Price is nice, but not all, for AOL

Chris Davis of internet provider AOL Broadband tells Andy Knaggs how outsourcing print procurement has added value to the business.

Chris Davis finds that his opinion of print management has taken an about-turn these days. Davis, the marketing operations director for AOL Broadband, the UK’s third largest broadband internet provider, first came across print managers several years ago, while working at a marketing agency.

“When I used to talk to print management agencies I thought really it was money for old rope. They were known as print farmers then, and I thought that they just knew lots of printers, and that was how they worked. I couldn’t really see the sense of it at the time, because I reckoned they weren’t offering anything we couldn’t do ourselves.”

You’ve guessed the punch line though. In September 2006 AOL Broadband, which is part of The Carphone Warehouse Group of companies, began a print management relationship with AccessPlus, and Davis can admit with a smile that “without doubt the amount of value that companies like AccessPlus add to the relationship has changed my view totally”.

The contract with AccessPlus, a three year deal subject to annual reviews, was the first time the internet company had outsourced its print, and covers the full range of AOL’s marketing print, including direct mail, point of sale and now fulfilment as well. Print is very important in the firm’s marketing mix, says Davis. It does not print as much as it once did, having moved on from the days of “carpet bombing” consumers with mailers, to a more targeted approach, but the operation is still huge.

Davis is enjoying the cost savings, obviously, but most of all he appreciates the way that employing a specialist print management company has simplified the management and organisation of a previously in-house function. He rates the removal of that burden above the cost saving.

“When I came here three years ago we had a team of five people running print procurement. My team was originally called marketing services. It offered a studio and a print management service to the rest of the business. But marketing managers were choosing what they wanted to put through the internal studio, and we had some agency suppliers that were doing print management as well, so it was not all going through AOL’s procurement people,” explains Davis.

“That’s when I started looking at the validity of having that resource in-house, and whether we could get a greater depth of knowledge and still maintain our service levels and cost levels. That’s how I got back involved with print management.”

Davis had met AccessPlus’s chief executive Jason Cromack some ten years before, when Davis’s then marketing agency, Manifesto Marketing, had been handling a direct mail project for travel operator First Choice, and brought the print manager in to assist. “We did not have the knowledge in-house to run what was a complicated DM campaign with a lot of personalisation,” says Davis.

"There were two companies that could both offer all the right services, but culturally were quite different. To a large degree it was that aspect that saw us choose AccessPlus – there was a better chemistry."

Soon after he moved away from the agency and became vice president of Creative Services for Universal Pictures International. All the print was handled by Universal’s agencies so Davis had no direct contact with printers, and consequently print management fell “off the radar”.

It remained so until Davis came to consider the value of his five-strong studio and procurement team at AOL. He emphasises that the team was talented and the system did work: “The trouble was, the work they were being given was ad hoc. It was an internal structure that needed to change within AOL. They were not being given the work mainly because people just did not realise the process or the benefits of putting it through them.”

The two main objectives were to simplify the whole process, removing the non-core area of expertise of managing the production and fulfilment team, and to realise cost benefits that might be redeployed elsewhere in the marketing budget on more acquisition or retention activity. Having received backing from the top of AOL to go out and find a print management company to replace the internal operation, Davis set about researching suppliers.

He wanted an all-rounder – a print management company that had expertise across several areas. “I really wanted to be able to go to them in the morning and talk about a new free standing unit we want to go in-store, and then in the afternoon talk about a DM piece. I need an agency that has that knowledge inhouse,” says Davis.

“I approached five different companies, and over a period of time honed that down to two. Then we held a pitch between the two. They were two companies that could both offer all the right services, but culturally were quite different. To a large degree it was that aspect that saw us choose AccessPlus – there was a better chemistry. Ultimately it was culture and the fact that I knew Jason could deliver.

“It was very involved though; we didn’t just go out and hire anybody on our gut feel. We put together different scenarios, different print packages we would want them to look at, gave them our previous year’s print volumes, and got them to do quite an in-depth pitch.”

Having appointed AccessPlus, the five-strong team had to be reduced to one, and the other staff members were offered the chance to “TUPE” across to the incoming supplier. This was a stipulation of the original tender, and the fact that none took up the option was due to each individual’s particular circumstances, rather than any ill feeling about the change, Davis stresses.

Nevertheless, there had to be some management of the changeover, more so within the wider community of AOL Broadband, which wanted to ensure its friends and colleagues were treated well.

“We needed to manage the people that were leaving the business, and it did go very well. They were well looked after, and there has been no animosity and continues not to be,” says Davis. “There was also a certain amount of selling the idea internally but we showed them the benefits immediately; we said ‘we are going to do this and this is the reason why’. Their main concern here was what will happen to the people leaving and as they were treated well it never became an issue. The whole business was going through a lot of change anyway, and it was recognised as part of that.”

A three month handover period was initiated, but the process was completed in half that time. Davis says that the way AccessPlus handled the switch made a big impression on him, given the complexities and the sensitivities of the moment.

“From the day we signed the deal, AccessPlus had someone in here sitting with the outgoing team. They literally sat next to them and learnt what was involved over a period of about a month. That was very intense and I was very impressed. They were looking over their shoulders the whole time. They could see what was involved, and then they got their account team in here after as a second step, so they knew they had the right people on the account. I must say, both Account Managers are fantastic.”

Now an account handler for AccessPlus is on site at AOL at least three days a week, and they are considered very much a part of the company. Davis professes himself happy with the way things are working out. He says that since the start of the contract, comparing on a year on year, job by job basis, the cost savings made have been between 20 and 25%. Every quarter, he and the print manager sit down to review performance against service level agreements, and he says they are operating at 99% on a consistent basis.

AOL’s fulfilment has also now been moved into AccessPlus’s care, a key second phase of the relationship that was always envisaged, and which has helped to rationalise the number of suppliers AOL has on its books.

The company also expects its print management supplier to bring innovation to the table, and Davis says this is already happening through a number of initiatives, such as the materials it uses for POS work and CD packaging. Often there are environmental benefits from these developments also.

"Yes the savings are important and we are all running businesses, but for me it has been the organisation and simplification of the process that’s made it successful." Chris Davis

In that regard, the evolving marketing mix will continually throw up challenges for print and for those who manage it. As a technology company, AOL desires to be at the forefront of the usage of marketing technology. Already it has been mentioned that the company is sending out less direct mail print than it used to, with online marketing on the up, and Davis points out that better use of targeting in print is the way forward for AOL.

“We’re looking at much more targeted, much more valuable mailing; we’re focussing on the value of customers.”

Customer data is prepared through AOL’s data strategy team in marketing, and AccessPlus is able to handle the data as part of the print and fulfilment process. Davis wants to be able to give more of this kind of work to AccessPlus, more of the sexier variable data and personalised direct mail that can make response rates leap high.

“I would like to see us do more personalised mailers. There has been some of that work, but we have not really given AccessPlus the opportunity in the last few months to show what they can do. I’m confident we will in the next few months. Personalisation has to be used in the right way though. As a consumer, I’m not particularly impressed by a piece of print that has my name substituted on it 16 times, but I am impressed by targeted DM that brings relevant information to the customer.

“I’m looking for the kind of DM that shows how much information the company knows about you and here’s this great product you will be interested in. I’m interested in real personalisation, I guess,” he reflects.

Davis describes AOL Broadband as a fast moving, dynamic company, where “there’s always the next big thing” happening. It does not have a prescribed outsourcing policy, although it does outsource some call centre activity. One of the reasons that outsourcing in general has received a bad press is that many companies have not gone about it in the right way – it is perceived that they have outsourced purely for the cost benefit. This is not how Davis views his own outsourcing decision and the benefits that have accrued.

“Really, yes the savings are important and we are all running businesses, but for me it has been the organisation and simplification of the process that’s made it successful. Where we find ourselves today, it’s very positive.”

He says it’s very important to research the industry as much as you can, before entering into a print management relationship. “On the surface they all offer the same thing, but culturally and attitudinally they are all very different. I saw five different company cultures come in here – more so than you would see in a lot of other industries.

“You shouldn’t just look at the cost benefit, but look at the organizational benefits, and look at the knowledge base that you are buying into instead. You are going to have a close relationship with these companies, in some cases for a long period of time.

“Depending on the specific requirements of a company, I would certainly recommend using a print management specialist. The key for us was having AccessPlus people within the organisation, so they became part of the team and were recognised as such, not only by your team but by the wider company. It has been achieved very well at AOL by AccessPlus.”