Smart strategy + big data = smart data
November 10, 2017

For obvious reasons, news publishers have been diligently, and in some cases desperately, re-evaluating their business approach during the past decade, says Anton Jolkovski. Where the aim once was to maximise the value of individual transactions, now it is to maintain and maximise the long-term value of customer relationships. Instinct and intuition, once the main influencers of business decisions, are being replaced by data-analysis technology

The traditional approach was to grow an audience – in print and/or online – and sell that audience to advertisers. The larger the audience numbers, the higher the ad rates. Thus ‘gaming’ audience measurements became an end in itself. The value of transactions with advertisers was maximised, but only by milking consumers for all they were worth. In many cases, the consumer was pushed to accept bundles of paper they did not want, view streams of meaningless photos on web pages, or worse.

Obviously, that is no way to treat someone if you are interested in maintaining a long-term, mutually beneficial relationship with them. And publishers urgently need to develop those relationships. Print advertising revenue continues to fall – dramatically in some countries – and digital ad revenue is growing much too slowly to compensate for the drop.

Big data and mobile computing concept. Hand holding silver table

So audiences must take centre stage. In 2014, global newspaper circulation revenues exceeded advertising revenues for the first time this century, and the disparity grew in the following year, according to World Press Trends. In 2015, US$89 million came from print and digital circulation, while $79 billion came from advertising, the report said. “More and more newspapers are focusing on developing meaningful relationships and engagement with their audiences, providing high-quality content, and transforming this into healthy revenue,” according to World Press Trends 2016. Keeping and growing audiences means finding out as much as possible about the people who comprise them (within legal and ethical bounds, of course) and giving each one what they need – even if some transactions sacrifice revenues in the short run. The new KPI is long-term revenue per subscriber.

Mass approach evolves into granularity
That’s where advances in data-collection and analysis technology, often referred to as ‘big data’, come in. As technology enables publishers to keep tabs on individual customers’ activities, a mass approach to statistics is giving way to what might be called a ‘granular’ approach. Each customer or potential customer can be addressed as a unique entity – but can still be grouped with others with similar characteristics when it comes time to discern trends and formulate tactics.

In fact, it is possible to quantify almost every aspect of customers’ activities and chart interrelations among them. Such mind-boggling possibilities may give rise to the temptation to invest large sums in systems and specialists, to engage in big data for big data’s sake. As Xavier van Leeuwe of Netherlands-based NRC describes in the introduction to Chapter 1 of the first report in WAN-IFRA’s Smart Data series (see box), such an engagement can easily become an expensive dead end:

“A few years back, I entered the office for my first day on a new job. The very first question my new boss shot at me was, ‘Do we keep the data warehouse?’ It cost half-a-million euros per year in maintenance alone, and there were millions of euros in sunk costs from the isolated staff of analysts who had worked at it for years – but nobody seemed to know what to actually do with the data. I decided to start talking to the analyst who was operating the system. I quickly noticed he was an extremely intelligent man.

“Nonetheless, our conversation did not go smoothly. He kept on telling me what data points were available. ‘Look at that connection with the retail information. We can visualise things,’ he said. But every time I asked him how we could put this data to use, he told me that was an inappropriate question. That deeply puzzled me. I did not understand what he meant. Inappropriate?

“So I went on to talk to the marketers. They had heard that the data warehouse could do great things, that the data warehouse had lots of connections. But they were not using the data, because they didn’t know what to do with it. I thought, how could this have happened? After a week, I decided to get rid of the entire data warehouse, since it was only costing us money.

“I now understand what was going on back then, and I see the same problem in many organisations: There is a small group of analysts who understand the power of data. They receive a budget, lock themselves up in a room with other specialists, and emerge a few months later, telling the businesspeople they have this cool thing that will improve the company. But the businesspeople are too busy selling stuff, visiting clients, and producing the product. The businesspeople are disconnected. And because these businesspeople have trusted their gut instincts for so many years, they will not change their inner compass just because some nerds say they know better about the business and clients.

“So we threw out an entire data warehouse only to build a new one years later – this time run by businesspeople.”

Closely heed the human factors
The first report, titled ‘How to make data work for your news organisation’, is, among other things, a caveat: Technology is only a tool, and publishers should start by making better use of the data they already possess – and closely heed the human factors that can make all the difference.

Big data is indeed a potentially valuable tool, but ‘smart data’ means putting that tool to use as part of a strategic approach that increases revenues.

Van Leeuwe, his NRC colleague Matthijs van de Peppel, and Matt Lindsay of Mather Economics have gathered extensive experience with smart data – and can point to substantial success. At NRC Handelsblad, they used analytics and other customer-relationship tools to turn readership decline into sustainable growth and point revenue development back in the right direction.

The three decided to share their experiences and knowledge by writing a book, How to Succeed in the Relationship Economy: Make Data Work for You, Empathise with Customers, Grow Valuable Relationships. They generously agreed to let WAN-IFRA publish excerpts from the book in this series of three reports.

Lessons learned from the first report
When it comes to analytics, put businesspeople in the lead (the anecdote above indicates why).
Dare to question your KPIs: are these the drivers of real value?
Always start data projects with a positive business case.
There’s an ethical threshold for storing data.
The first millions in extra revenue will probably comefrom understanding the basics of your business.
The second report in the Smart Data series, tentatively titled ‘Build valuable relationships’, explains how to use data to attract the right customers – ones who are willing to commit to a longer-term relationship – and how to keep those relationships going by understanding the influence of pricing.

Highlights from the second report
Targeted pricing can increase revenue substantially while minimising customer losses.
Don’t let the gut define prices (it never beats data).
If it’s about pricing, analyse real behaviour.
Forget group averages; understand individual performance.
Learn what emotionally drives and what burdens salespeople.
The third report in the series, tentatively titled ‘Sustain relationships by improving customer experience’, will explain how organisations get to a higher level by stepping into their customers’ shoes. It will be published in early autumn. Some highlights from the third report:
Listening to real people complements listening through data.
Once you’ve been in the shoes of your customer, you can’t go back.
Belief in customer experience has the power to break down silos.
Management has to be personally involved in customer experience projects.
Maintaining relationships doesn’t have to cost a lot of money.

(The writer is WAN-IFRA’s managing editor. This article appeared in the April – May 2017 issue of World News Publishing Focus.)

October 2017