By Ben Skolnik, Senior Director Platform Solutions
As publishers continue to look for efficiencies in their advertising sales strategy by opening up programmatic sales, one of the key challenges they face is finding a way to manage all revenue channels holistically. In just a few years, programmatic has grown from a relatively small portion of the inventory most publishers sell to become a significant part of their revenue picture. In 2015, globally, programmatic is expected to reach 48 percent of total display ad spend and by 2018 the U.S. figure is forecasted to reach 82 percent of all display ad spend according to Magna Global.
While many publishers have developed a sophisticated technology stack that helps them to package, offer and sell their inventory programmatically, they are in many cases still working to address the internal challenges that may impede their ability to manage sales holistically. While the fast changing ad sales market offers a host of change management issues for publishers here are three things every publisher should consider when they are evaluating how to navigate the complexity of multiple sales channels.
As publishers continue to grow their direct sales efforts as well as manage external programmatic partnerships, there are some workflow practices that need to be reconciled in order to most effectively manage all of the demand they see. This can include CRM, inventory management, ad trafficking and billing systems. It is not unusual – and often required – for publishers to use different systems and processes across their programmatic versus traditional direct sales efforts. However, in order to truly manage and optimize across all sales channels publishers will need to drive consistency in how they apply their workflow systems to programmatic sales and traditional direct sales. In the current state, platforms that support programmatic transaction offer a level of data transparency that allows for seamless alignment with the direct channel in order to help unify both efforts. The goal is to ensure that one side informs the other as comprehensively as possible.
For example, a publisher may license a third party CRM platform to maintain a database of information about its advertiser and media buyer partnerships. This data will help provide valuable insights for their lead generation efforts. At the same time, data on advertiser or media buyer relationships coming in via programmatic sales also represents a lead generation opportunity but such data is often not captured by the current CRM platform. Therefore, this publisher may want to consider how this programmatic data might be merged into the same CRM system that houses the data gathered from traditional direct sales.
Rate Card Management and Pricing
Rate card pricing models have been used for many decades to guide upfronts and direct sales, long before the advent of programmatic. Yet with many advertisers and agencies now purchasing ad inventory from the same publisher both programmatically and directly, these buyers have the advantage of using the intelligence derived from a publisher’s rate card as well as the price floors and other pricing queues found through the programmatic channel. There is an opportunity for publishers to leverage both sets of sales data about their packaging and pricing to fully understand their demand landscape and optimize their revenue strategy. For example, many savvy publishers will use bid price, bid “density” (the volume of buyers and bids) and the resulting auction close price to understand how buyers are valuing impressions on the basis of context, audience or other forms of targeting. This allows them to gain significant insights that allow for a more dynamic pricing strategy where the direct rate card pricing is informed by buying behavior across all channels.
Sales Team Compensation Plans and Commissions
One of the challenges many publishers face is managing the impact of channel conflict on their direct sales team’s efforts. As many ad sales executives rely on commissions from direct sales as a significant part of their compensation, the concept of “cannibalization” often comes up as a concern when the share of programmatic buying grows, especially when some of the same advertisers appear through indirect channels. Some publishers have started to address this by using the data transparency coming from programmatic platforms to understand which advertisers are running through multiple channels, and then building a compensation plan for their direct sales team that is tied to programmatic sales activity.
With many resources available to get over the challenges preventing truly holistic advertising sales, the biggest challenge is to manage the change process itself. The buying landscape is changing rapidly. However, the tools are there to allow publishers to make the most of their inventory assets, drive the greatest possible value to their available advertising real estate, and stay ahead of the shift in the market.