What´s this? An innovative business model: Coupons that leverage the prescription power of regional dailies.
A team of experienced developers set up a system to distribute the workload and keep the customer supported at all times. Thanks to its local presence through it regional media, Oferplan has managed to outs Groupon.
Vocento is the leading multimedia communications group in Spain. Its 12 local dailies and a national newspaper have a share of 24% of total circulation.
Common to all newspapers worldwide, Vocento waved through the crisis of the dailies: the evaporation of classifieds revenue, the drop of large advertisers and the decline of their base of subscribers.
Vocento’s network of 12 regional dailies are dominant in their local markets. They set Vocento apart from the rest of the print industry in Spain, composed by national newspapers with poor audience at regional level. The 12 dailies enjoy a large, robust market share combined with a great prescription power among its readers base.
How to leverage this strength without cannibalising the existing revenue?
While searching for new revenue streams, Vocento looked into the potential of the business model of coupons and its weaknesses: short-term capacity of small businesses and poor targeting resulting in small retention of end-users.
What is Oferplan?
Oferplan is a coupon platform that features discounted gift certificates usable at local companies.
Vocento dailies have a great influence in the prescription of local products or services. Readers of regional dailies are traditionally attached to their newspapers and they trust the brand, the medium and its content.
Vocento considered various alternatives: developing Oferplan in-house or relying on a technological partner. When it was decided to develop the platform externally, Paradigma was chosen for two reasons:
Paradigma developed deal-of-the-day websites for Metro International in Sweden, Save My Day. The project went so well that it was exported to the websites of Metro in Chile and Mexico.
Paradigma contributed in the early stages of the project with strategic consultancy. Paradigma’s consultants provided insights and their knowledge of the market to help Vocento define the offering of Oferplan.
Paradigma carried out the whole development cycle with Vocento from A to Z. It did it so by adopting an extreme flexibility to implement Vocento’s requirements. This allowed to shorten the software development cycle significantly.
The platform was rolled out in November 2011 for El Norte de Castilla. Following its immediate success, the scheme was extended in a few months to other media titles, including the regional flagship, El Correo.
Since then, the development included a seamless integration with logistics operator via API, ad-hoc connectors to accounts via SAP and a back-office with a nation-wide clearing house.
A team of experienced developers set up a system to distribute the workload and keep the customer supported at all times
1M € EBIDTA additional to the revenue of the Vocento group. A stand-alone business unit adding a new revenue stream without any cannibalisation
Paradigma took Oferplan as an opportunity to leverage its experience with coupons in a few international markets. The value of the proposition was not its capacity to deliver software, but critically, to help a client evolve its business from traditional media to Internet.
Value proposition of Oferplan to the market
Vocento thinks of Oferplan as a sales channel, not as traditional display advertising. The commission on sales shapes up a true partnership with merchants. The selection of merchants considers their capacity to delivery and the interest offering for the dailies’ readers.
Other coupons schemes by nationwide newspapers fail to leverage the prescription influence of the regional dailies of Vocento. While other national or international propositions of coupons exploit the push model, Oferplan enjoys the pull both from the readers base and from the local merchants.
Merchants see Oferplan as a factor contributing to flatten their curve of demand over time. Oferplan allows them to rotate their inventory how and when they need to without eroding its margins or saturating the existing channels. Vocento is a predictable source of new revenue free from extra operational expenditure or administrative burden.
Purchases are cleared directly with Vocento, not with the end-users.
“The contribution of Paradigma to Oferplan is three-fold:
· Their remarkable knowledge of how Internet really works
· Their proven track record of development of coupon platforms online
· Their capacity to integrate teams and processes. By going beyond a mere relationship provider-client, we work faster and seamlessly”
Roberto de Celis
Director of Online Business at Vocento
Oferplan managed to re-think the traditional newspapers and media business. It proved that innovation needs to leverage exiting off-line strengths and combine them with the scalability of online platforms.
New business units can operate as de-facto start-ups within large corporate conglomerates enjoying both the agility of small operations and the economies of scale of the holding company.
Software development can be a powerful way of adding true and significant value to large clients if complemented with strategic consultancy. Only such partnerships
accommodate the peaks and troughs of the launch of new services.