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Four Paths and One Destination: How the Yield Curve Can Foster Digital Ad Success
By Benjamin Reid, VP of Sales Engineering, Operative | April 2009
As overall ad spend continues to decline in the midst of this tough economic climate, digital media publishers are seeking ways to maximize revenue with greater urgency. While ad networks can help sell significant amounts of unsold inventory, smart publishers realize other tactics must be employed in order to generate high-efficiency revenue and retain the value of the brand.
Faced with existing tactics which have ceased to bear fruit, many publishers are unsure as to which strategy would best optimize operational efficiency and increase the value of ad inventories. Publishers also struggle with connecting the value of ad operations to revenue.
The yield curve, a tool often used in finance to determine the relation between interest rates and the time to maturity of the debt for a borrower, can be extremely useful for publishers seeking to increase the value of their advertising efforts. For example, the below yield curve (also online) shows the relationship between CPM and volume of ad impressions.
Let’s examine four strategies that publishers can pursue to increase the ad value across the yield curve. Since each of these strategies can affect the major strategic levers that guide a publisher’s monetization efforts, operational efficiency and value of ad inventory, we will also discuss the pros and cons of each method.
1. Increase Value of Premium Inventory
Increase the value of premium ad inventory by understanding the unique and desirable aspects of your audience. By associating a premium with a sought-after audience publishers can drive greater revenue on existing inventory.
Pros: Effort aligned with core value of your web property. Pays long-term dividends
Cons: Premium ad inventory may not get sold as advertisers’ budgets tighten.
2. Convert Standard Inventory to Premium Inventory
Understand the “second choice” inventory of your top advertisers. Publishers may not be charging the premium they could if this class of inventory is packaged appropriately. Use past campaign performance to predict future performance of similar campaigns.
Pros: Expands the overall amount of higher-demand inventory in your network
Cons: Not all second tier inventory performs as well as primary-target inventory
3. Increase Yield of Discretionary Inventory
Increase the sell-through of low-cost ad inventory. By employing optimization techniques and technologies, undifferentiated traffic can still generate consistent revenues.
Pros: Good ratio of effort to revenue
Cons: Better rates are often associated with better campaigns your in-house sales team may be selling directly. Low-value advertising may be a poor association with your brand.
4. Manage Inventory Closely
Depending on the overall performance of a given area, it may make sense to add or remove ad slots. Adding ad slots in higher-demand areas will increase sellable inventory and in areas where sell-through is weak, it may be best to remove the ad tags and save on serving costs. By removing excess costs with minimal impact to revenue, publishers can optimize the overall yield or profit from their site.
Pros: Can have significant and lasting impact to yield
Cons: Labor-intensive. Removing ad tags eliminates future analysis of a given section
Whether implemented separately or combined, the success of these strategies is contingent on a publisher’s advertising operational efficiency. Advertising operations plays a crucial role in revenue generation for publishers. The effective management of the repeatable, manual tasks found at the heart of every ad campaign is even more important today than ever, because a change in strategy can create the positive impact on efficiency and productivity that publishers need to thrive in these rough economic times.
Successful publishers create more revenue opportunity and boost their chances of profitability by streamlining their advertising operations and the systems, tasks and teams that manage them. So how efficient are your own ad operations?
Stay tuned for the second installment of this series to gauge the efficiency of your company’s operations and learn best practices for increasing the ROI of your advertising sales and operations.
