Creating a unified database that delivers on its objectives and ROI is a massive undertaking. What are the make-or-break elements? Here’s what we uncovered when we put that question to AD and database marketing executives. The reasons behind media companies’ growing focus and investment in integrated customer databases are no mystery. If having a 360-degree view of customers and prospects was once a desirable goal, the online revolution—with all of its simultaneous potential and competitive implications—have made it a survival imperative. Data integration is the key to achieving the truly targeted marketing capabilities that maximize cost efficiencies and drive new audience and advertising revenue streams online, offline and in combination.
But as many sophisticated publishing companies have found over the years, creating a unified database that delivers ROI requires far more than sheer willpower and the ability to invest in systems and human resources. Success requires not only commitment to appropriate investments, but a clear vision, leadership, coordination, expertise on many levels, and discipline from inception through every stage of development and implementation.
To say that there is “no one solution” is to greatly understate the reality. The specific revenue-generating/cost efficiency objectives and challenges of b-to-b and consumer companies certainly differ—albeit less than was true in the pre-Internet world. Moreover, the optimal solution for each company obviously depends on its business model, existing data scenario, existing and desired revenue streams and goals, and initial and ongoing investment capabilities, among other factors.
The good news is that, whatever the company’s size, needs and goals, cost-effective unified database capabilities are likely within reach given a disciplined approach. This is true in no small part because of the range of options and solutions available today, in-house, off-site and hybrid. In-house options range from off-the-shelf solutions to building highly sophisticated customized systems, while outside options range from using traditional fulfillment houses’ internal or partnered solutions, to providers with new-generation relational systems that offer integrated traditional fulfillment and cross-channel environments, to partnering with one of the huge data management and business intelligence providers and tying the database to legacy fulfillment systems.
All of that said, Audience Development recently probed a sample of b-to-b and consumer audience development and database professionals experienced with these initiatives, asking them to identify the make-or-break elements and share some of their best advice.
Defining the Mission (Or, How Are We Going to Monetize This?)
Achieving internal consensus on the core missions and drivers for a database—the objectives that can realistically monetize the investment as well as longer-term goals—is the single most critical determinant of ultimate success or failure. And obvious as this might sound, it’s often the most difficult.
The key is pinning down a reasonably small number of truly achievable bottom-line objectives. And while enhancing advertising revenue streams by being able to offer more integrated yet more targeted audience buys and new products is obviously an ultimate objective for most, several b-to-b and consumer pros alike say that it’s often most realistic to focus first on marketing efficiencies and enhancements to be gained in audience development and revenue-enhancing and cost-reduction opportunities in the list rental arena to cost-justify the building and maintenance investments.
Database consultants and executives as well as audience development pros noted that unrealistic expectations or over-reliance on short-term advertising pay-offs to produce ROI have been known to undermine or derail a number of database initiatives over the years.
On one hand, among b-to-b companies, the critical end-game is the ability to identify which audience members are consumers of print magazines, newsletters, events, Webinars, white papers and other product offerings—the data needs to demonstrate to marketers that reaching the full target audience requires touching individuals through all or many of media channels offered. However, some pros point out that realizing incremental advertiser revenue can be impeded by factors ranging from lack of scale or over-segmenting (as sometimes happens with databases built strictly by brand without an accompanying corporate database) to practicalities such as overwhelmed ad sales staffs being unable to fully leverage data-based opportunities. At the opposite extreme are companies that are so focused on achieving audience marketing efficiencies that opportunities for realizing audience growth and new product development are somewhat lost in the shuffle.
On the consumer side, much as integrated cross-channel media buys may be advertisers’ and media companies’ objective—and much as some potentially revolutionary initiatives are afoot (the Time Inc./American Express Publishing sole-sponsored “Mine” magazine model, for example), practicalities as mundane as individual media buyers being focused only on page buys can prove to be obstacles.
“The advertising team wants, and will have, the ability to provide advertisers with specific demographics and transaction data about the audience, and ultimately the ability to explore cross-database partnerships with advertisers or marketers,” notes one consumer AD executive. “But having the improved audience marketing capabilities that pay for the database—not having to depend on the advertising ROI from the get-go—is a good position to be in.”
Top management’s full commitment to investment and rallying those involved at all levels behind the process is critical. But a strong case for the build and ongoing staff and maintenance costs must be pulled together to secure that C-level support, usually by a small task force devoted to spearheading the initial internal research, including gathering of desired input from key players, analysis and plan development.
One piece of advice offered by many is to be inclusive and listen carefully to all key stakeholders, but not allow the project to become mired down by trying to meet everyone’s needs or wish list.
“You can’t let the perfect be the enemy of the good,” sums up Heidi Spangler, director of circulation and audience development at b-to-b media company Questex Media Group, Inc. “It’s going to cost a lot more if you don’t know what you really want and need, or make mistakes that have to be corrected. And you have to be disciplined about determining what data need to be in there, and which types are extraneous to the core objectives, much as a given group might want to have it in there.”
Focusing on groups with numerous product offerings online and offline—who were eager to participate and could see tangible benefits that would emerge from costs—was key in accomplishing this process smoothly, reports Spangler. “It doesn’t make sense to try to force publishers or groups into a database if they don’t see the value,” she says. “You can always add them later.”
While some companies may not have this flexibility, since they need the scale to make the enterprise work, everyone agrees on determining core functionalities and tackling the project through a logical, stage-based approach.
“No matter how large the company, and whether it’s in-house or with a third party, resources are always limited, so you have to prioritize,” concurs David Ball, VP, consumer marketing for Meredith Corp., which has had an in-house integrated database for almost a decade now. “You have to determine exactly how you’re going to monetize it.”
“Identifying where the leverage is so that you can make the case to management is the hardest part,” says Liberta Abbondante, who had experience with database initiatives at other major publishers prior to joining Hearst Magazines as SVP, consumer marketing in early 2008. While this wasn’t an issue at Hearst—management was driving the database initiative and outsourcing to a major database provider was already underway when she came on board—Abbondante’s own first priority was hiring a database marketing expert with deep experience with major vendors, Charlie Swift, as VP, database strategy and marketing. “You need someone who understands both the technical and marketing sides to be the driver and liaison with the vendor,” she stresses.
Square One
How to begin planning and determining the investment for what can seem, particularly to the uninitiated, a complex and daunting process? In basic, streamlined terms, “You start with a clear understanding of how you’re going to make money, and then an understanding of the basic requirements involved in executing the processes involved in making that money,” says Hearst’s Swift. “Then you make decisions about the level of detail and timeliness of updating required. Every step has costs associated with it, and at every step, you need to be guided by which decision will maximize the monetization.” To cite one of myriad examples, the cost of having more timely updates against the fulfillment system needs to be weighed against the revenue and cost savings produced by an X-percent higher response rate projectable as a result of using fresher names.
Many decisions also require factoring in the effect on the customer experience, Swift stresses. “If a customer made a transaction an hour ago, do you want the customer service rep to have that information available? You don’t have to give every customer a Mercedes Benz level of service—service levels can be tiered,” he says. “That’s where lifetime value equations come in.”
Ball and others note that it may well pay to tap the expertise of a database consultant in the initial planning stages, to “help you conceptualize what you really want and need and anticipate the countless questions that will need to be answered to get there.” Some companies know their optimal third-party provider solution early on and can work with that partner to hone the plan. And certainly, once a third-party provider is chosen, clients rely on their expertise, best practices experience and timetables to keep the process on track and sort through decisions.
Costs run an extreme gamut, depending on specific objectives and, to some extent, the timeline. For some, building the database is a low six-figure proposition with relatively modest staff and maintenance costs thereafter; for others—very large databases—investments of up to a couple of million dollars for the build and first year of operation, followed by annual maintenance costs that can also run up to that range, are possible.
In-House Versus Outside
In Meredith’s case, an internal centralized database is much more cost-effective than using a third-party provider because of the scale and affinity of its corporate-wide audience base, with its core of some 28 million active subscribers of mostly women age 35 and older, according to Ball. Meredith has about 20 staff members working on the database, including highly experienced statisticians. Modeling, for purposes of reactivating expires, new business cross-promotions and gift subscriptions alone yields response lifts and mailing and promotion efficiencies that more than pay for the database costs, he reports. “Sixty percent of our acquisition mailings are to house lists, and the vast majority of these are modeled names.” That’s not counting significant revenues realized through the ability to model and target names across brands for list rental partners.
At the other end of the in-house range, small publishers with highly focused needs may have extremely inexpensive options. One small b-to-b that focused on achieving fewer than a handful of “leverage points” is spending just a few thousand dollars per year to license off-the-shelf software plus the costs of two part-time support personnel, reports one consultant.
However, in-house is not the solution chosen by most. While in-house may enable greater customization and flexibility, outside providers bring a wealth of readily available solutions, resources and partnerships to the table and are often the most cost-effective solution, if chosen wisely. “You need to factor in the ongoing costs of keeping database technology up-to-date—trying to do that in-house as opposed to having those costs borne by an outside provider,” points out Denise Robbins, VP, group director, circulation for NewBay Media.
“You must select a vendor that truly understands your business model and marketing objectives, as well as having the needed systems and technical capabilities,” adds Abbondante, who reports that having access to fresher names and use of modeling for mailings alone is enabling more targeted offers and producing 25 percent to 40 percent response lifts that are yielding significant bottom-line results (with matching of online/offline sources and data appending for email marketing enhancements yet to be tapped).
Choosing a vendor requires consolidating the determined objectives and specific needs into an RFP sent to select vendors, of course. And as would be expected, the larger and more complex the project, generally the more detailed and complex the RFP. (Note: With large database providers, the RFP process itself can sometimes require significant upfront investment.)
However, Toni Nevitt, president of online audience development consultancy eMediaAdvantage and a veteran of many database projects, suggests that, in some cases, it may be possible to quickly narrow down the field of vendors that are viable RFP recipients by first approaching the potential field of candidates somewhat informally, armed with the budget, timeline and basic objectives.
It’s no secret that, particularly for consumer publishers, there can be challenges involved where an outside relational database needs to tie to legacy fulfillment systems designed for cost-effectively handling magazine fulfillment. Tying postal addresses to Web and email customer data is “still an imperfect science,” says Joe Furgiuele, president of FCI Systems, speaking from the database consultancy side of his business. Legacy systems weren’t designed to handle multiple, simultaneous transactions (such as combo sales) or relatively special cases (like extending a subscription term), and confusion regarding source origin is a common challenge, he and others point out.
Compatibility and timing/updating issues must be sorted out to maintain core fulfillment and auditing functions while trying to best leverage the capabilities of the integrated database. “At this point, publishers may have 25 percent or more of new names coming in through the Internet, but the data’s going into old flat-file silos first,” says another database consultant. “Updating or running all of the data elements in the two environments isn’t realistic more often than every two or three days or once a week, if that. At some point, you’ve got to make the data cut-off and hand-off decisions. Obviously, this isn’t a truly real-time scenario, compromises are necessary.”
The Nitty Gritty: Key Points
Identifying and understanding all of the data sources within a company can be a fairly massive undertaking in and of itself, at least when you’re starting from scratch. But that’s just the beginning, from a technical standpoint.
Still, on a macro basis, the core challenges essentially come down to three, according to Swift: Having clean and standardized customer data; an environment flexible enough to provide the needed data access; and a structure and processes that match customer data together most effectively.
Achieving clean, standardized data—the complex process that includes mapping data that’s been captured and coded in different ways, often across multiple platforms and systems—is one that audience development executives also never fail to mention as one of the most time-consuming, as well as critical, aspects of the process.
“It’s not so much where the data resides as getting the data to ‘talk’ and flow together,” says Kate Spellman, SVP, strategic marketing and business development for the Everything Channel, a United Business Media Limited division devoted to offering a “complete channel solution” for technology marketers.
“Be prepared to have your head spinning at some points during the mapping process, as you’re sorting through codes, pouring over spreadsheets and making decisions about a huge number of questions,” warns Questex’s Spangler.
Swift’s second major must—a database environment that’s sufficiently flexible—addresses the need to have ready access to key marketing data across all customer contact points, including direct mail sources, the Web and email, as well as the timeliness needed to support monetized objectives. When updating the database against flat fulfillment files, “you don’t need all data to be accessible in real time, but you need enough flexibility to support timeliness for specific needs,” he says.
One major component of the third must—ensuring optimally effective matching of customer data across print subscribers, email addresses and online registrants—requires careful thinking through of the strategy that will enable the database to execute the matches. “For example, if you’re on our site, and there’s no match showing, maybe the system prompts you to log in with an email address,” Swift notes.
This component also requires thinking through important decisions relating to the “cost of being wrong” on matches. Risking a certain degree of wrong matches on personalized marketing messages may be acceptable, but zero error tolerance must apply to credit card data, for example.
If you get these three core components of the database right, you’re then in a position to build predictive tools, segmentation and other capabilities that will enable the core objectives that produce sustainable ROI, Swift concludes.
Bringing us to another point made by virtually every pro interviewed: Demonstrating ROI to top management is a never-ending process. “You must always be making the case to management to justify the continuing investments,” sums up one AD executive.
Boiling It Down
Framing a Database Build-out, Step by Step
01. Form a task force to spearhead the initial research.
02. Avoid getting bogged down by “special interests.”
03. Achieve consensus on the core missions of the database. These must include realistic monetization objectives as well as longer-term goals.
04. Focus on tangible benefits first, and those product groupings that can benefit the most. Marketing efficiencies and
revenue-enhancing opportunities with list rental are often good places to start with cost justification.
05. Get a full commitment from management.
06. Avoid a reliance on short-term pay-offs, this can undermine the plan.
07. Balance audience growth objectives with incremental revenue opportunities.
08. Position development costs directly against comparable future monetization or cost savings opportunities.
09. Identify and understand all your data sources.
10. Have clean and standardized data.
11. If going with an outside vendor, the larger the service the more complicated the RFP.
12. Tying an outside relational database to a legacy fulfillment system is still “an imperfect science.”
13. Be prepared to sort out the timing and compatibility issues with core fulfillment and auditing functions and the new capabilities of the integrated database.
14. Remember that demonstrating ROI to management is a never-ending process.