Read “Application Case 5.2: AMC Networks Is Using Analytics to Capture New Viewers, Predict Ratings, and Add Value for Advertisers in a Multichannel World,” located in Chapter 5 of the textbook.
In 50-100 words each, address the questions presented at the end of the case study.
Over the past 10 years, the cable television sector in the United States has enjoyed a period of growth that has enabled unprecedented creativity in the creation of high-quality content. AMC Networks has been at the forefront of this new golden age of tel-evision, producing a string of successful, critically acclaimed shows such as Breaking Bad, Mad Men, and The Walking Dead.Dedicated to producing quality programming and movie content for more than 30 years, AMC Networks Inc. owns and operates several of the most popular and award-winning brands in cable televi-sion, producing and delivering distinctive, compel-ling, and culturally relevant content that engages audiences across multiple platforms.Getting Ahead of the GameDespite its success, the company has no plans to rest on its laurels. As Vitaly Tsivin, SVP Business Intelligence, explains: “We have no interest in stand-ing still. Although a large percentage of our business is still linear cable TV, we need to appeal to a new generation of millennials who consume content in very different ways.“TV has evolved into a multichannel, mul-tistream business, and cable networks need to get smarter about how they market to and con-nect with audiences across all of those streams. Relying on traditional ratings data and third-party analytics providers is going to be a losing strat-egy: you need to take ownership of your data, and use it to get a richer picture of who your viewers are, what they want, and how you can keep their attention in an increasingly crowded entertainment marketplace.”
Zoning in on the ViewerThe challenge is that there is just so much information available—hundreds of billions of rows of data from industry data providers such as Nielsen and com-Score, from channels such as AMC’s TV Everywhere live Web streaming and video on-demand service, from retail partners such as iTunes and Amazon, and from third-party online video services such as Netflix and Hulu.“We can’t rely on high-level summaries; we need to be able to analyze both structured and unstructured data, minute-by-minute and viewer-by-viewer,” says Vitaly Tsivin. “We need to know who’s watching and why—and we need to know it quickly so that we can decide, for example, whether to run an ad or a promo in a particular slot during tomor-row night’s episode of Mad Men.”AMC decided it needed to develop an industry-leading analytics capability in-house—and focused on delivering this capability as quickly as possible. Instead of conducting a prolonged and expensive ven-dor and product selection process, AMC decided to leverage its existing relationship with IBM as its trusted strategic technology partner. The time and money traditionally spent on procurement were instead invested in realizing the solution—accelerating AMC’s progress on its analytics roadmap by at least 6 months.Empowering the Research DepartmentIn the past, AMC’s research team spent a large por-tion of its time processing data. Today, thanks to its new analytics tools, it is able to focus most of its energy on gaining actionable insights.“By investing in big data analytics technology from IBM, we’ve been able to increase the pace and detail of our research an order of magnitude,” says Vitaly Tsivin. “Analyses that used to take days and weeks are now possible in minutes, or even seconds.“Bringing analytics in-house will provide major ongoing cost-savings. Instead of paying hundreds of thousands of dollars to external vendors when we need some analysis done, we can do it ourselves—more quickly, more accurately, and much more cost-effectively.
We’re expecting to see a rapid return on investment.“As more sources of potential insight become available and analytics becomes more strategic to the business, an in-house approach is really the only viable way forward for any network that truly wants to gain competitive advantage from its data.”Driving Decisions with DataMany of the results delivered by this new analyt-ics capability demonstrate a real transformation in the way AMC operates. For example, the company’s business intelligence department has been able to create sophisticated statistical models that help the company refine its marketing strategies and make smarter decisions about how intensively it should promote each show.InstrumentedAMC combines ratings data with viewer information from a wide range of digital channels: its own video on-demand and live-streaming services, retailers, and online TV services.InterconnectedA powerful and comprehensive big data and analytics engine centralizes the data and makes it available to a range of descrip-tive and predictive analytics tools for accelerated modeling, report-ing, and analysis.
IntelligentAMC can predict which shows will be successful, how it should schedule them, what promos it should create, and to whom it should market them—helping to win new audience share in an increasingly competitive market.With deeper insight into viewership, AMC’s direct marketing campaigns are also much more successful. In one recent example, intelligent segmentation and lookalike modeling helped the company target new and existing viewers so effectively that AMC video on-demand trans-actions were higher than would be expected otherwise.This newfound ability to reach out to new viewers based on their individual needs and pref-erences is not just valuable for AMC—it also has huge potential value for the company’s advertising partners. AMC is currently working on providing access to its rich data sets and analytics tools as a service for advertisers, helping them fine-tune their campaigns to appeal to ever-larger audiences across both linear and digital channels.Vitaly Tsivin concludes: “Now that we can really harness the value of big data, we can build a much more attractive proposition for both consum-ers and advertisers—creating even better content, marketing it more effectively, and helping it reach a wider audience by taking full advantage of our multichannel capabilities.”
Questions for Discussion
1. What are the common challenges broadcasting companies are facing nowadays? How can ana-lytics help to alleviate these challenges?
2. How did AMC leverage analytics to enhance their business performance?
3. What were the types of text analytics and text mini solutions developed by AMC networks? Can you think of other potential uses of text mining applications in the broadcasting industry?