Reader's Digest Retools 'Cranky' Database Technology

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The Reader's Digest Association Inc., struggling to leave its days of flat revenue and profit behind, is completing its first major overhaul of its database marketing technology since 1969.


New investment in that area aims to help the Pleasantville, NY, publisher and direct marketer extract more value from its database of 50 million customers in the United States. It will lead to the replacement of the company's proprietary software.


"That's our CEO's directive to us -- to be cheaper, faster, better," said Kari Regan, vice president of database marketing services at Reader's Digest. "Our current system's pretty good, but it's old and cranky to maintain."


The technology changes are critical for a company known to have pioneered predictive modeling in 1967, an integrated 360-degree view of the customer in 1969 and sweepstakes promotions. Still, that has not stopped 81-year-old Reader's Digest from losing ground to nimbler, younger competitors.


In its 2003 annual report, chairman/CEO Thomas O. Ryder stated his intent to cut jobs at Reader's Digest en route to sustainable revenue in 2005. Acquisitions like Reiman Media Group help, too. That firm contributed $291 million in revenue and $32 million in operating profit to Reader's Digest's $2.5 billion revenue and $139 million in operating profit for fiscal 2003 ended June 30.


Besides layoffs, purchases for expanding customer acquisition channels, cross-selling across properties and improving margins in mature businesses by cutting marketing waste are planned. Most of the changes affect the company's database and how it is mined.


The new technologies, scheduled to go live in early spring, will affect the 500 to 600 campaigns conducted yearly by mail and telephone. Marketing pushes Reader's Digest's self-named monthly magazine and other special-interest titles, books and music.


The core of this revamp is a new campaign management and execution tool. Reader's Digest has opted for Unica Corp.'s Affinium software to plan, design, execute and evaluate direct communications to its database.


Affinium's advantages include an intuitive user interface and the ability to draw Reader's Digest customer data from disparate sources. In essence, this campaign module will scan the database and save the data to the pertinent files for meeting mail shop needs.


The publisher will start implementing Affinium into its mail process. The call center channel is next. There is no immediate schedule for integrating the e-mail efforts.


"They do expect that this will reduce costs over time as it'll reduce the expense of maintaining software," said Carol Meyers, vice president of Unica, Waltham, MA.


Reader's Digest bought the license to use Affinium. It will pay an annual maintenance fee.


Important as it is, campaign management is one of five new technologies brought in by the publisher, striving to reach out to new audiences.


For example, it has chosen Ab Initio's Extract Transform Load, or ETL, tool. This will help bring data into the database. It also will use Firstlogic for matching software for recognizing members in a household, Oracle Discoverer for business intelligence queries and SAF for analytics and modeling.


"It's the biggest database marketing investment we've made in technology," Regan said. "It's the first phase. We expect to expand it internationally later." She would not disclose the budget but said it was in the millions.


No date is set for the international rollout. But it is an equally, if not more, ambitious endeavor. Reader's Digest has another 50 million customers internationally. Reader's Digest magazine alone is published in 48 editions and 19 languages and sold in more than 60 countries.


"Initially, we're going to continue doing what we're doing," Regan said, "but over time we expect to be able to execute campaigns more rapidly and to integrate with the e-marketing channel more fully. We're not fully integrated with the e-marketing channel, and we want to link campaigns over time more completely."


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