What makes digital ad sales so complex?

by Clayton Tarics

 

What is it about the industry that makes digital ad sales business so complex for publishers?

The advertising business has a lot of players, all competing for share of mind, share of wallet and the opportunity to serve advertisers. The digital advertising Lumascape shows over 300 companies in the ad buying ecosystem. Big brands and small ones have a large set of opportunities to reach audiences and create sustainable business results. From our position at the heart of publisher revenue management, we examine every element of a publisher’s business in an effort to make an impact on profitability, business operations, and performance.

While this is certainly not a comprehensive list, these are just a few things we think make a big difference in the complexity of the today’s digital advertising industry:

1. Publisher traffic (supply) forecasts fluctuate heavily

Publishers don’t have units in a warehouse sitting on a shelf. There isn’t a plan to manufacture a particular amount of that sellable good. Although publishers do have some levers to pull to influence traffic, they’re largely selling against a moving target.

2. Inventory is perishable

But unlike groceries at a grocery store, impressions have milliseconds of shelf life. Following the ad call, an ad server has to make a real-time fill decision as publishers are bound by expectations for user experience on the page. The monetization rate is only as good as the strategy established ahead of the ad call; you can’t put an impression on “manager’s special”.

3. Delivery is non-linear…

As opposed to a TV broadcast or a shipment of goods, a decision is made on how to monetize each individual impression.

4. …and modern advertising technology enables perfectly fluid market (audience) segmentation:

The result is variable supply and demand for each impression. What does that mean? Take airline pricing for example: two people sitting next to each on an airline other can pay wildly different costs based on the specific seat, the amount of time before the flight that they bought the seat, the retailer they bought the seat from, and a host of other factors. The person booking a ticket to visit their aunt in Chicago could pay a very different amount for the same seat than the business traveler who has to get to Chicago last-minute for a meeting.

Similarly, ad impressions that a publisher serves can be categorized in a virtually unlimited number of ways by both the publisher and the advertiser. Each impression can fall into an unlimited number of audience segments as well as other targeting and ad experience criteria, and each segment is worth different amounts to different advertisers at any given moment in time.

5. Forward guaranteed orders get complex quickly

Publisher and marketer planning teams can put together orders with a lot of line items – sometimes with over a thousand line items in an order with complex flighting and targeting requirements spanning multiple months.

Furthermore, marketers expect the ability to optimize complex orders over time. The result is that publishers are continuously reassessing and re-packaging the order that has already been transacted to optimize performance and ROI for their clients, and in an environment with fluctuating supply no less! Some will tell you that the hard work starts after the campaign is sold in.

And of course, advertisers only want to pay on measured delivery (but how and by whom?). It doesn’t stop after the deal is inked. The fulfillment process itself requires “revenue management” too.


10 -15 years ago when a publisher was running their digital ad business on a CRM system, an ad server, and a billing system, a simple order management solution was sufficient. The market was much less complicated. Today, the technology landscape is very different, with publishers using 10-30 ad tech systems across multiple sales channels in both spot and forward markets. Buying trends have evolved as well.

This is where Revenue Management thinking needs to be applied so that publisher operation teams can achieve more. Deep integrations let publishers connect to a sales, CRM, finance, accounting and attribution systems. All constituents within the publisher use the platform as a centralized resource. Data entry duplication is eliminated. As I noted in my interview with AdMonsters...

“The heart of digital advertising revenue management is a platform that connects all the disparate systems in the publisher tech stack that contribute to the generation of revenue and yield optimization. It drives the comprehensive, cross-channel sales and execution strategy.”

Interested in learning more? Contact us at 818-615-0380 or email us at info@fattail.com.