Mark Maldeghem

Media Services Manager

SAS Forum BeLux 2013 :

Smarter Analytics – The answer to a changing media environment

Case study Concentra NV

Simon Blanchaert

Consultant

A small introduction …

Concentra in a few words :

NEWSPAPERS

• Het Belang van Limburg

• De Gazet van Antwerpen

• Metro

A small introduction …

Concentra in a few words :

AUDIOVISUAL

• National TV stations

• Radio

• Regional TV stations

A small introduction …

Concentra in a few words :

CLASSIFIEDS

• Hebbes.be

• Autokanaal.be

• Vakantiekanaal.be

A small introduction …

Concentra in a few words :

And many more …

A small introduction …

4C Consulting in a few words :

Trusted advisor in customer

interaction services …

A small introduction …

4C Consulting in a few words :

And a serious expertise in

data analytics !

Okay, the media industry has some good news …

Some context …

970.309

958.180

944.846

933.030

922.987

919.371

921.043 918.964

915.000

925.000

935.000

945.000

955.000

965.000

975.000

2004 2005 2006 2007 2008 2009 2010 2011

STEEP DECLINE UNTIL 2008, GENTLE DECLINE FROM 2009.

# o

f p

aid

co

pie

s

FLEMISH PAID NEWSPAPER PRINT SALES 2004 - 2011

But unfortunately, focus is needed to stabilize the print circulation …

Some context …

FLEMISH PAID NEWSPAPER DIGITAL SALES 2010 - 2012

Nevertheless …

Some context …

4900

12300

21650

0

5000

10000

15000

20000

25000

2010 2011 2012

# o

f p

aid

co

pie

s

So let’s compare !

Some context …

FLEMISH PAID NEWSPAPER DIGITAL SALES 2010 - 2012

98%

2%

PRINT

DIGITAL

So let’s compare !

Some context …

FLEMISH PAID NEWSPAPER DIGITAL SALES 2010 - 2012

98%

2%

PRINT

DIGITALOkay, there still is a long way to go !

DIGITAL SALES

Low volume, but increasing

Some context …

Allright allright, it’s clear that …

High volume, but declining

DIGITAL SALES

PAPER SALES

Low volume, but increasing

Some context …

Allright allright, it’s clear that …

What’s the strategy for the future ?

High volume, but declining

DIGITAL SALES

PAPER SALES

Low volume, but increasing

Some context …

Allright allright, it’s clear that …

Some context …

So why not bundle best of both to optimize the offer ?

Subscription sales Single – copy sales

Some context …

Sales channels

Subscription sales Single – copy sales

Some context …

Sales channels

Can we optimize this ?

TOO MANY NEWSPAPERS

Overstock

Unsold newspapers are useless

2 situations

The case …

TOO FEW NEWSPAPERS

Out of Stock

Missed sales

‘ The Newsboy problem’ : How many newspapers should I deliver to each POS ?

TOO MANY NEWSPAPERS

Overstock

Unsold newspapers are useless

2 situations

The case …

TOO FEW NEWSPAPERS

Out of Stock

Missed sales Optimal number

of newspapers ?

‘ The Newsboy problem’ : How many newspapers should I deliver to each POS ?

Traditional forecasting method: The weighted moving average

0

20

40

60

80

PAST FUTURE

X-4 X-3 X-2 X-1 X

Forecast for next Saturday : X = (X-4 * 10%) + (X-3 * 20%) + (X-2 * 30%) + (X-1 * 40%) / 4 X = (60 * 10%) + (63 * 20%) + (66 * 30%) + (68 * 40%) / 4

= 66 newspapers

The case …

0

20

40

60

80 1

1 Ignoring the upward trend

X-4 X-3 X-2 X-1 X

PAST FUTURE

Traditional forecasting method: The weighted moving average

The case …

0

20

40

60

80 1

2

1 Ignoring the upward trend Only taking 4 weeks of history into account 2

X-4 X-3 X-2 X-1 X

Traditional forecasting method: The weighted moving average

The case …

PAST FUTURE

0

100000

200000

300000

400000

500000

600000

700000

Coast POS

Stable POS

The case …

Seasonally influenced POS versus stable POS

0

20

40

60

80

The case …

PAST FUTURE

ARIMA forecasting method

0

20

40

60

80

PAST FUTURE

The case …

ARIMA forecasting method

0

20

40

60

80

PAST FUTURE

The case …

ARIMA forecasting method

Okay, now we know how much sold newspapers we can expect on average…

The case …

Okay, now we know how much sold newspapers we can expect on average…

… taking trends and seasonal effects into account …

The case …

Okay, now we know how much sold newspapers we can expect on average…

… taking trends and seasonal effects into account …

But is this is the optimal number of newspapers to deliver ?

The case …

Going a step further …

The case …

= A smart newsboy !

He expects to sell 70 newspapers

But he realizes that the average expected

demand comes with a standard error

0

0,05

0,1

0,15

0,2

0,25

64 66 68 70 72 74 76

ARIMA model output: Forecast : 70 Standard error : 2

Distribution of demand

3 2 1 0 1 2 3

Going a step further …

The case …

0

0,05

0,1

0,15

0,2

0,25

64 66 68 70 72 74 76

ARIMA model output: Forecast : 70 Standard error : 2

Distribution of demand

3 2 1 0 1 2 3

Going a step further …

The case …

0

0,05

0,1

0,15

0,2

0,25

64 66 68 70 72 74 76

ARIMA model output: Forecast : 70 Standard error : 2

Distribution of demand

3 2 1 0 1 2 3

Out of Stock

Going a step further …

The case …

0

0,05

0,1

0,15

0,2

0,25

64 66 68 70 72 74 76

ARIMA model output: Forecast : 70 Standard error : 2

Distribution of demand

3 2 1 0 1 2 3

Out of Stock Overstock

Going a step further …

The case …

“ Actually, I don’t bother with statistics,

I just want to maximize my profit “

Integration of Marginal Profit (MP) & Marginal Cost (MC)

Probability of selling an extra newspaper

* MP

Probability of NOT selling an extra newspaper

* MC

Going a step further …

The case …

Optimal number of newspapers to maximize profit ?

Formula for finding balance point

between profit & cost:

MC ----------------- MP + MC

0

0,05

0,1

0,15

0,2

0,25

62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78

Taking into account the MP & MC, we are able to deliver in 67 % of the cases

Conclusion

Our new way of forecasting …

… is completely automated …

… takes into account trends and seasonal effects …

… is optimized by balancing potential profit & costs in the forecasting process …

So how about some results ?

The case …

The planning …

Automated steering Go live Parallel evaluation period between manual and automated steering

Incorporation of additional business rules Manual steering

After Proof of Concept in 2012 :

-0,5% -0,5%

1,5%

-0,4%

0,1%

-0,3%

2,1%

0,1%

-0,4% -0,8%

1,6%

0,0%

-1,0%

-0,5%

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

% Out Of Stock

mrt/13

jul/13

sep/13

The results …

GVA Kerngebied

Keten

GVA Kerngebied Niet - Keten

HBVL Kerngebied

Keten

HBVL Kerngebied Niet - Keten

Conclusion:

A positive effect on Out of Stock copies

that are under target

Positive financial contribution

1,6%

5,2%

3,9%

2,6%

3,9% 4,2%

3,1%

1,9%

2,9%

3,5%

1,4% 1,4%

0,0%

1,0%

2,0%

3,0%

4,0%

5,0%

6,0%

% Unsold

mrt/13

jul/13

sep/13

The results …

GVA Buiten Kern

Brabantse Rand

HBVL Buiten Kern

Kempense Rand

Conclusion:

The automated steering also results in

less unsold copies

Positive financial contribution

Sounds great … And what did you learn ?

The key learnings …

Sounds great … And what did you learn ?

The key learnings …

The choice of a capable partner

Specific knowledge in advanced analytics

Project management (budget & time)

Guidance in software solutions

After sales support

The choice of a reliable software platform

Scalable solution in line with

the needs of Concentra

High computational power

Low maintenance cost

The questions …

The end …

Mark Maldeghem

Media Services Manager

Simon Blanchaert

Consultant

Thank you !