Raising the Gate on Revenue Management: A Talk With FatTail on Going Beyond Order Management

When Does Order Management Become Revenue Management?

The last few years have marked an exciting time for publishers’ holistic revenue strategies. Programmatic channels have gained more prominence, and publishers have gone forth in search of the tech that can help them break down the siloes that had previously constricted pockets of their inventory.

Of course, that process is about as complicated as it is exciting. You have to track and manage orders across all channels, analyze and optimize yield–there are a lot of component parts involved in getting complete view of your inventory’s performance. Order management as publishers know it quickly grows into something broader–revenue management.

AdMonsters recently had a chance to talk with Clayton Tarics, FatTail‘s VP, Product Management, about this idea that order management done correctly is, more accurately, revenue management. Clayton’s entire focus right now is FatTail’s core AdBook platform. He started out by explaining how AdBook’s continuing development, and the functionality publishers have demanded of the platform, has pointed toward this revenue management concept.

Advanced advertising made simple: the sell side platform for guaranteed inventory.

BRIAN LaRUE: Can you fill us in on the AdBook product and what you’re doing currently to keep up with publishers’ evolving needs?

CLAYTON TARICS: FatTail started with an ops tool to help publishers manage orders. From there we grew the platform building in components for pricing, inventory management, ad server integration, and wrapped it into a workflow management and reporting suite.

From there we developed sales enablement tools for sales teams. AdBook Direct brings sales extension into the AdBook core platform, helps to power automated guaranteed marketplaces, and facilitates connections directly into buying systems. We’re rebranding all of that as the AdBook Plus revenue management platform.

The core mission is to help publishers execute sales and optimize yield, and to execute forward guaranteed transactions from any channel.

BRIAN: You’ve said the key differences between order management and revenue management are the use of analytics to drive strategy, and things like integration and scalability. Can you elaborate?

CLAYTON: Order management, for publishers, is a bit of a misnomer. An order management solution is more like a system that you’d run on your web store for T-shirts and funny coffee mugs. Airline pricing systems are the textbook example of revenue management, but I also think of that gate that I have to go through in the parking garage at work—that’s a revenue management system in the parking industry. The heart of digital advertising revenue management is a platform that connects all the disparate systems in the publisher tech stack that contribute to the generation of revenue and yield optimization. It drives the comprehensive, cross-channel sales and execution strategy.

Revenue management needs to present insights from analytics in an actionable manner. That influences how sales happen, product packaging and mix, pricing, downstream ad campaign optimization. There’s a business workflow control element, like the parking garage gate, that manages and puts controls around the end-to-end process. A new horizon for us is extending the publisher’s sales reach.

BRIAN: When did you come to realize order management was maybe not the most accurate term for what you needed to do?

CLAYTON: I was having a conversation with the dev team here, thinking, “What if there was no Save button on the order page?” That led us to some reflections. Why do we call it order management? What makes digital advertising so uniquely complex?

For one, publisher supply forecasts fluctuate heavily. Second, inventory is perishable, and it has only milliseconds of shelf life as you’re bound by expectations around user experience to make decisions on how to complete the transaction. Third, delivery is non-linear—you’re responding to every single ad call. Fourth, audience segmentation is fluid, and those segments are worth different things to different people at different moments. Lastly, forward guaranteed transactions get complex quickly. Some of our publisher clients put together orders with a thousand line items and complex flighting and targeting requirements spanning multiple months. So, the need is beyond what a system for a T-shirt store can offer.

BRIAN: Can you explain the various systems that need to be connected within a revenue management system? What’s under the hood?

CLAYTON: We’ve offered integration to CRM platforms, inventory forecasting systems, DMPs, billing systems, ad servers and other fulfillment systems. A fulfillment system could be a DSP for an audience extension. We’ve also facilitated integrations for BI and reporting systems as well as for delivery reconciliation systems. We’ve built a robust set of APIs to connect components of the ad tech stack and for electronic buying systems to facilitate sales extension. On the horizon is data synching technology that would allow buyers to forecast and buy their own audience segments directly from publishers, in addition to proprietary publisher segments.

BRIAN: In differentiating an OMS versus an RMS, there’s this implication that not everyone is doing revenue management. So why is not everyone doing it, and what’s the barrier to entry?

CLAYTON: You’ve got to have data and an opportunity to make the insights from the analytics on that data actionable. In the typical publisher ad tech stack in 2017, it’s really difficult for a standalone RMS to not have an operational component to it. Trying to build a business influencing processes across six or eight very different connected systems remotely is a massive investment. Another barrier to entry is the rapid pace of emerging technology.

BRIAN: That said, there’s obviously a demand. Publishers have tried to implement hacks and workarounds with order management. What does FatTail see with those customizations, and how do those inform the RMS?

CLAYTON: A lot of times, we don’t get to talk to a company until they’ve gotten desperate around a particular problem. When we do talk, often we see sub-optimal use of other systems in the tech stack, or point solutions bolted on to anchor systems in the stack. Tell-tale signs of the struggle are elaborate swivel-chair processes — read: duplicate data entry between systems — or offline trackers to manage sales, pricing and operational components. In-house dev teams often try to solve revenue management gaps on the nearest available dev platform—we see a lot of crazy solutions built into Salesforce, the billing system, or their in-house operational platform.

After we get the publisher’s lay of the land, we talk about how to re-position the systems in the stack for their best uses. If a particular workaround isn’t accommodated for by a feature on AdBook today, we look to integrate with the system that does solve that problem, or build a custom solution. For example, one of our clients uses an internally built order management system, tailor-made for a subset of products. Part of our partnership with them included building an integration so that they could assemble a single order with lines from their order management system and lines from products managed in AdBook. That’s two order management systems united by a single revenue management system.

BRIAN: So how can implementing an RMS versus an OMS affect the overall efficiency and resource management for a publisher?

CLAYTON: That’s the million-dollar question, or many millions of dollars. It’s impossible to quantify perfectly. But with the case studies we’ve performed, we would say an OMS could allow you to save 20-25% of revenue through efficiencies yielded, whereas a revenue management system would allow you to double that or more, depending on levels of sophistication around inventory management or pricing, and on optimizing sales channels.

BRIAN: How does a good RMS help a publisher understand and optimize yield across all their direct and programmatic channels? Is there anything a less-robust OMS can’t do that an RMS can?

CLAYTON: You have to be able to connect to all of those systems and channels to be able to execute that comprehensive strategy. Also, business controls—the parking garage gate—are an important component. You have to be able to allow other systems to connect to you and further amplify the process. You have to be able to see the world in terms that make sense to that particular publisher based on key dimensions like site or platform or size.

BRIAN: In building out the product, did you experience any challenges in pulling together information from multiple points of entry throughout the publisher org?

CLAYTON: Integrations are hard because in most cases you’re trying to marry together two fundamentally different systems. We see some patterns: Every ad server has dates, an impression goal, and similar targeting capabilities, for example. On the other hand, not every system is ready to be integrated with. Beyond that, we try to balance the desire for a nirvana state of things—full integration, full automation, business control in all the right places, campaigns flowing cleanly from sales to ops, no late creative, etc.—with our experience tackling those problems. We try to be as consultative as possible with process, integrations, and alignment of people and technology.

Cultural change can be equally challenging. The level of the desired change for management and the organizational readiness to make that change are usually not aligned.

The revenue management need, from the perspective of the organization, sits across the whole tech stack and all teams involved, from quote to cash, configuration to monetization. The goal is to put all of those systems and people and processes in harmony with each other and optimize for the best yield. You can’t look at one or two solutions or people or processes in isolation and expect to hit a home run.