(But using them is still an art.)
By Thomas Siegman, VP Client Services, RSG Media & Mayank Agarwal, Product Manager, Zoox Analytics
A spate of new tools is letting publishers take back their place at the table, giving them critical insights into inventory management, pricing, and products—a position that they were in peril of ceding to the buy-side. Combined with the skills of seasoned professionals, these tools position publishers to recoup money that they have been leaving on the table—a figure that RSG Media estimates conservatively as 10 – 15% of revenues while better meeting advertisers’ goals.
The rebounding ad market is reviving classic challenges. As ad spend revives from 2009 levels and online media speeds past print, our customers tell us that they again face the happy challenges of managing demand against supply. Only now they face buyers sophisticated in the use of data, ad networks, new packing and product strategies, and other bidding and buying concepts. By combining registration and behavioral info, and pixel tracking with Nielsen-Catalina and Harte Hanks data, buyers get an amazingly detailed picture. When you click on a banner ad for Oat Crispies, they can tell that you’re a 43-year old high-income earner in Savannah, GA; they can also tell from your frequent shopper card that the next day you bought your cereal in aisle 5 and your milk on sale in aisle 13.
Buyers often find no correlation between CPMs and the value they get from ads – their own research tells them what works, and what each piece of inventory is worth to them. And too often publishers lack the tools to say otherwise.
This information divide is driving publisher’s embrace of new reporting, analytics, forecasting, and yield tools. Publishers understand that unless publishers can intelligently educate and discuss opportunities with their customers, and bring real value to their advertisers, they run the risk of becoming order takers.
Simultaneously, premium inventory pressure is forcing publishers to allocate and even ration any inventory that targets a valuable demographic. While this is great news for publishers, it causes four largish headaches as they look to extract maximum value from their ad inventory:
- Cannibalization: Like it or not, different products that use the same underlying ad elements cannibalize each other. Yes, Ad Ops can still promote ROS and RON. But it’s like selling a fruit salad where someone has gone and picked most of the premium cherries off to sell to people who will pay more for just cherries. Meanwhile the “berry salad” guys are picking off the blueberries, raspberries, and strawberries. Soon, ROS is looking like just a bunch of apples and bananas with the occasional grape thrown in.
- Inventory transparency: Without accurate forecasting and inventory transparency, everything else is moot. Yet the info passed back from the Ad Servers is incomplete and often too late to calculate capacity accurately. To forecast capacity and availability accurately, publishers need to process complex inventory overlays, audience information, and look across a multitude of ad servers and delivery platforms.
- Deal Pricing: Distinct from the rate card, to accurately price a deal and maximize revenue, the yield team has to understand not just the CPM of a deal, but of all the underlying elements. They need to know how those elements might otherwise be sold: the opportunity cost, the inventory pressure, and how any deal is likely to affect availability for all other deals, potential and actual. And, since the demise of Rapt, only a handful of companies have taken up the price-forecasting gauntlet.
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Proposal planning: Sales has to discern which of thousands of products and platforms available best meet the agencies’ goals while balancing inventory across multiple deals. Then they have to “educate” the customer as to why their buy is smarter than the one the customer came up with.
This requires smart proposal building that understands not just the single buyer’s needs, but an accurate forecast of market demands, network capacity and availability, and the value of underlying elements.
No wonder Advil sales are up.
While these challenges are still formidable, digital publishers are making solid progress. At RSG Media, based on data from five of the largest internet publishers, we’re finding that we can accurately predict capacity and update availability as bookings take place. We know that other companies are not far behind.
Our analytics and dashboards show analysts which products are competing for elements, how to resolve conflicts, and where they most need to grow fresh inventory. (“We need cherries & berries, STAT!”) This kind of inventory visibility is becoming the new normal.
Similarly, in pricing, an industry once written off as impossible within a “negotiated price setting,” we are able to price deals dynamically using such disparate factors as element capacity/availability, market pressure, client history, and opportunity cost so that sales understands the true value of what they are selling, both to the buyer and to the network. Sales may still choose to price deals below our recommended floor price for any number of reasons, but now they know where the floor is.
The dirty secret of all these tools, however, is that they are just that: tools. Just as a great knife doesn’t make someone Batali, knowing the floor-price on a deal won’t make someone a great sales person. But in the right hands these tools can make a world of difference. Experienced Ad Ops managers can maximize sell-thru and revenue by analyzing and trending inventory dynamically; Yield managers can raise eCPMs with dynamic pricing; management can identify which inventory is worth additional investment (e.g. additional product, audience extension, or other means). Data analysts can create automatic triggers so that Ad Ops can review the flagged areas and recommend course corrections.
All of this creates a huge top-line opportunity as publishers use this new inventory transparency, with its more accurate forecasts and relevant pricing suggestions, to make data-driven dynamic decisions about their premium inventory. Moreover, this new clarity directly feeds into parallel strategies for ad networks, real-time bidding, and the like.
Some clients we’ve talked to see the beginning of an “arms race”: buyers and sellers jostling to see who knows the most about the data; we see it as a friendly contest and even a win-win-win situation for the advertisers-agencies-publishers. Yes, advertisers and their agencies will still look to get the best value that they can from a publisher. Now, with the help of the advanced analytics, publishers will be able to contribute to that conversation, much like a great sommelier at a fine restaurant, steering the client to not the cheapest match, but to the one that will leave all parties satisfied.
RSG Media Systems creates software products to manage and monetize media properties. RSG Media Systems also designs strategies and implements custom technology solutions to meet its clients’ needs. Established in 1985, the company is headquartered in New York City.
RSG Media will host the 2011 Zoox Digital Media Symposium, Tuesday April 26th from 1:30 PM to 6:00 PM at the New Museum in New York City.
Join industry experts and thought leaders in the conversation about the state and future of digital media, in a rapidly evolving digital environment. Panels will explore growth opportunities and the challenges they pose to multi-platform media companies. This is an invitation-only event. To request an invitation and for keynote and panel information, please contact Syia Lewis as [email protected] .