Decreasing the Inefficiencies in Advertising

LorneBrown_Headshot Lorne Brown is the CEO of Operative, one of the top advertising business management solutions in the industry. They exist to drive revenue and increase profitability for publishers and media companies by helping them to better control and sell their inventory. Prior to founding Operative in 2000, Lorne served as Vice President of Sales and Operations at BCJ Systems, an Internet consulting company. The Makegood recently spoke with Lorne about decreasing inefficiencies and increasing revenue for publishers. 

The Makegood: What do you believe publishers can do to find and capture the lost and un-monetized revenue opportunities when there are so many demand channels to manage?

Monetizing new revenue opportunities starts with organizing your supply. This enables you to segment your inventory across demand channels. Many publishers are stuck in the classic waterfall approach, where they focus first on exhausting the market for their “premium CPM” inventory before shifting into “lower CPM” demand channels. Expanding your yield curve requires simultaneous monetization across all demand channels, which helps you maximize revenue potential.

Start by organizing your operations into 4 key categories; 1) Planning, 2) Organizing 3) Capturing, and 4) Managing.  Far too often, we just manage. These activities all need to happen in order for true yield to be optimized.

  1. Planning starts with connecting your supply chain and your available units to be sold.  This is your ad servers, targeting, 1st party data, 3rd party data, partner inventory, sponsorships & everything that you offer. This requires an integration approach for your supply side systems.
  2.  Organizing is establishing a single, universal product catalog. This involves taking a holistic view of your products and assigning them to the right demand channels.  You may include the same “data” for a brand advertiser as you would a direct response marketer, but the creative units you assign to those packages would be different.
  3. Capturing means housing all of your revenue data from demand channels in one place.  Historically, only sales bookings are captured and remnant deals are the after thought.  All inventory, price and units purchased, by a human or a programmatic buyer, must be captured.  Only then will you have a full picture of your entire yield curve.
  4. Managing demand channels and segmenting your yield curve is now possible, once you have your supply organized in a single place. At this point, it’s possible for a CRO to decide who gets what inventory at what price at any given time…not just with 3 days left in the month when you need to open the programmatic flood gates to make the number.

The Makegood: With your knowledge of the industry, and as the CEO of Operative, could you discuss how publishers can simplify the complexities of ad operations to start increasing their revenue?

If your top talent in ad ops is constantly getting sucked into trying to figure out why a creative isn’t firing clicks, then they aren’t thinking about how to increase revenue. And, if you’re like most publishers, you likely have 3-20 people, who know more about your inventory, products, and customer needs than anyone else, and they are stuck in a back room somewhere. But they can’t help you make money if they are copying and pasting targeting variables all day long.  The industry is only growing more complex and more competitive. Bringing this knowledge to your sales process and business strategy starts with getting these employees out of the weeds – or, as one of our customers put it: outsourcing low ROI tasks to achieve high ROI operations.

Where do you start?

List of all the jobs the team does all day long, then categorize them (trafficking, reporting, QA, troubleshooting, etc.).  Then, list of all the jobs you want people to focus on to help generate revenue (creative, optimization, yield, product packaging, etc.).  Take the first list off your plate. You want to add the power of 5-10 quota carrying sales reps to your 2015 plan?  Free up your ad ops team to help you start making money.  They will surprise you, and then you’ll start thinking how you can double or triple revenue that comes out of ad ops.

The Makegood: How can media companies increase the visibility of their inventory with premium buyers?

It’s not so much a desire to withhold inventory information from the buy side, but a question of how a publisher can easily control this information. Sharing inventory availability is choice. The challenge is that too many publishers continue to manage inventory out of their ad server, which is far removed from the channels that are buying it. As a result, the inventory is often out of date, which doesn’t help buyers.

The key capability here is making sure inventory is decremented at the time of purchase or reservation. That comes with an inventory centralization infrastructure (not a spreadsheet!).  For many publishers, the solution starts with structuring product data into a universal product catalog. By standardizing inventory into a categorized set of data, you can control it— and then you can share it.

And again, this starts with planning, organizing capturing and managing.

The Makegood:  How can publishers reduce the inefficiencies of their advertising operations and sales departments?

The reality for media companies is that most of their traditional media sales have relatively few transaction steps, but deliver high value. This is not the case with digital.

Executing a digital sale is 5 times more complex than traditional media. There are 5 times as many line items in an IO, which means 5 times the amount of data that needs to be processed. Average insertion order information is typically rekeyed 6 times, and that’s just for display ads. Add other formats like mobile or video and now you have 6 product lines that are operationally 5 times more expensive than your traditional media business.

In addition, as linear TV moves towards convergence, we’re dealing in a world that trades in impression-based currency. This intensifies the need to solve the digital game, as preserving margins and growing profits becomes even more critical. The solution starts with centralizing operations and creating automated workflow handoffs at each transactional step. This automation needs to start with beginning and flow through the end.  If you don’t create these efficiencies, you have to throw people at the problem, and then throw more people as you scale, because the transactions don’t go away, and only get worse and more complex from here. By integrating technology, you reduce the number of times you process things, reducing your reliance on manual transactions.

The Makegood: How do you believe publishers can be more strategic in their control and price of their inventory to avoid commoditization?

When C-suite executives introduce a strategy to innovate and differentiate, far too often the plan falls apart by the time it gets to a sales rep. For many publishers, complexity can get in the way of executing new strategies for growth. But really, complexity can be a competitive advantage — if you can effectively manage it.

The challenge for publishers is harnessing the valuable targeting data they’re sitting on, and making it easily accessible for sales reps to provide to customers, offering them something they can’t get anywhere else. All too often, this valuable information is trapped in technology or departmental silos.

What most media executives don’t realize is that executing a go to market strategy actually starts with centralizing your supply into a structured product catalog, and pulling in valuable targeting data for sales reps to use. By empowering your sales team with this information, you help them stand out in highly competitive marketplace, and you enable operational execution of corporate strategy. The key is to leverage a structured product catalog and valuable audience data to provide customers with an experience they can’t get anywhere else, and that keeps publishers above the commoditization line.

The Makegood: Thank you, Lorne.