Yield Management. Maximising the return from your online inventory

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Abner Leonard
7 years ago
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1 Yield Management Maximising the return from your online inventory

2 Increase Revenue for Top Publishers Maximise yield: Forecasting, pricing, and sales Advertiser Audience Publisher Optimise ad delivery: Prioritisation, effectiveness Improve efficiency across the board MEDIA TOOLS SERVICES 2

3 The ideal Maximum return for every impression

4 CPM Publishers: In an ideal world, you could monetise every impression at your premium rates Maximum Revenue Max CPM x Max Impressions Volume of Impressions 4

5 CPM The industry has developed two classes of inventory to price discriminate Premium Sales Revenue Discretionary Sales Revenue Volume of Impressions 5

6 CPM 5 WAYS of Increasing Revenue 1. Maximise Value of Premium Inventory 2. Increase Sell-through of Premium Inventory 5. Increase Overall Efficiency in Ad Sales & Delivery Premium Sales Revenue 3. Optimise Yield on Discretionary Inventory 4. Expand Total Impressions Available to Sell Discretionary Sales Revenue Volume of Impressions 6

7 WHY IS THIS SO DIFFICULT?

8 Let s consider the airline challenge: matching price with demand to optimise revenue.

9 Yield management is a core function of the airline industry Airlines will adjust seat prices to maximise revenue. Publishers need to understand the scarcity of their inventory and use yield management concepts to manage their sites. 9

10 Why is this so hard to achieve? It s relatively new to online media Complex, multiple product offerings Online is not the only option It requires partnership between publishers and advertisers Tendency for many customers to make late bookings

11 The way forward Improved product definition Inventory forecasting Smarter pricing Common sense ways to increase your revenue.

12 PRODUCT DEFINITION

13 Product Attributes Placement (Where) Creative Type/ Ad Format (What) Use product attributes to differentiate and to price discriminate Audience Segment and Context (Who and What s Being Viewed) Order and Delivery Rule (When/How)

14 Best practices 1. Inventory product managers should define products. 2. Bundle high-demand inventory with inventory in abundance. 3. Be transparent about value of premium products advertisers are getting. 14

15 INVENTORY FORECASTING

16 What affects the quality of forecasting? Time Granularity Volatility Duration

17 Good inventory management improves revenue capture Overselling: Unrecognised revenues Over-predicting by 10% can put as much as 6% of total revenue at risk because of under-delivery Underselling: Opportunity cost of missed sales Under-predicting by 10% can result in an opportunity cost equivalent to 8% of total revenue due to missed sales Source: Rapt research, based on observed trends and typical distributions across inventory types, sell-through rates, and pricing across brand and remnant

18 Rate Card Design RATE CARD DESIGN

$What fraction of demand remains as time approaches delivery? External Market Dynamics Seasonality Preference Trends Booking Profiles Price Response E.g., Is the entire market growing or shrinking? E.g., Is the mix of products shifting?$

19 Understanding core price-demand response requires stripping away the layers of the onion Does the sales force close most of the business in the third month of the quarter? What fraction of demand remains as time approaches delivery? External Market Dynamics Seasonality Preference Trends Booking Profiles Price Response E.g., Is the entire market growing or shrinking? E.g., Is the mix of products shifting? 19

20 Rate Card best practices 1. Rates need to match the true value of each product 2. The rate card must be credible, and enforceable 3. Sales must be willing to sell against rate card 4. Should integrate into sales workflow process, not be stand-alone guide

21 REVIEW

22 5 WAYS of Increasing Revenue 1. Maximise Value of Premium Inventory 2. Increase Sell-through of Premium Inventory 5. Increase Overall Efficiency in Ad Sales & Delivery CPM Premium Sales Revenue 3. Optimise Yield on Discretionary Inventory 4. Expand Total Impressions Available to Sell Discretionary Sales Revenue Volume of Impressions 22

23 THANK YOU

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