Complex business problems in a creative world require creative solutions. In the entertainment industry, analyzing promotions – that is, the selling mechanism for specific media releases – falls neatly into that category. Alas, that is probably the only aspect of the topic that is neat. Promotions intersect nearly every dimension of the business, often in very creative ways in order to generate synergy among the products, titles and properties at a given time. This results in a complex fabric of relationships between the promotions and these intersecting dimensions. For larger studios, the sheer volume of both new releases and catalog items (products that are not in the early stages of their life cycle) makes it difficult for the human being to grasp it all. Nevertheless, it is a critical part of the entertainment company. 

Typically, the discussion of promotions centers on the Home Entertainment segment of the studio business. This includes such product areas as DVDs, audio CDs, and computer games. However, promotion management and analysis pertains to any product that is offered in special ways with unique combinations of pricing, terms, configurations, and product synergy. While no two studios take the same approach, many today apply some degree of business intelligence (BI) to the management and analysis of their promotions process. Before looking at the impact of business intelligence on promotions analysis, it is instructive to examine briefly some of the basic elements and business dimensions of the topic. 

As mentioned, promotions are the selling mechanism for a media release. This mechanism is how the studio packages products for sale into the various channels (e.g., distribution, retailers, clubs). The promotion itself comes in a variety of “flavors.” Some are focused on the new release of a title. Others are structured to promote catalog items, some of which may have been on the market for years. Still others target the re-release of a title, perhaps one that has been on sales moratorium.  

The central business dimension in promotions is that of product. However, a product never stands alone in a promotion, even a new release. First, there are likely several versions of the title (e.g., wide-screen, extended version, Spanish language) all being released at once. In addition, the studio may wish to include other items that promote studio synergy with the release. This could include other titles with the same director or artists, or other releases from the same franchise. The promotion might also include products outside the specific medium of the release (e.g., a related game packaged with or sold alongside a DVD). The bottom line is that each promotion will contain a unique mix of products specific to that selling effort. To make matters even more interesting, several multipack configurations may be offered on the same promotions, with each combination potentially offering different selling terms. 

Of course, time, customer, and customer terms are also obligatory dimensions in promotion analysis. Customer terms may include advertising co-op levels, market development funds allowances, return % accruals, and dating terms. Each of these dimensions will also require analysis across any number of attributes such as street date, promotion begin/end date, title type (e.g., hits, catalog, new release), genre (e.g., family, mystery, sci-fi), channel (e.g., distributor, retail), or customer size. Needless to say, promotions themselves – along with any hierarchy created by the business – constitute yet another dimension. All of these elements make for a tremendously complex business structure to comprehend. 

In general, the basic components of a promotion (e.g., SKUs, begin date, end date, goals) are normally handled in an operational system, not at the business intelligence layer. In some cases, promotions are managed in a customer relationship management (CRM) system. In others, the studio may have a custom-built promotion system. In all cases, good promotion management presupposes a common business language (CBL) tying all the various and competing nomenclatures and hierarchies of the underlying systems together into a single language of the business. These systems may include promotions, CRM, orders, bill of materials, demand planning, GL, or others. In addition, some form of data warehouse is desirable for a cleansed, consistent view of the data. Figure 1 shows a typical high-level architecture for information management. 

Figure 1: Promotion Analysis Architecture 

In the case studies researched for this article, many different types of business intelligence applications were observed. Clearly evident is the variety of both analytic and presentation approaches being deployed in the industry. From the analytic functions, some applications were product-centric, allowing a cross reference between promotions and products, with the respective hierarchies for both intact. Basic measures included both units and dollars. Other applications were used to track promotions by week. Still others were used to perform such diverse tasks as calculate sales bonuses and distributor rebates, and to print date sheets and announce letters. 

The method of data presentation was also varied. In addition to analytic applications in which data was retrieved through Excel spreadsheets for drilling, analysis, and reporting, data was also delivered to a variety of applications on corporate portals including executive dashboards, canned reports, and report decks. Basic information included:

• Performance Measures
• Units and Revenue Invoiced (single or multipack)
• Units and Revenue Shipped (single or multipack)
• Retail Revenue
• Units and Revenue Returned
• Gross Margin and Gross Margin %
• Year on Year Comparisons by Promotion Type
• Shipped Units/Revenue as % of Customer Total
• Shipped Units/Revenue as % of Product Total
• Goal Measures
• Units and Revenue Goals by Promotion
• Units/Revenue Invoiced/Shipped Compared to Goal
• Spend Measures
• Co-op Spend
• Customer Marketing Funds
• Trade-Specific Funds
• Special Program Funds
• Placement Fees 

Beyond these basics, the companies developed analytic constructs to meet their individual needs. Analysis of POS decay, returns, ad placement effectiveness, and profitability are just a few of the applications built on this foundation.  

The value to these businesses has been enormous. The key benefits are:

• Improved decision making through multidimensional reporting and analysis. This is not to be underestimated. As the business changes, the need to ask new questions in real time has become more critical.
• Reduced time/cost of report and dashboard creation. Creation of a new report no longer requires a discrete IT project. Many new reports can be designed directly in the front-end tools. Delivery of data is optimized for retrieval, and many manual steps are eliminated.
• Improved revenue and margins through better understanding of the underlying relationships and promotion drivers. Visibility to cause and effect, and comparisons of like promotions across years allows for refining of promotion design. 

The studios interviewed for this article were understandably reluctant to share specific metrics for return on investment. One, however, volunteered that their suite of applications is used heavily in their weekly “situation room” meeting. The purchase activity of key accounts is scrutinized promotion by promotion, with under-performers being spotlighted for additional investigation. Where an identifiable problem exists, the team can be proactive by increasing incentives or even getting the brand team involved. 

These benefits derive largely from the ability to model the complex dimensions and relationships in a way understandable to the human being at all levels of the organization. It also takes the day-to-day effort out of the hands of the IT staff and places it squarely where it belongs – in the hands of the knowledge users. This allows IT to focus on maintaining the underlying systems and data. Finally, business intelligence modeling allows the data to be made available quickly for a targeted use, whether through easy pivot and drill or through efficient consolidation up to an executive dashboard.  

Today, business intelligence tools and platforms abound and companies already have one or more in house. In fact, most studio IT shops have established an enterprise BI platform that putatively meets 80% of the company’s needs. Unfortunately, even today, so many of these platforms – along with the investment they represent – are hugely underutilized in practice. Budgetary considerations are important, but business intelligence will not yield a return on the investment if it is not used. In entertainment, as in all other verticals, the majority of the cost of business intelligence is not in the modeling, or even the cost of the platform, but in the modeling and cleansing of the underlying data. There is nothing like a business intelligence project for putting your company’s data under a microscope. 

Media promotions represent an outstanding example of how the complexities of the business world can be modeled in a way that is flexible and understandable. With good data design and careful stewardship, business intelligence can be used to tighten business processes, tune performance, and respond quickly to changes in the market. How creative you can be with your solution is up to you. 

SOURCE: Complexity Cubed