67 Trusted Titles ...

SAS^® Analytics on SAP Data Help the Leading Publisher in The Netherlands to Map Out its Future

Based in Hoofddorp, Sanoma Uitgevers is one of The Netherlands' largest media companies, with interests in a range of creative, media and publishing activities. Its mission is to reach as many people as possible with "infotainment" – information that is presented in an entertaining and relaxing way. The company's core business is magazine publishing, encompassing 67 titles in women's, special interest, youth and lifestyle market sectors. These titles have become respected and trusted brands, which Sanoma Uitgevers disperses through a variety of channels, particularly the Internet, but also through events, books and merchandising.

Behind the titles, there is a considerable and highly efficient back-office operation: print management and coordination, logistics, after-sales service including call center support, as well as special projects such as IT and change management.

Efficiency, for a number of reasons, is essential in a business that has become intensely competitive. Electronic media, especially the Internet and mobile telephones, have eaten into the magazine publisher's youth market, whose constituents tend to read online publications and receive ads via text and multimedia phone messaging.

Among the adult segments, out-of-town shopping malls with extended opening hours and other amenities mean that middle-aged and elderly people are spending less time at home reading magazines. Meanwhile, new technologies and reduced distribution costs have lowered the barriers to entry into the industry. There are already an ever-increasing number of free magazines available.

In 2001, to increase its efficiency, Sanoma Uitgevers began the implementation of an SAP R/3 media industry transactional system to replace the legacy environment: first rolling out advertising sales, then product sales, article sales and, finally, the various subscription sales. "Our use of SAP is now very extensive, and it has been successful in centralizing our transactional processing, which is a major cost center," says Joop J.J. Van Beek, director of production at Sanoma Uitgevers.

But while centralized transactional processing may be necessary for the survival of a creative media company, it's not enough to make the business thrive. The company needed an enterprise intelligence platform to identify opportunities for greater profitability and increased market share.

Creative use of data
"So the next challenge was to get the information out of SAP to use it creatively for marketing purposes. We have 3 million subscriber records, plus 5-6 million records of passive customers. That's a significant portion of the total Dutch population of 16 million," says Van Beek. Building up this customer base takes a lot of time and effort, and the biggest challenge for publishers of subscription magazines is the high churn rate. Therefore, Sanoma Uitgevers needs to continually refresh the subscriber base. It does this through various marketing activities to recruit new customers and retain existing ones.

With the centralization of data through SAP and the phasing out of franchise-based logistics, there was an opportunity to improve these marketing efforts. "But this means that we are now dealing with much larger volumes of data, so we have to become better at information management and intelligence than we were before," says Van Beek. "While SAP has proved to be a good system for centralizing the transactional systems, it does not provide us with the rapid and flexible access to data that we need to support strategic marketing. Also the marketers found that SAP BW tools did not meet their analytical needs." The company has more than two dozen marketers, responsible for approximately 3,000 to 4,000 campaigns per year, the majority of which are designed to increase the renewal subscription rate.

Sanoma Uitgevers started looking for a solution to extract and exploit SAP data, choosing SAS for a three-phase project, including the SAS Data Surveyor for SAP for faster and easier access. "SAP is fine for streamlining back-office functions, but you need SAS for the front-office sales and marketing activities," says Van Beek. One immediate gain of introducing SAS was to simplify the effort to get the data needed to run marketing campaigns. The publisher implemented the SAS Information Delivery Portal to provide all the routine reports, which were compiled automatically through routine extractions of SAP data using the SAS/ACCESS® interface to SAP R/3. "As a direct result of this first phase of our project, we were able to measure significant gains in terms of cost reduction and reporting time saved," says Van Beek.

Faster delivery of information
"Our marketers' time is now being spent much more productively in areas such as customer analysis," adds Jessica Haagmans, chief operating officer at Sanoma Uitgevers. But while this was a very welcome "quick win," the real benefits followed with faster reporting for marketing purposes. The second phase was to put more sophisticated analytical reporting tools directly into the hands of the marketers, to enable them to do their own precampaign selections and to analyze campaign results: what worked, what didn't and why. "Before we did this, we had lots of complaints from the marketers who said they could not do their jobs effectively while it took so long to get at SAP data," says Haagmans. "Now they are getting the reports they need."

Phase Three is the more open-ended marketing automation and optimization stage. "Our initial goal is to have fewer and smaller – but more effective and more profitable – campaigns," says Haagmans. "SAS is already helping us to eliminate the campaigns that don't deliver a return on investment," adds Van Beek. "With so many magazine titles and approximately two-thirds of the market share, most of the competition is in-house. That's healthy in many respects, but there is bound to be a lot of wastage if you do not have a firm grip on information. A single household could receive two or three different offers from us in the same week. There is a lot of internal competition since each magazine's managing editor is also the magazine's marketing manager. Without a common information platform, there is no way that the marketers can work toward common objectives," says Haagmans.

Better campaigns, less wasted effort
Campaign management allows Sanoma Uitgevers to streamline and improve the selection process for campaigns, thereby enabling marketers to focus their efforts on analytical activities where they can add value: for example, identifying successful campaigns that are reproducible and reusable for other titles. "With SAS, we have the capabilities we need, and as our confidence grows, we will be executing more and better-targeted campaigns but with less effort," says Haagmans. "SAS software is opening new horizons. The real challenges of a consolidated approach are organizational. When each title is a business unit, everyone is most concerned about their own profit and loss, and while most units will be winners, there may be some losers as well, or at least there is always that perception," says Van Beek. "One thing is for sure: We are now succeeding in areas where we could not possibly have succeeded without SAS," adds Haagmans. "It was a prerequisite for moving forward.

"So I would summarize our success in Phase Two as doing business as usual but much better. Phase Three is focused on doing new business and changing the way we do business."

Sustaining reader interest
Two subsidiaries, one focused on men's titles and the other on magazines for young families, were chosen to roll out a more customer-focused, as opposed to a title-driven, approach. "People generally read different magazines according to their current interests and their age, family status and so on. From the perspective of a managing editor, the best outcome is to keep a reader for as long as possible. But if the customer is not really happy reading that editor's title, we might eventually lose him altogether. So from an enterprise perspective, it is far more sensible to identify how and when to move a reader from one title to the next," says Haagmans.

"The challenge you then face is how to do this without annoying people who are perfectly happy to carry on reading the title. For example, 20 percent of the readers of Donald Duck magazine are outside the core 8-15 age bracket. That's a lot of revenue if you multiply it over many years of a subscription! So your models have to be very highly tuned. SAS Enterprise Miner is the ideal solution for providing the information that will help build these models," says Van Beek. "You then have to use the intelligence it generates creatively."

In a multichannel media environment it is also important to be able to integrate data on both magazine and Web usage. "We decided to use SAS Web Analytics for click-through analysis. Looking at behavior patterns on the Web can give a lot of clues as to what appeals in a magazine's content and design," says Van Beek.

"We have to adapt to the new market realities, and SAS is an important part of that process. SAS is moving our marketers from a report-based approach to an analytical model-focused approach. The end result will be that our brands will have much more personality, depth and color, because they will have a much closer relationship with the readership, for example, through Internet-based communities. And that will make them more fun and will make the marketers' jobs more interesting and more challenging. I believe this is the way forward for the magazine business," concludes Haagmans.

SAS enables Sanoma Uitgevers to access its data, improve its quality, store it intelligently, discover new trends using BI and change the way it does business. With their integrated, end-to-end solution, the publisher not only reduces costs, but generates more business opportunities than ever before.

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