(This is Chapter 5 of the Adomik Programmatic Yield Management Handbook)
To survive and be a successful digital media seller in today’s programmatic world, one must understand and master programmatic yield management. With the advance of programmatic, the techniques of yield have been evolving significantly.
Revisiting a definition of yield management and how to manage your yield in that new era of advertising is then both interesting for your organization and critical to continue generating the optimal revenues.
First: Back to basics…
Let’s start with a definition. Generally speaking, yield management is about factoring consumer behavior into your pricing strategy in order to maximise your revenue.
More specifically, it means coordinating timing, consumer buying patterns and prices to achieve the best results. A seller who has strategic control of its inventory will thus be able to apply variable prices to sell more. The typical yield management example is the airline company that will change the flight fare depending on the time of the day and when the flight departs. There are indeed different prices for exactly the same seat.
In traditional advertising, yield management was mainly driven by sales teams. These teams had the knowledge of what is the best timing, how buyers behave, and relationships to negotiate with buyers and get the best price for Insertion Orders. This human-mediated technique worked well for a long time, but as programmatic has automated buyer/seller relationships, we have entered a new paradigm – let’s call it the programmatic paradigm.
The 3 key drivers to yield management in the programmatic paradigm are:
-
Sellers are moving from a limited number of relationships with buyers to a multitude of demand sources and buyers, often with no direct contact
-
Traditional advertising was based on a “one product” concept: selling inventory to one buyer based on an insertion order while programmatic includes a wide variety of channels: open RTB, programmatic direct, guaranteed deals, and existing premium sales are still in the mix
-
The understanding of buying patterns was based on physical interactions between buyers and sellers while programmatic sellers now have access to a vast amount of Seller Trading Data to make sense of the market dynamics and how buyers behave
The key question around how to get the best revenue for each impression now involves gaining insights from your trading data to define the best product channels and prices to generate maximum revenue at any moment in time.
Programmatic Yield: Seller Trading Data is the starting point
Yield starts with understanding: understanding buyer patterns and how much buyers value your inventory.
The answer to these questions lies in your Seller Trading Data, which gives you unparalleled insights into a buyer’s “programmatic behavior”. Reading this data requires definition of the right terms and dimensions to measure, based on a set of metrics dedicated to programmatic commerce. These metrics will allow you to monitor how buyers participate in your programmatic sales process, how much they are ready to bid, whether they win or lose, how much they pay, how they spread their bids,etc. Analyzing and comparing the behavior of buyers through these key metrics will allow you to build a clear picture of buying patterns.
After you command your Seller Trading Data, understand your inventory on different levels
Once you have command of your Seller Trading Data, you can better understand your competition and thus your inventory’s value in the marketplace. As said earlier, one unique attribute of programmatic is that it gives you access to a multitude of buyers and brands, giving you the opportunity to understand and compare competition across:
-
key and strategic buyers – data-driven buyers are leverage unique user data sets that lead to them behaving and valuing your inventory very differently,
-
different categories of buyers: agencies, independent trading desks, retargeters, networks, etc. or different brand industries: automotive, finance, travel, etc.
-
broader buying patterns across your whole portfolio, with a focus on the level of competition between all buyers , i.e. how many buyers bid in the same auctions and how high.
What you learn from individual buyers might actually be related to a more general pattern. As you consider your programmatic yield management strategies, you may notice that some buyers act very differently from their peers. Never stop on single “in silo” analyses of buyers and always seek to understand how these buyers fit into a group.
Focus on programmatic trends as well as metrics
Also, in assessing how your inventory is valued you will need to look at more than key “buyer behavior” metrics. Remember to pay attention to the dynamics as well. Programmatic buyers continually adapt their buying strategies – based on their campaigns success or failure, budget changes, arrival of new campaigns, etc. – and what was relevant a week ago might not be anymore today.
Keeping a close eye on these buying patterns might be time consuming. But this is the foundation for having the right yield strategy at any point in time.
Key take aways for this overview:
For success in programmatic yield management remember the following:
-
Use trading data to measure buyer activity and behavior through dedicated key metrics.
-
Build your understanding on different levels: from individuals buyers to buyer/brand groups and whole buyer ecosystem.
-
Pay attention to dynamics
To get these posts in your inbox, sunscribe to the Adomik Blog:
< PREVIOUS Programmatic Yield Management Handbook NEXT >