http://www.adexchanger.com/yield-management-tools/fattail-burke/ Digital media optimization news and discussion website. Fri, 10 Feb 2012 23:33:42 +0000 hourly 1 http://wordpress.org/?v=3.3.1 http://www.adexchanger.com/yield-management-tools/fattail-burke/#comment-5521 Doug Burke Tue, 06 Apr 2010 17:43:12 +0000 http://www.adexchanger.com/?p=18143#comment-5521 Roy: Your question is theoretical because a futures exchange does not exist today. Obviously striving for high CPMs by publishers is a desirable goal - but at what cost to profitability? Premium Publishers have proven that sales reps can lead to higher CPMs, however, the cost to create and support a direct sales team is very high. And it does not guarantee universal sales coverage. As Tolman Geffs of The Jordan, Edminston Group articulated at the IAB Leadership Summit, when all the elements of the value chain on this CPM extract their toll, there is not a lot of contribution margin left for the publisher to cover the cost of a direct sales team. (Page 19 of Tolman’s presentation). http://www.jegi.com/files/docs/2010_IAB_Presentation.pdf. There is too much friction in the display selling ecosystem to service the diverse needs of buyers - including major brands, agencies, local advertisers, and direct response buyers. This is one reason that super-premium publishers have high minimum order sizes - driving a significant portion of the demand into ad networks and exchanges where there are low minimum order sizes. If the majority of the buyers for future inventory could be assembled in one place, in one moment in time, bidding simultaneously against each other, with no human intervention, bidding on the same, standardized inventory with non-cancellable contracts, an automated futures exchange is feasible. Our industry is a long way from that. The answer to increased publisher profitability is to automate the selling process by connecting the supply side to the demand side in a transaction network. Roy: Your question is theoretical because a futures exchange does not exist today. Obviously striving for high CPMs by publishers is a desirable goal - but at what cost to profitability? Premium Publishers have proven that sales reps can lead to higher CPMs, however, the cost to create and support a direct sales team is very high. And it does not guarantee universal sales coverage. As Tolman Geffs of The Jordan, Edminston Group articulated at the IAB Leadership Summit, when all the elements of the value chain on this CPM extract their toll, there is not a lot of contribution margin left for the publisher to cover the cost of a direct sales team. (Page 19 of Tolman’s presentation). http://www.jegi.com/files/docs/2010_IAB_Presentation.pdf.
There is too much friction in the display selling ecosystem to service the diverse needs of buyers - including major brands, agencies, local advertisers, and direct response buyers. This is one reason that super-premium publishers have high minimum order sizes - driving a significant portion of the demand into ad networks and exchanges where there are low minimum order sizes. If the majority of the buyers for future inventory could be assembled in one place, in one moment in time, bidding simultaneously against each other, with no human intervention, bidding on the same, standardized inventory with non-cancellable contracts, an automated futures exchange is feasible. Our industry is a long way from that.
The answer to increased publisher profitability is to automate the selling process by connecting the supply side to the demand side in a transaction network.

]]> http://www.adexchanger.com/yield-management-tools/fattail-burke/#comment-5459 Roy de Souza Thu, 01 Apr 2010 01:26:22 +0000 http://www.adexchanger.com/?p=18143#comment-5459 Doug, do you think that an automated futures exchange or a sales rep visiting in person would result in an advertiser paying higher CPMs for a premium publisher's guaranteed inventory? Doug, do you think that an automated futures exchange or a sales rep visiting in person would result in an advertiser paying higher CPMs for a premium publisher's guaranteed inventory?

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