in South Africa’s history was still two years away.
Economically, South Africa was hard hit by a recession in that period. It was like learning to swim in shark-infested waters. Yet, Junk Mail survived and prospered.
“We ventured in where angels feared to tread,” says Erken.
“But as we started to become successful, our name – or brand – Junk Mail became increasingly memorable and strong, even though it is not the best name.
“Junk Mail classifieds had such a positive connotation with success because everyone that used it in some way (buyer or seller) had had a positive experience with it,” he adds.
Erken did not join Junk Mail straight away.
He made an initial move to Auto Trader as sales representative in 1992. Call him a basement dweller, but he rose from relative obscurity as apprentice to managing director within two years – a breathtaking roller-coaster ride for the passionate 26-year-old South African.
And the spectacular move to the top position did not go unnoticed.
“I met Gerald Coniel of Junk Mail to discuss some joint initiative (which never materialised), and was immediately impressed by him and his business. He even tried to headhunt me during my time at Auto Trader, but I was fiercely loyal to the company I had helped start and build,” Erken relates.
“It was only two years after I left Auto Trader and gone overseas and came back, that I looked up Gerald to see if there was opportunity working with him.”
A tremendously hard worker, he was very positive and passionate about the Auto Trader product. He was one of the best performers in the company; and whenever the promotions came along, Erken eagerly grabbed them with both hands.
“I was the youngest managing director ever in the entire Auto Trader Group, by about 10 years,” he says. “The directors did recruit for the managing director’s position while I was caretaker, but found no one suitable as a replacement they felt could do the job better than me.”
Coniel’s share in growing Junk Mail should not be dismissed.
Erken joined the organisation at the height of its first phase in business. It had to move to the next phase, which entailed the strengthening of the process of managing a successful business in terms of its resources.
Thereafter, it had to grow substantially from the base it had built for itself and to prepare it to take advantage of future opportunities.
Erken was the proverbial midwife of a new birth, that of Job Mail, as a unique and independent title. It soon became the most successful product in the Junk Mail stable.
He decided to nurture the culture of Junk Mail into a more competitive and professional entity. “This was very hard”, he says, “and my intention of making us the best sales force and management team was often misinterpreted by some managers as evil. Yet, the majority of the people knew we were on the right track – and to their credit, they adapted.
“Eventually, I felt I had the full co-operation from management and their staff alike. This was critical in us moving forward.”
When Erken joined Junk Mail, it had a collective circulation of about 60 000 copies.
To address the circulation, the company had to look at titles individually and get on the news shelves. “Our biggest success story was the deployment of Junk Mail stands. Here, Gerald was brilliant,” says Erken. “Almost 50% of the stores we went to had Junk Mail stands, which was unheard of in South Africa.
“This gave us great power at the shop front – our most valuable marketing tool. I just had to make sure the basic principles of publishing and distribution were in place.
“It’s incredible how big turnarounds in companies come purely because the basics of the business are addressed,” he notes.
Perhaps the greatest and most pivotal contribution to the success of Junk Mail was the ability to get onto shelves nationally in spite of the close attention of strong competitors (read “media giants”).
“But naivety was the key,” says Erken. “We did it because it had to be done, and we did it well because we didn’t realise the absurdity of attempting to become the only print retail distribution network outside the big three newspaper distributors. Gradually, bit by bit, we did it.
“It culminated in a fully fledged distribution company capable of distributing to 10 000 outlets nationally in less than 12 hours on a Thursday – delivering over 100 titles over and above the Junk Mail titles, and without owning one vehicle in the process.
“I think we have never been given the credit we really deserve for this feat in the publishing industry in South Africa,” he adds.
“It also highlights how, if you are determined to succeed, you can – no matter the odds.”
Currently, Erken is the chief executive officer of ‘black-and-white gold’, boasting a total of a million advertisements at any given time across all the Junk Mail websites.
But no account of his amazing rags-to-riches tale would be complete without an acknowledgement of his business- and personal setbacks.
At one stage, with the advent of Google and other Internet competitors, the popularity of Junk Mail’s online ranking plummeted.
Erken is honest about his “madness on the Web”: “We had a very protective policy online for our print titles. We charged users to see our content and we only gave them the opportunity of seeing it online when our papers were being delivered, namely every Thursday.
“This had two major disadvantages for the future the Web was taking: We charged for viewing classifieds when many gave it for free. Even worse, if you placed your free advertisement online – instead of it going live immediately, the ad placer had to wait up to 10 days to start selling it.
“Then global competitors came into the market and played to the new rules. Online users were using Google more and more as part of their browsing experience online, and we weren’t even being picked up by them. So these international classifieds sites were getting more and more traffic and we were losing ours,” he explains.
“This made it clear that we had to eat our sacred cow and change our online strategy completely. We forfeited over R7 million profits for this strategy, but it didn’t matter – it was the right one.
“That’s probably where many publishing companies have become short. They have protected for too long what is not protectable for the sake of the profit that needs to be delivered for the shareholders at the end of each year,” Erken adds. “Luckily, our shareholders weren’t so blind; and that has put us in a good position three years later.”
He acknowledges that he made numerous business errors such as choosing the wrong people, not reacting quickly enough to some threats, trying to do much work himself, not trusting his gut enough, and falling prey to complacency. “Correcting it is actually easy: you just have to admit that you were wrong – that is the hardest part,” he says.
Erken did not escape personal hardships. “I am divorced, which was a low point in my life and an experience that helps me understand the world a little better. I have two beautiful kids, Isabella and Felix Jr., whom I am so sad about, as they are part of a divorced couple.
“I’m in a relationship with an incredibly inspirational, intelligent and beautiful woman from Switzerland, Marlene.
“I love my kids so much that they are in constant danger of being smothered with love and affection by me and Marlene,” he says.
Erken made a pact with his nine-year-old son that they would be spectators at every Soccer World Cup for the rest of their lives. “What a great way to bond: to see a new country and to watch the best football for the highest prize on the planet,” he says.
The German-born business leader is constantly challenging and defeating his worst enemy: complacency; and its twin brother, the comfort zone.
“I try to stay ahead of the competition by constantly monitoring my competitors and by remaining aware of the changes in the market and the factors that will change them. One needs to take all one’s competitors seriously, whether they are big or small, old or new,” says Erken.
“One can never be disappointed, or be caught unaware. One must ensure that what one is offering is always better or at least competitive in offering.
“I also believe in pushing my team every day,” he adds.
Being a leader in the qualified industry requires a fresh appreciation of the team. “You have to choose the right team because you are only as good as them in the long run,” says Erken. “The better your team, the better you will do – look after them.”
He is quick to point out that a healthy double-digit raise is not sufficient for his subordinates: “You have to develop them, engage them in the process and allow them to contribute. Give them confidence in themselves, in their product and in you – in that order.
“You have to be bold if necessary. Don’t be scared to admit your mistakes and just be a real person to your staff, your competitors and your customers.”
Erken and his company survived the global economic meltdown in 2009 and 2010 thanks partially to a conservative approach to debt.
“You have to make sure your business is run on sound business practices and strong business processes,” he says.
The company had a very tight sales credit control system, which was fundamental in assisting Junk Mail to ride what Erken calls the “perfect economic storm”.
Its exposure to bad debt is extremely low because it ensures it is well managed, he concludes.
Fanie Heyns
