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Jun 12, 2018 8:53:49 AM

Publisher Sales Team: How to Negotiate a PMP

As a Programmatic Sales person, your work day often entails responding to calls to tender from agencies and trading desks with PMP proposals. Most of the time, you already have a standard rate card that more or less fits the brief you’re responding to. More often than not, you’ll settle for the price that the buyer is ready to pay.

In any case, it is important to have a Rate Card for your RON PMPs. That said, if you have to create a custom deal, as a salesperson you’re probably wondering :

Is my inventory valued at the optimal price?

Whenever you find yourself in a position to negotiate a PMP, you need to do your homework! You have to be sure of two things :

1) You are selling your inventory at a fair price.

2) The agency / trading desk will be happy enough to activate and keep the PMP running.

In this article, we will walk you through the key steps to follow when negotiating a PMP, if you'd prefer to discover how to capture more PMP opportunities, try out this article from our blog. 

STEP 1- Know Your Inventory’s Real Value  

To get a clear view of how valuable your inventory is to the buy-side, you need to understand how buyers behave across your inventory. It can be tricky since buyers don’t value all of your inventory the same way: Some dimensions for many reasons, attract more buyers; for instance, in the French market, the top-valued format in PMP is the Half Page.

To get a better grip on this, three factors play into the mix :

  1. The level of competition in the auctions: How many bids compete for one impression? How many buyers are interested in my inventory?
  2. The fill rate: How much volume I am already selling?
  3. The bid levels: How much money are buyers ready to pay for my inventory?

It’s possible that you already have this information from previous analyses on buyers’ bidding behavior within your company - but is the time in excel really worth the effort?! (Estimated time to completion: 1245322 hours)

gallery-1467985352-angry-computer-gif

Within the Adomik Platform, this is something you can assess very easily, using the Value Analyzer feature. This component automatically shows you the metrics you’re interested in, and allows you to filter specific formats or sites to get the granular info you’ll need in negotiation. 

For instance, for the selected inventory, the graphs above help this publisher spot two things:

  • In open auction, they have a good level of competition for the selected scope
  • Across all auctions on this scope, the top bid is $1.79 - this is how much winning buyers have to bid to win the impression on the chosen scope (the first frame).
  • The demand is strong on the chosen scope: the unsold volume is very low due to the lack of demand (which we call “no bid rate”), less than 0.5% (the third frame).

Conclusion: here, it seems like the publisher can afford to be tough in negotiations. If you want to make a deal for this dimension, you need to price it at least higher than your the average top bid.

But we’re not done yet! When a buyer is looking to make a PMP with you, you should know that he is aiming for a volume with a good viewability rate, so you should also take a look at your viewability metrics on the chosen inventory. The higher the viewability rate, the more attractive your inventory is, so this is also something to keep in mind in the pricing discussion.

adomik-analyze-appnexusSource Adomik Analyze 

In the case, above you can see that the viewability rate is about 52% and the monetization factor, meaning the ratio of viewable CPM over non-viewable CPM, is 1.23. The viewable CPM is $1.74. If you’re making a deal on viewable inventory, this means that your price should not be lower than $1.74, as this is what you can expect to get from the open market.

Quick tip: you can have a standard “monetization factor” that applies when you are selling viewable inventory.

STEP 2- Know Your Competitors’ Pricing

You don’t negotiate a deal with a captive advertiser the same way that you negotiate it with a random advertiser. Knowing the value of your inventory for the advertiser’s vertical is very important when you have to determine the pricing. So before you offer a price to a buyer, you should do your homework and check market prices!

For example, if you want to negotiate a deal on video with the brand Mini, in order to set your price you should consider what other publishers in your market offer. If your price is too high, the buyer probably won’t buy it because they know that they can find the same inventory at a lower price. On the other hand, if your price is too low, you are preventing yourself from getting the fair revenue from your PMP activity.

There are several options here: to get the information you’re looking for, you can try asking advertisers the price they pay for similar deals with other publishers. Obviously, the answers you get will most likely be biased.

Otherwise, our MarketWatch platform is designed for this kind of situation! You get an instant view of the CPM price agreed upon and the volumes purchased by every brand in the market in PMP, for any format, device, or SSP. You can compare the prices advertisers are currently paying on your inventory vs. what they pay on average in the market in order to better renegotiate the deal. Or you can also simply spot prices paid by advertisers with whom you don’t currently have any PMP.

In the example below, you can see that Mini is paying a $30.5 CPM for Video deals on the market, you must have that figure in mind in order to avoid under-pricing your deal!

adomik-marketwatch-appSource: Adomik MarketWatch App 

STEP 3- Know the Added Value of Your Deal for the Advertiser

Generally speaking, the purpose of a trading desk to set up a PMP is to be able to get something you’re not sure to get in the open market. This means that a good deal is a deal that integrates an added value compared to the open market.

That being said, whenever you add a something to a deal, that has to be translated into additional revenue. From open auction to programmatic guaranteed, there are many factors that can increase your deal’s value, for example:

  1. The Expected CTRYou have probably already made the same (or a very similar) type of deal as the one you’re negotiating with another advertiser. This gives you insight into the average CTR that the buyer can expect from the deal.
  2. The Audience: If you sell a deal with data, you need to assess if the data you are offering is unique. Also it depends on what kind of user data you are including into the deal. The more precious the data is for the advertiser, the higher the value.

To sum up, before negotiating a deal with an agency / trading desk, please take into account your own value and your inventory’s projected value for the buyer. And we’re not quite done yet…

...Please don’t forget to evaluate your opportunity cost. You need to know the overall impact of creating this particular PMP. If you want to learn how to evaluate your opportunity cost, you can find all the relevant information in this article. 

If you enjoyed this article and you'd like to try out our platform, sign up for a demo by clicking on the button below. 

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Topics: PMP, publisher sales, PMP negotiation

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