By: Taras Bugir
Content and services providers are in a quandary. Their efforts in responding to brands and agencies trying to aggregate audiences across an increasing array of fragmented delivery platforms, while trying to maintain appropriate ad exposure goals, poses immense challenges. With new advertising inventories from OTT, linear, digital, addressable and digital out of home (DOOH), media companies are trying to determine how to maximize these advertising revenue opportunities with optimal use of cross-media audiences.
Much of the advertising industry is talking about digital transformation with the promise that once you go digital “It will be great!” and all your problems will be solved. Yet, what do people mean by “going digital”? If the destination of this transformation is digital, what does that really mean? Does it mean all inventory will be digital? Does it mean programmatic? How does going digital help your company? And how does your company achieve this transformation?
It is important to realize that it’s not just about digital. The advertising industry is in the midst of a revolution in yield management and automation that presents infinite possibilities.
A very similar transformation took place in the airline industry many decades ago. In the past, you would go to a travel agency and jointly plan your destination. The agency would call the airline, confirm seat availability, and issue you with a paper ticket. You kept that ticket safe, because losing it spelled trouble.
When the Internet enabled on-line ticketing, travel agents and brokers all but disappeared. This transition to digital created an opportunity for new middlemen aggregators but the airlines themselves were still largely unprofitable. It wasn’t until the airlines embraced yield management, that they would have the tools to value their inventory, push middlemen out of the transaction, and drive the profits they needed. This “frictionless” transaction saved the airline commissions, and saved travelers significant planning and buying time. The airlines maximized their revenues, while travelers realized better flight prices and options, immediacy in purchase guarantees, and tickets were secured from loss.
The keys to the success of the airline industry’s digital transformation was:
1. Automating the processes (intelligent, scalable technology)
2. Carefully tracking all seating options (inventory) across all flights (platforms)
3. Embracing yield management
4. Eliminating middlemen (frictionless trading)
These four things supported by diligent data governance enabled yield management, trusted billing, and dynamic pricing and planning. All of which maximized the revenue opportunities and unprecedented operational efficiencies for the airlines.
During this transformation to digital sales, airlines simply did not throw away their systems, procedures and processes overnight. In fact, they still have diverse technologies (planes) and inventory (seats) across diverse flight technology platforms. And already there have been several generations of change in airline transportation since with doubtless many more to come.
Their transformation continues.
It is important to understand that digital is not the final destination. The transformation required for a business cannot be addressed with simple technological panaceas. Transformation requires a synchronous journey of technology and business to create an economically sustainable enterprise that can evolve through the transformation to a digital destination, and beyond.
How does this apply to the world of advertising?
Cross-media Advertising Platforms
Large media providers have purchased or built OTT platforms, some already have broadcasting platforms, cable networks, digital footprints, OOH and print. With this portfolio of advertising delivery platforms, they now have an enormous amount of advertising inventory and associated audiences. Invariably, each delivery platform has its own separate sales and management system.
When a campaign order arrives from a brand or an agency, the order is taken by the seller and campaign elements are divided across these multiple systems. Each of these silos has its own independent workflow, with no awareness of how the other campaign elements are being fulfilled. As the elements of campaign orders are delivered, they are recombined for reporting purposes. In most media enterprises today, multiple reports from each delivery platform are manually processed with the aid of spreadsheets, resulting in extremely inefficient and error prone results.
In an attempt to automate reporting, several organizations have attempted to build integrated solutions, investing heavily in time and money to achieve modest successes. While reporting is essential, actionable information to drive the business is really the indispensable component. These efforts have invariably fallen short, as the efforts were focused upon a technological or operational focus rather than a revenue focus, offering perfect examples of technology misaligned to the needs of the business.
As the media business becomes more diverse with inventory and audiences, the potential combinations across advertising delivery platforms and associated cross-media campaign management becomes increasingly complex. A successful cross-media approach evaluates all proposals, optimizes all orders, and leverages all potential inventory for the entire sales ecosystem in real-time to maximize revenue. Ensuring efficient inventory utilization and comprehensive copy management for insertion orders, aligned to audience values, is essential. This requires pristine data governance with a robust platform providing a sophisticated cross-media data model. The volume of granular data from all of the advertising delivery platforms to be analyzed is now beyond the realms of human comprehension, and it is for this reason that machine intelligence must be employed. Clearly, this is much more than simple aggregated reporting functionality.
To support these challenges of business transformation, Decentrix® developed a cross-media advertising yield-management SaaS platform called BIAnalytix™. This technology unites existing delivery platform infrastructures and business workflows to optimize the use of advertising inventory, making sure that the right content gets to the right audience, at the right price on the right device. BIAnalytix™ supports yield management, accurate billing, secure data governance, dynamic pricing and planning in both traditional and cross-media workflows. BIAnalytix™ delivers across all platforms in order to achieve operational efficiencies and maximize revenues for the media company, while ensuring effective campaign outcomes for the advertiser.
Transformation is Not a Choice, It’s a Necessity
The importance of effectively managing cross-media inventory delivery for both sellers and buyers is now clearly established. From an economic perspective, as a brand, your objective is to reach a specific target audience across as many different viable platforms at the most efficient cost per transaction with the lowest cost per viewer. Conversely, as an owner of those platforms, you want to make sure that the cost of delivery is economically efficient and ensure that the ability to deliver expected results is timely and accurate. As a result, we have seen mergers and acquisitions of different distribution channels and platforms by large media companies to provide the scale and significant return on investment expected by their investors.
If you create cost effective systems to enable advertising to flow as frictionless as possible between the buyer and the seller then you’re in a position to actually start maximizing your revenue. Decentrix® enables organizations to transform their business by streamlining and unifying their workflows across different delivery platforms in the most economical way possible. By enabling inventory to be dynamically compared, priced and allocated, media companies can start maximizing the value of that advertising inventory.
This is achieved by allocating and pricing of both inventory and audiences across all advertising delivery platforms without displacing existing infrastructure and operations. As we’ve seen before in other industries, these are the keys to transformation – having diligent data governance to deliver audiences across platforms, eliminate friction from the value chain, and automate processes with intelligent, scalable technologies.
This approach will not only maximize advertising revenues to self-fund the transformation, but it will sustain the business throughout and beyond a transition or transformation to digital. That’s what Decentrix® is all about.
Yield Management
Yield-management is one of the factors of success to digital transformation. While there has been a lot of conversation about this topic, it has been confined to singular applications such as digital capacity predictions, and/or spot/break positioning. All such individual topics fade into the oblivion of minutia when cross-media campaign optimization, the real thrust of digital transformation, is deeply understood. This understanding requires a nuanced knowledge of the business, economics and operational parameters of various platforms.
At the most fundamental level yield management for media focuses on the maximum cross-media opportunity that can be secured using the available advertising inventory under demand pressures against that inventory – within a given set of circumstances. The key question is what is the best price and best use of that inventory to maximize its yield?
Dynamically changing inventory pricing in response to demand, the profile of the campaign audience, without creating harm to fulfilling the requirements of other campaigns, is clearly one approach. But will this maximize the yield? Perhaps. But carefully managing inventory, creating appropriate allocations and redistributing audiences across all orders in the system may alter the equation. However, if the inventory is priced correctly, and it’s good for the owner of that advertising inventory as well as for the buyer, then both parties win. Unfortunately, with the current fragmented operationally focused cross-platform, omnichannel or multi-media approaches to buying and selling, that has not been happening.
In order to enable the yield management key for transformation, we need to accept that there is a lot of inefficiency in currently deployed operationally focused systems. There is scant evidence that any of them realistically consider inventory usage and its impact on revenue. They work well in their designed role – to simply offer enhanced order entry and placing engines with billing and basic reporting. Yet, by orchestrating them synchronously across the media enterprise using BIAnalytix™, businesses can implement effective utilization of inventory, understand its demand, and dynamically price it across all platforms to maximize revenue.
Consider a concept that is absent from all existing systems, such as measuring the liability created by a commercial transaction. A liability calculation can determine whether an order should be accepted at a given price. If the order is accepted, we could therefore be assured that its liability in the context of all other orders and their respective demands upon inventory satisfies business rules and can therefore be delivered successfully. Think of the implications – less workflow churn, client deal satisfaction, preservation of advertising value, effective inventory use, more precise audience allocations and therefore improved revenue outcomes. Friction has been removed from the trade.
As we’ve seen in other industries, buyers will request more products and services if they are priced appropriately, satisfy their requirements, and delivered reliably. These fundamental tenets of trading offer greater opportunities for yield management in nuanced cross-media diverse platform environments than in dedicated sales channels, and they underpin the secret to effective business transformation.
Frictionless Trading™
Frictionless Trading™ is also an integral part of business transformation. Frictionless Trading™ eliminates middlemen from the buy-sell process and creates a safe environment for transactions to take place. Some say, “I can do that today with programmatic.” While partially true, the following considerations deserve close attention.
When programmatic systems are implemented by sellers, the value of inventory risks commoditization, and studies have shown it can be devalued over 40 percent. This is primarily due to a cluster of small ad tech companies that have injected themselves into the trading process to skim the revenue stream. Such an advertising or technology tax is being unwittingly sanctioned by both the buyer and the seller.
Secondly, doubtless you are receiving strange feedback or inaccurate information due to the level of fraud being actively monitored in these supply chains. More importantly, there is no control over where the advertiser’s content will appear. The whole concept of brand safety – the brand which you have spent millions or billions of dollars developing – could well end up on some nefarious website.
If an advertiser wants to both buy and control a campaign, why wouldn’t they use the exact same workflows as the seller over appropriate inventory made available to them? It’s possible. No tech-tax or revenue skim, clear brand safety, and surety of delivery with Frictionless Trading™. Today’s programmatic platforms do not effectively deliver this in the digital space let alone contemplate the complexities of consolidated trading across diverse media platforms.
Implementing Cross-Media Advertising
Transforming to a cross-media enterprise requires deep strategic introspection. Consumer behavior in the media space is leading to ever-increasing audience fragmentation and accelerating downward pressure on advertising revenues. Media enterprises are challenged with how to monetize this change in behavior. As we have seen thus far, growing media revenues using existing workflows is no longer tenable as the economics of advertising delivery keep costs escalating to deliver content in multiple formats across-platforms.
The headline of the January 8th, 2020 edition of Variety by Todd Spangler read “Change or Die: 50% of Media and Entertainment Execs Say They Can’t Rely on Old Biz Models, Survey Finds”. Alarmingly, this article indicated that 34% of executives surveyed indicated that their company will no longer exist in five years unless their business undergoes reinvention.
No team, no matter how smart or experienced, can do cross-media using traditional systems and workflow at scale without incurring massive operational overhead that overshadows the value. While the size of the transformation problem is incalculable, you need to coordinate all the data from traffic and billing, CRM, content rights, clickstream data, scheduling, proposals, audience research, financial data, currency and existing rates into a single cohesive plan.
Most organizations still have individual sales teams and systems for each type of media e.g., TV, Digital, Mobile, OTT. In reality having separate sales teams means that you are competing with yourself for ad dollars from each agency and brand. Worse, multiple sales teams typically mean multiple systems and disparate workflows to handle what should be a unified and coordinated campaign. This results in unrealistic delivery goals, uncoordinated copy rotation plans, unaligned audience targets, and service miscommunications. A coordinated sales approach provides a single point of contact, and a truly optimized campaign within a single integrated workflow.
Cataloguing inventory, managing it within silos, or not having access to monetizable capacities is not true inventory management. Implementing true cross-media campaigns, requires unified audience segments that cross the different advertising delivery platforms in a consistent and non-redundant way. By creating a coordinated cross-media campaign, your organization can focus on capturing impressions across all media types.
In a true cross-media world, inventory is allocated across all advertising delivery platforms to ensure that their aggregate value is maximized. At any moment, allocations may require re-evaluations based upon demand, using a system that can accurately forecast the demand for each inventory pool and price it accordingly. Most likely, true yield management and dynamic pricing are not integrated into advertising operations workflows. Without dynamic pricing that reacts to changes to inventory and demand, you are making educated guesses on the value of the inventory. It is essential to have insight into all your inventory pools and understand their real time demand pressures. Without machine intelligence powering a yield management platform to optimize your business it is impossible to identify opportunities that maximize revenue.
BIAnalytix™ enables business leadership to inspect the business in real time on a single pane of glass, be it mobile or desktop, allowing the company to understand the optimum way to grow, shift or morph the business. Inherent scenario planning capabilities with historical data enables the company to steward its opportunities through these transitionary times.
But it all starts with a platform providing diligent data governance with a sophisticated cross-media data model employing yield management powered by machine intelligence.
The Transformation
We have seen that the digital transformation is very real and that new platforms such as OTT are accelerating the imperative. However, we have also learned that it is the transformation that is important, not the destination of digital.
We’ve seen the keys to transformation – having diligent data governance to deliver audiences across platforms, eliminate friction from the value chain, and automating processes with intelligent, scalable technology.
Having a clear destination and the keys to transformation is a great start. Addressing the imperative to start requires the right vehicle with an experienced guide to help chart a path through the ambiguity of transformation.
BIAnalytix™ from Decentrix® provides the technology and assists in aligning it to your business in order to streamline your transformation efforts. We provide an artificial intelligence powered yield management platform trained on your data, your business. Understanding the complexity and nuance of the transformation process challenges the boundaries or business, economics, technology and data science and we’ve spent an inordinate amount of time in making cross-media advertising simple.
Unlike the classic systems of yesteryear, transforming to digital with a cross-media yield-management platform takes months not years.
Fast is the new pace in our industry. So, are you ready to make the journey? A true cross-media yield-management system is the ticket to your digital transformation. All aboard!