What Is Yield Management?

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The programmatic ad network[5] is constantly evolving, and publishers have to evolve with it to maximize revenue and to continuously deliver relevant ads.

Yield[12] management[6] has come to the forefront of optimization in terms of higher yields and maximum profits, however, the implementation of the strategy often leaves publishers scratching their heads in confusion.

In this article, we’re going to talk about yield management and its important components, as well as the best strategies in terms of utilizing it.

Read on to learn more.

What Exactly Is Yield Management?

Put simply, yield management is a strategy that’s based on selling to the right customer at the time and for the right price. It’s most commonly recognized within the hotel industry as it typically refers to selling the right rooms to the right guests at the best possible times which equates to selling for the highest amount.

In the programmatic ad selling world, the amount of inventory[13] on any given site is seemingly steady, however, the demand for the inventories in question varies. Much like hotel rooms, the goal is to sell all the inventory on the site at the highest prices possible, which means selling that at the right times. 

In the ad tech[14] world, yield management—or, programmatic yield management—is very technical and challenging. Publishers struggle with predicting the future of demands so they can manage their inventory accordingly, which is why they typically just sell their inventory around the clock. 

By utilizing the yield management strategy, publishers are able to maximize their incoming bids by moving their inventories around to where the demand is the highest. 

The obvious point of yield optimization is to make every single impression[7] more valuable and countable. So, for the entire strategy to work in terms of maximizing the publisher[15]’s yield, they would have to rely on other optimization channels such as private marketplaces (PMP[1]), Real-Time Bidding[2] (RTB), and Programmatic Direct[3].

What Are the Benefits of RTB?

RTB is an important component of yield management in programmatic ad selling. This is because RTB provides a bidding environment that allows advertisers to bid on different inventories in real-time that can in turn be delivered to specific users. 

RTB is also considered to be a publisher’s best friend as it works to increase their revenue streams by placing the right ads in front of the right users—at the right time. Essentially, it embodies the concept of yield management.

The benefits of RTB overall include the following:

  • The selling of as space to highest paying bidders in real-time
  • An automatic maximization of profits from both premium and leftover inventories
  • It contributes to higher margins
  • It provided detailed reports of the ad inventories in real-time

Additionally, when publishers use the RTB marketplaces, their partners can choose the buyers they want to bid on the inventory.

What Are the Benefits of PMP?

When publishers use the Private Marketplace, they can sell their premium ad inventory[8] within a smaller circle and still garner higher returns. This is because the PMP allows for the customization and combination of inventory packages based on target audiences.

Therefore, PMP works directly with demand-side platforms (DSPs) to benefit both publishers and advertisers.

What Are the Benefits of Programmatic Direct?

Programmatic direct is one of the more recent advertising models that allow for the identification of the premium target audience for certain ad campaigns. It also lends itself as a more long-term solution for publishers in terms of better yield management. 

Overall, the benefits of Programmatic Direct include the following:

  • It helps publishers efficiently control their unsold inventories
  • It creates better audience segmentation for targeting[16]
  • It assists in the delivery of more relevant content to specific audiences
  • It helps with the targeting of premium audiences beyond the publisher’s site
  • It aids in the optimization of content
  • It generates maximum CPM[4] rates for the less identifiable audiences

Programmatic Direct is arguably the most important optimization channel in terms of helping publishers yield maximum revenues. Its approach is similar to that of a private auction for publishers during which they can coordinate the top priority bids with premium buyers for certain inventories

Programmatic Advertising Strategy Confines Higher CPMs Than RTB

Of course, in order[17] to take advantage of these optimization channels for better yields, publishers must utilize the best yield management strategies. Those strategies would include the following:

Header Bidding

Also referred to as pre-bidding or advanced bidding, header bidding is the most utilized bidding process today as it was designed to increase impression monetization. Moreover, it connects publishers and ad networks with different demand platforms while calculating the value of their inventory. 

The entire process happens just before the bidding event begins (hence the name), and when done correctly, ad results and delivery is virtually instantaneous. 

Native Ads

Native advertisements are another viable yield management strategy that many publishers utilize. Native advertisements (native ads[9]) present themselves with the same aesthetics and flow as the publisher’s content.

In other words, native ads are less disruptive because they blend in more with the overall website, which creates a more effective ad experience for the users.

As the native content fits in with the overall website’s content, the advertiser[10] is better able to promote their content without disrupting the user experience. Additionally, the advertisers are paid for their content based on increased visibility while publishers’ revenue is generated directly from their websites. 

Affiliate Marketing or Direct Marketing

Affiliate or direct marketing is a strategy that also proves effective for yield management. This strategy allows for various companies to approach the publishers directly, which means they don’t have to go through ad networks to avoid bidding competition. 

Being that it’s a direct deal with no intermediaries, it also pays a much higher price to the publisher compared to going through an ad network. 

Additionally, it allows for more direct targeting of the website’s audience and therefore makes it easier for the company in question to maximize the viewability[11] of their ads which equates to increased revenues. It also provides the publishers with a commission, making it a win-win on both sides.     

Conclusion

In the world of programmatic ad buying and selling, the goal of publishers everywhere is to maintain and maximize their yields across all channels. It’s a challenging job with a lot to consider, and it’ll likely become more complex before a simple solution has been designed.

Terms
1. Private Marketplace [PMP] ( PMP ) Private Marketplace deals or PMP is a direct deal made between a publisher and buyer for programmatic ad inventory. A PMP can also be called Preferred Deals. This practice contains much more human interaction unlike the alternative of selling ad inventory through an ad exchange. Often higher rates for ad inventory can be negotiated through this method.
2. Real-Time Bidding. Real-time bidding is a technology-driven auction process where ad impressions are bought and sold almost instantaneously. Once an advertiser wins a bid for an ad impression, their ad is shown on a website. Real-time bidding plays a crucial part in the digital advertising ecosystem together with other players such as ad exchanges and supply side platforms.
3. Programmatic Direct. Programmatic direct is where specified buyers get access to specified inventory that’s not necessarily available from an open marketplace or a supply-side platform (SSP).
4. Cost Per Mille/Thousand [CPM] ( CPM ) Cost per mille, or thousand (mille = thousand in Latin). A pricing model in which advertisers pay for every 1000 impressions of their advertisement served. This is the standard basic pricing model for online advertising. See also CPC and CPA.
5. ad network. A company that serves as a broker between a group of publishers and a group of advertisers by aggregating inventory and audiences from numerous sources in a single buy. Ad networks traditionally aggregate unsold inventory from publishers in order to offer advertisers a consolidated and generally less expensive pool of impressions, but they can have a wide variety of business models and clients. In the context of ad trafficking and ad tech, the term "network" is generally taken to mean an ad network.

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