The advertising challenge is twofold: digital transformation requires a new type of product strategy and the competition is harder. But is declining ad revenue in news media actually connected to the demand for better products and stiffer competition?

Mittmedia decided to combine business development and data science in an effort to rethink and rediscover its market potential. By using data science to find causation between stale organisational strategies and retention of advertising clients, Mittmedia challenges the notion that platform giants are taking clients.

The data from our study actually showed that Mittmedia itself was pushing clients away. From this knowledge, Mittmedia has restructured its business development in line with a strategy better suited for customer retention.  

Clients contacted only on a sporadic basis are more likely to churn or place smaller orders.
Clients contacted only on a sporadic basis are more likely to churn or place smaller orders.

By crunching historical data from digital and print advertising, Mittmedia started to see patterns in how ad revenue could be predicted based on customer retention.

Often the sales organisation tends to approach customers from a short-term perspective, mainly focusing on those that could potentially place large orders and thereby help the organisation (or individual seller) reach the revenue goal for the current month.

Data shows an ad client often only is contacted based on the likelihood estimated (by the salesperson) that the client might place a large order within the coming days. However, data also shows a very high probability that clients who are contacted only sporadically will place smaller and smaller orders.

An extended time period between each point of contact from the salesperson increases the risk of churn greatly. This is especially true for companies that have seasonal revenue streams, which sometimes means contact between Mittmedia and the client only occurs once a year.

Repeated sales contact as part of an ongoing relationship with a client correlates with an increase in the average campaign order size.
Repeated sales contact as part of an ongoing relationship with a client correlates with an increase in the average campaign order size.

However, Mittmedia also is able to conclude that in cases when a salesperson has an ongoing relationship with a client, even throughout off-seasons, the average campaign order size increases over time. Few companies tend to churn in the middle of an ongoing advertising campaign based on a long-time strategy.

For Mittmedia, the objectives in researching and acting on parameters that drive churn in the advertisement customer base are, therefore, rooted in redefining the sales process. The sales force should base their goals and objectives on the insight that retention, rather than acquisition, is the key to revenue growth (which mirrors the common knowledge from the paid content business model).

Armed with insights on how Mittmedia’s traditional sales processes prevented a desired long-term retention of advertising clients, the company decided to start a process that analysed our customer journey. The goal was that from a customer point of view, we could identify pains in the process and make organisational improvements.

We found that much of the change needed to start at the top. During the early summer of 2019, the B2B executives within the organisation decided on a path forward that introduced new retention strategies to the entire sales force. In line with this, the company integrated a new competence training package and certification process.

The key performance indicators (KPIs) also were changed in line with the results produced by the data science work that laid the foundation for the project. The new KPIs are now measuring customer growth over time and sales revenue on yearly basis, instead of the previous monthly monitoring.

The effects of these changes are still being reviewed since a large part of the advertising business is seasonally driven and requires a long time frame for patterns to emerge. When we look at the statistics for the final months of 2018, we did see a clear retention improvement in our display business.