(Part 1 of a 5 part series on Holistic Yield Management)
An Overview of Holistic Yield Management
Programmatic ad yield management can be defined as the process of improving revenue through the implementation of strategic pricing and inventory controls. Most Publishers are now accustomed in some form to this process, especially in programmatic channels.
Still the publisher side of the market has been recently hit by a new wave of innovation, and the advertising landscape continues to become more and more complex. Among these, the generalization of header bidding, and the emergence of programmatic guaranteed and people-based marketing. While the additional complexity is a good thing for sellers to make their offering to advertisers more relevant and appealing, it also makes life harder on the revenue management front.
When focusing on revenue optimization, a key change is that we used to talk about simple “yield management”, in order to maximize revenue. Market changes have forced a new discipline called “holistic yield management”. Holistic yield management is the practice of maximizing the overall revenue. It is no longer about trying to optimize the revenue of one channel, be it direct, programmatic PMPs, or a single platform within the ad stack like the primary SSP. On the contrary, publishers must harness the complexity of the new advertising landscape and manage yield across their entire advertising business.
Pragmatically, publishers need to identify the “localized” actions that will have an overall positive impact on the business, and that create minimal opportunity costs. That concept of “localized action” is key. Holistic yield management can sound complicated, if not impossible, if you approach it in a top down manner, trying to revise your pricing & inventory strategy as a whole to generate maximum revenue.
Instead, we prefer to think holistic yield management employing a strategy based on the implementation of a series of small actions (pricing, priorities, inventory allocation, product activation, etc.) with a focus on how such ‘tweaks’ will affect the overall business:
- What is the incremental revenue of an action vs. what would happen without this action? A question that we often hear is “What is the incremental value of adding Demand partner X in the Header”?
- How does the action prevent you from making more revenue “somewhere else” in the ad stack? When such an action happens, you are creating an opportunity cost. As an example, imagine a guaranteed campaign booked with a CPM of $2 when a retargeter is trying to buy the same impressions for $4 on the Open Auction market.
As you can see, diligently weighing and working on small actions with a focus on their overall impact is the key to holistic yield management.
To dive deeper into Holistic Yield Management, publishers should consider their yield management “actions” across 4 different streams. We’ll dedicate a future post to each of the following streams:
- Impressions mechanics & management
- Sales channel organization
- Relationship management with demand partners
- Data operations
For each of these streams, you can think and organize revenue generation “holistically”. The primary concept however, is unification within them.
Next Post in Series: Part 2: Holistic Yield Management in Practice: Unification of Impression Mechanics