Programmatic Inventory Channel Allocation: Part 1: General Channel Overview

Posted by Jennifer Derke on Feb 1, 2016 4:58:29 PM
(This is Chapter 12 of the Adomik Programmatic Yield Management Handbook)

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When thinking through programmatic inventory channel allocation, first understand the channels you'll use to serve your buyers

Let’s imagine you at a big dinner and there is an abundance of delicious homemade food on the table in front of you. You’ll want to maximize area on your plate to feed yourself. How will you determine the best foods to put on your plate so that you will be optimally satisfied at the end of the meal?

Let’s push the analogy to adtech: imagine that you are a media seller seated at a table with millions of ad spend dollars within your grasp. What should be the best way to ‘plate’ and manage your revenue? You need to set up a strategy that takes advantage of all the available ad sales channels (food) and maximizes the output of each.

 In the first part of this Channel Allocation series, we will seek to understand the basics of the channels available to today’s programmatic yield manager

In a previous post we discussed available the channels for media sellers; traditional premium sales (direct deals with insertion order (hassles)), programmatic direct premium sales (programmatic direct sales aims to update the direct sales process with technology), private marketplace (PMP uses a Deal ID to transact on media in an ad exchange), and the open RTB auction (including both RTB transactions and performance driven CPA/CPC transactions). Let’s discuss these channels.

  • Traditional premium sales with direct insertion orders continues to be a major channel of media sales. Keep your eyes open for technology that increases efficiency. Don’t let yourself get too bogged down in IO paperwork or buffering campaigns to satisfy third party numbers. Using innovative software for direct deals will increase your bottom line and you can devote your resources to pursuing higher ROI sales channels.
  • Programmatic direct channel sales will help you implement sales orders in an automated and efficient way. You can use technology providers to coordinate planned sales with buyers. Using tech to avoid some back and forth hassle and paperwork will streamline your direct sales. To take full advantage of this channel, you’ll need to have relationships with buyers. This channel will help you forecast your expected revenue from guaranteed sales, but you could potentially miss out on higher CPMs on the exchange with market based pricing.
  • Private Marketplace deals (PMP) use a deal ID or token number for the seller to offer preferred access to buyers. Both buyers and sellers can benefit from PMPs. Buyers get a streamlined access to higher quality inventory and the eyeballs they are trying to reach. Media sellers can secure relationships with buyers and also typically get commitments for minimum deal CPMs. This control improves revenue / revenue predictability for sellers as it builds long-term revenue from buyers if managed properly. If you have the right technology to manage deals and troubleshoot, this could become a major source of programmatic revenue and empower you to build longer term relationships with buyers while enjoying the productivity of RTB sales.
  • Open RTB can be as simple as turning on an ad exchange partner to sell inventory that is not sold through direct. However, as buyers in the open RTB markets have become more sophisticated over the years, many media sellers are allowing their reliance on open RTB to increase. Managing your tech partners, various SSPs, and exchanges can be challenging. To take full advantage of this channel, you’ll want to find the best implementation strategy to maximize your revenue potential. This could range from simply implementing one exchange to practicing data-driven pricing floors or even doing holistic yield management like header bidding.

The best blend of these sales channels will be a balance of your in-house resources, your unique user and  inventory attributes,  and actual market conditions. For instance, if your team is is strong with data science, milk the open exchange for competitive CPMs. If your team has great buyer relationships, focus on setting up strong PMP offerings. Work to complement your human and inventory strengths with technology partners who can help you take advantage of the other programmatic channels to balance out your offering to buyers. This blend can and should change based on market conditions. And by being in control of your trading data you’ll be able to meet the buyers where they are at the appropriate price and packaging, using a strategic blend of these programmatic sales channels.

See the next section (later this week), Inventory Channel Allocation: Part 2: Holistic yield management with PMP, Programmatic Direct, and RTB for suggestions on how to balance the mix of these channels to maximize revenue.

Check in with Adomik for a personalized discussion of how you can best balance a portfolio of these programmatic sales channels.

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Topics: programmatic channel allocation, programmatic yield

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