1) Concentra is a Belgian media company that publishes newspapers, operates TV and radio stations, and runs classified advertising sites. They were facing declining print circulation and sought to optimize digital and print sales. 2) Concentra partnered with 4C Consulting to implement an automated forecasting system using ARIMA models to predict print sales. This took trends, seasonality, and uncertainty into account to determine optimal newspaper delivery quantities. 3) The results of the new system showed reductions in unsold and out-of-stock newspapers, contributing positively to Concentra's finances. Concentra concluded the partnership provided an effective, scalable solution with ongoing support.

1. SAS Forum BeLux 2013 :
Smarter Analytics – The answer to a changing media environment
Case study Concentra NV
Mark Maldeghem
Media Services
Manager
Simon Blanchaert
Consultant

2. A small introduction …
Concentra in a few words :
NEWSPAPERS
• Het Belang van Limburg
• De Gazet van Antwerpen
• Metro

3. A small introduction …
Concentra in a few words :
AUDIOVISUAL
• National TV stations
• Radio
• Regional TV stations

4. A small introduction …
Concentra in a few words :
CLASSIFIEDS
• Hebbes.be
• Autokanaal.be
• Vakantiekanaal.be

5. A small introduction …
Concentra in a few words :
And many more …

6. A small introduction …
4C Consulting in a few words :
Trusted advisor in customer
interaction services …

7. A small introduction …
4C Consulting in a few words :
And a serious expertise in
data analytics !

8. Some context …
Okay, the media industry has some good news …

9. Some context …
But unfortunately, focus is needed to stabilize the print circulation …
975.000
970.309
# of paid copies
965.000
STEEP DECLINE UNTIL 2008,
GENTLE DECLINE FROM 2009.
958.180
955.000
945.000
944.846
935.000
933.030
925.000
922.987
921.043
918.964
919.371
915.000
2004
2005
2006
2007
2008
2009
2010
FLEMISH PAID NEWSPAPER PRINT SALES 2004 - 2011
2011

10. Some context …
Nevertheless …
25000
21650
# of paid copies
20000
15000
12300
10000
4900
5000
0
2010
2011
2012
FLEMISH PAID NEWSPAPER DIGITAL SALES 2010 - 2012

11. Some context …
So let’s compare !
2%
PRINT
DIGITAL
98%
FLEMISH PAID NEWSPAPER DIGITAL SALES 2010 - 2012

12. Some context …
So let’s compare !
2%
Okay, there still is
a long way to go !
PRINT
DIGITAL
98%
FLEMISH PAID NEWSPAPER DIGITAL SALES 2010 - 2012

13. Some context …
Allright allright, it’s clear that …
Low volume, but increasing
DIGITAL SALES

14. Some context …
Allright allright, it’s clear that …
Low volume, but increasing
DIGITAL SALES
PAPER SALES
High volume, but declining

15. Some context …
Allright allright, it’s clear that …
Low volume, but increasing
DIGITAL SALES
PAPER SALES
What’s the strategy for the future ?
High volume, but declining

16. Some context …
So why not bundle best of both to optimize the offer ?

17. Some context …
Sales channels
Subscription sales
Single – copy sales

18. Some context …
Sales channels
Subscription sales
Single – copy sales
Can we optimize this ?

19. The case …
‘ The Newsboy problem’ :
How many newspapers should I deliver to each POS ?
TOO MANY
NEWSPAPERS
2 situations
TOO FEW
NEWSPAPERS
Overstock
Out of Stock
Unsold newspapers are useless
Missed sales

20. The case …
‘ The Newsboy problem’ :
How many newspapers should I deliver to each POS ?
TOO MANY
NEWSPAPERS
2 situations
Overstock
Unsold newspapers are useless
TOO FEW
NEWSPAPERS
Out of Stock
Optimal number
of newspapers ?
Missed sales

21. The case …
Traditional forecasting method:
The weighted moving average
PAST
80
60
X-4
X-3
X-2
X-1
FUTURE
X
40
20
0
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

22. The case …
Traditional forecasting method:
The weighted moving average
PAST
80
60
X-4
X-3
40
20
0
1
Ignoring the upward trend
X-2
X-1
FUTURE
X
1

23. The case …
Traditional forecasting method:
The weighted moving average
PAST
80
60
X-4
X-2
X-3
X-1
40
20
2
0
1
2
Ignoring the upward trend
Only taking 4 weeks of history into account
FUTURE
X
1

24. The case …
Seasonally influenced POS versus stable POS
700000
600000
500000
400000
300000
Coast POS
Stable POS
200000
100000
0

25. The case …
ARIMA forecasting method
PAST
80
60
40
20
0
FUTURE

26. The case …
ARIMA forecasting method
PAST
80
60
40
20
0
FUTURE

27. The case …
ARIMA forecasting method
PAST
80
60
40
20
0
FUTURE

28. The case …
Okay, now we know how much
sold newspapers we can expect on average…

29. The case …
Okay, now we know how much
sold newspapers we can expect on average…
… taking trends and seasonal effects into account …

30. 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 ?

31. The case …
Going a step further …
ARIMA model output:
Forecast : 70 Standard error : 2
= A smart newsboy !
He expects to sell
70 newspapers
Distribution of demand
0,25
0,2
0,15
But he realizes that the
average expected
demand comes with a
standard error
0,1
0,05
0
64 66 68 70 72 74 76
3 2 1 0 1 2 3

32. The case …
Going a step further …
ARIMA model output:
Forecast : 70 Standard error : 2
Distribution of demand
0,25
0,2
0,15
0,1
0,05
0
64 66 68 70 72 74 76
3 2 1 0 1 2 3

33. The case …
Going a step further …
ARIMA model output:
Forecast : 70 Standard error : 2
Distribution of demand
0,25
0,2
0,15
Out of Stock
0,1
0,05
0
64 66 68 70 72 74 76
3 2 1 0 1 2 3

34. The case …
Going a step further …
ARIMA model output:
Forecast : 70 Standard error : 2
Distribution of demand
0,25
0,2
0,15
Out of Stock
Overstock
0,1
0,05
0
64 66 68 70 72 74 76
3 2 1 0 1 2 3

35. The case …
Going a step further …
“ 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

36. The case …
Going a step further …
Optimal number of newspapers to maximize profit ?
Formula for finding
balance point
between profit &
cost:
0,25
MC
----------------MP + MC
0,05
0,2
0,15
0,1
0
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

37. The case …
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 ?

38. The planning …
After Proof of Concept in 2012 :
Automated steering Go live
Manual steering
Parallel evaluation period
between manual and
automated steering
Incorporation of additional
business rules

39. The results …
% Out Of Stock
Conclusion:
2,5%
2,1%
2,0%
A positive effect on
Out of Stock copies
that are under target
1,5%
1,5%
1,6%
mrt/13
1,0%
jul/13
0,5%
Positive financial
contribution
0,1%
sep/13
0,1%
0,0%
0,0%
-0,5%
-0,5%
-1,0%
-0,4%
GVA
Kerngebied
Keten
-0,3%
-0,5%
-0,4%
-0,8%
GVA
Kerngebied
Niet - Keten
HBVL
Kerngebied
Keten
HBVL
Kerngebied
Niet - Keten

40. The results …
% Unsold
Conclusion:
6,0%
5,2%
The automated
steering also results in
less unsold copies
5,0%
4,2%
3,9%
4,0%
mrt/13
3,5%
2,0%
3,1%
2,9%
3,0%
Positive financial
contribution
3,9%
jul/13
2,6%
sep/13
1,9%
1,6%
1,4%
1,4%
1,0%
0,0%
GVA Buiten
Kern
Brabantse
Rand
HBVL
Buiten Kern
Kempense
Rand

41. The key learnings …
Sounds great … And what did you learn ?

42. The key learnings …
Sounds great … And what did you learn ?
The choice of a capable
partner
The choice of a reliable
software platform
Specific knowledge in
advanced analytics
Scalable solution in line with
the needs of Concentra
Project management
(budget & time)
High computational power
Guidance in software solutions
Low maintenance cost
After sales support

43. The questions …

44. The end …
Mark Maldeghem
Media Services
Manager
Thank you !
Simon Blanchaert
Consultant