Media ProductizationRealizing the True Value of Your Online Assets

White Paper | November 2011

TABLE OF CONTENTS

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INTRODUCTION: HOW YOU PRODUCTIze YOUR AsseTs MAkes A DIffeReNCe 3

PRODUCTIzATION: GLOssARY Of TeRMs 5

CHALLeNGes TO PRODUCTIzING ONLINe INVeNTORY 6

A sTRATeGY fOR ACHIeVING TRUe PRODUCTIzATION 9

CONCLUsION 13

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INTRODUCTION

How You Productize Your Assets Makes a Difference

Do publisher revenues reflect the true value of their inventory? In far too many cases, the answer is a resounding “no.” With the explosion of technology solutions at publishers’ disposal to increase the value of their inventory (e.g., targeted networks, data aggregators, yield optimizers), the landscape has become so convoluted that navigating through it has become a challenge in itself.

As a result, the process of developing and maintaining a catalog of sellable products out of a publisher’s total addressable inventory—productization—can bring various uncertainties for the people in charge. Are we offering the right products? Are we packaging our inventory in a way that provides clients the value they are seeking? Are we selling our products at a price that maximizes revenue? And an equally important consideration for publishers…can we profitably deliver on our commitments?

All of the above certainly keep many in our industry awake at night. The problem is there is no obvious answer to optimal productization.

Historically, publishers would let their ad serving technology drive how they packaged their inventory. That is to say, ad server language (e.g., line items, sites and zones, keyword targeting) would influence how a publisher would package and offer ads to clients. For example, instead of displaying an exclusive Homepage sponsorship on a publisher’s insertion order (IO) as “Exclusive Homepage Sponsorship”, it would be reflected as the multiple line items that make up the sponsorship. For advertisers and agencies, this is not an easy way of doing business.

“The online media buying revolution is in full swing - to make it through the digital Media Meltdown, online publishers are going to have to empower themselves with audience-oriented sales strategies, yeild optimization technologies, and tech-savvy organizational upgrades.”1

- Michael Greene, Forrester Research Inc.

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Media Productization: Realizing the True Value of Your Online Assets

INTRODUCTION

As buyers trend towards buying audiences and demand more integrated campaigns (see Figure 1), ad server-based selling is quickly becoming a competitive disadvantage.

To answer client demand for more targeted audiences, and to be able to effectively operationalize ad sales downstream into trafficking and billing, publishers need to rethink their approach to productizing inventory. For too long, a critical consideration to long-term viability was being pushed to the backburner—having the right infrastructure in place to support best productization practices.

This is no longer the case. More than ever, publishers are discovering what is required to win—the combination of a strong productization strategy and the proper enterprise-wide technology infrastructure to support it. Not only can it provide lift in key inventory management areas, such as yield and sell-through performance, but it also ensures publishers can smoothly execute and bill what was sold.

This white paper is for the online media publisher who is facing challenges with productizing their inventory. It identifies the impact of sub-optimal practices and offers solutions addressing the questions: What are best practices for getting the most value out of my inventory? And how can I ensure we are able to execute these products efficiently?

The marketing and media ecosystem is at an evolutionary threshold, as increasingly informed digital marketers are demanding more innovation, value, and accountability. Those who can adapt to these increasing demands through a systematic productization strategy and a solid infrastructure ultimately carry a decided advantage.

Figure 1. Publishers are increasingly facing a more complex, competitive, and fragmented environment in which to sell advertising.1

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PRODUCTIZATION: GLOSSARY OF TERMS

Today’s publishers recognize the need for a new approach to manage their online advertising business. Before we begin our discussion, it is important to establish what we mean by a few basic terms and concepts related to productization.

Ad Slots Any location on a site through which an ad can be served. Examples:

• Auto Homepage 300x250 Rectangle • News Text Link

• Entertainment 300x600 Skyscraper • PS3 Game Reviews Video Pre-roll

Addressable Inventory Any and all opportunities that a publisher has to present an advertiser’s creative to a consumer. When considering the term generically as a consumer’s exposure to an advertiser’s ad, a publisher’s addressable inventory is the set of all impressions running through all of their properties.

Products There are two main components that make up a product: 1) where the ad space physically resides (the ad slot) and 2) the various audience attributes of those who are shown the ad (targeting). Because advertisers and agencies are increasingly demanding the ability to pick and choose audiences by target segment, publishers want to build products that provide their buyers with this flexibility. Examples:

• News 300x600 Skyscraper, targeted to men aged 30-45 in New York with household incomes greater than $100K

• Sports Homepage Expanding Top Banner, targeted to youth aged 13-18 years old, searching “movies”

Product Packages Products bundled into a group. Examples:

• Homepage Takeover, consisting of background skin, 728x90 leaderboard, and 300x250 Skyscraper

• NFL Gametime Sponsorship, a takeover of the NFL section homepage, ownership of the 175x90 button site-wide, and first impression pre-roll on all NFL related clips

Product Catalog A publisher’s complete list of sellable products. For many publishers today, this resides in an Excel spreadsheet, a customer relationship management (CRM) system, an ad server, or inventory management system. A publisher’s product catalog is best created, maintained and optimized with an enterprise-wide business platform—it provides the end-to-end infrastructure required to support all sales, ad operations and billing processes to streamline contract to cash.

Productization The process of bundling your total addressable inventory into sellable products and packages in a way that maximizes revenue.

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Why is it So Difficult? Done well, productization enables the publisher to attract more buyers and maximize yield. Another less obvious but critical benefit, to be elaborated on later, is how a more disciplined productization strategy can also bring operational efficiencies throughout the sales, ad operations, and billing processes. Unfortunately, many publishers today are still challenged in determining what to sell, how much to sell it for, and how to optimize their product offerings on an ongoing basis. Below summarizes some of these challenges and how they hinder a publisher’s ability to maximize revenue.

1. Audiences Have Multiple Dimensions

First and foremost, understanding who visits a publisher’s site(s) informs decisions around which products and packages to offer and the rates and premiums to demand.

However, with a variety of web analytics2, data exchanges, and other audience measurement tools in the digital media ecosystem3, it quickly becomes a confusing exercise to figure out all the different characteristics, or dimensions, to an audience (see Figure 2). At any given moment, a visitor can represent multiple dimensions such as:

• Age

• Gender

• Location

• Income

• Interest

• Behavior-based intent to purchase

Even when publishers gain an intimate understanding of their audience’s profile, deeper challenges lie ahead with determining, at any given point in time, how much inventory is available.

CHALLENGES TO PRODUCTIZING ONLINE INVENTORY

Figure 2. At any given moment, a site visitor represents multiple characteristics, or dimensions. These can include: age, gender, location, income, and interests.4

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Media Productization: Realizing the True Value of Your Online Assets

CHALLENGES TO PRODUCTIZING ONLINE INVENTORY

2. It’s Difficult to Get Accurate Inventory Numbers…

The multi-dimensional nature of audiences makes it difficult to keep track of how much inventory is available to sell. For the majority, offline processes have developed to obtain inventory availability. It typically involves logging into the ad server(s), running a forecast report, exporting the report to Excel, manipulating the spreadsheet for easier consumption, and finally, distributing the report to the sales team in response to multiple inventory requests.

… And Link Them To Specific Products

In the offline process described above, when forecast reports are pulled, the information displayed does not always neatly map to the publisher’s list of sellable products. For example, as previously described, while “Homepage Exclusive Sponsorship” may be the product a sales rep sold to its buyer, forecasted inventory in the report will appear broken down into the sponsorship’s various ad components. Therefore, human intervention is still necessary to bridge the gap between the list of sellable products and packages, and available inventory.

As companies grow—adding new Salespeople, receiving more Requests for Proposals (RFPs), and adopting emerging technologies to support new revenue opportunities—these offline, manual processes quickly become unsustainable.

3. Different Sales Teams Have Varying Requirements

Publishers may rely on several different sales teams (e.g., premium, national, local) and channels (e.g., direct, indirect, partners, exchanges) to sell their inventory. Most times, this requires that every channel needs its own product catalog, rate cards, and separate set of controls to specify what inventory may be sold to whom and when.

Unfortunately, most publishers have no way of centralizing these varying requirements across the different teams into a single, holistic view; thus adding to the complexity of maintaining productization best practices.

The Negative Impact of Poor Productization:

1. Slower RFP response times

2. Less control over what is sold

3. Lower eCPMs

4. Inefficient processes across the organization

5. Hampered customer service

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Media Productization: Realizing the True Value of Your Online Assets

CHALLENGES TO PRODUCTIZING ONLINE INVENTORY

4. Not Organized to Sell How Clients Want to Buy

Advertisers are consistently looking for a new experience or fresh idea when approaching publishers, and it’s challenging to offer a set of products that can be adapted by the sales team to meet those goals. A productization strategy that focuses too much on controls and standardization can limit valuable business, while agreeing to any and all requests can place great pressure on the ad operations team to deliver custom ad solutions.

5. Direct & Indirect Sales Aren’t Integrated

Direct and indirect campaigns are often contracted, operationalized, analyzed, and reconciled separately. They are two very different sales strategies, using separate inventory pools (premium and remnant), and often executed through separate systems with separate reporting. The resulting outcome of the lack of a disciplined productization strategy across all sales channels is disparate data, inefficient processes, and an inconsistent customer experience.

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A STRATEGY FOR ACHIEVING PRODUCTIZATION

The process of achieving true productization has three main components: 1) Adopting a holistic approach to addressable inventory, 2) shifting product development away from how it needs to be delivered to how clients want to buy, and 3) implementing an enterprise-wide platform that operationally streamlines the selling, executing, and billing of products.

Adopt a Holistic ApproachTo optimize revenues and satisfy buyer demand, publishers need to take a strategic and holistic approach to productizing their inventory. A holistic approach will enable a publisher to compare how inventory performs across channels, partnerships and pricing schemes. It will also ensure that sales controls, advertiser exclusions and other criteria are enforced across the network. But most importantly, a holistic approach will enable the publisher to offer data-driven products that today’s advertisers want.

Create Products Based on the Buyer, Not the TechnologyAdvertisers understand the value of robust audience data, and have demonstrated their willingness to pay a premium for it.5 Good productization allows publishers to generate demand from buyers that accurately reflects its true value.

As previously discussed, publishers should not be allowing an ad server’s capabilities and structure to drive how products are created. In other words, a company’s product catalog needs to be separated from the technology that is used to deliver it. By enforcing this discipline, publishers allow themselves to offer solutions in the way advertisers and agencies want to buy.

The following best practices provide guidance to achieving true productization.

• Classify content into groups. The first step to productizing inventory is to organize it by content (e.g., News, Entertainment, Sports, Music). This makes it easier for sales teams to find the product that presents the most value to their buyers, which in turn, provides the best opportunity for publishers to boost effective CPM (eCPM).

True Productization Requires:

1. Adopting a holistic approach 2. Offering solutions the way

clients want to buy3. Implementing the proper

infrastructure to support and scale best practices

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Media Productization: Realizing the True Value of Your Online Assets

A STRATEGY FOR ACHIEVING PRODUCTIZATION

• Identify and segment audiences. Buyers are keenly interested in the audience that reads the publisher’s content, and will pay more for products that include data attributes, such as demographic, psychographic, and behavioral information. Even if these characteristics are not being explicitly targeted, this data can help drive a higher CPM on content-based campaigns.

• Ensure cross-organizational transparency of all addressable inventory. Publishers will not be able to maximize sell-through and yield as well as effectively deliver campaigns unless there is complete cross-functional awareness. The sales team needs to know what they can sell and the quantity available, and ad operations need to understand the execution requirements to successfully deliver what is sold. Revenue potential can be compromised without proper access to this information.

• Embed execution instructions into products and packages to maximize the potential for automation. When products and packages are sold, a cascade of activities need to happen in order for ad operations to launch campaigns on time and deliver them in full. To ensure efficient and accurate delivery, products and packages should be set up with back-end delivery instructions. This way, when campaigns are sold, they can be easily trafficked without extraneous manual effort.

Leverage an Advertising Business Management (ABM) Platform to Aid ProductizationTo achieve true productization, publishers will need an enterprise-wide system that brings all addressable inventory into a single product catalog, offers automated workflows, sales controls, and inventory forecasting and reporting. Below discusses in further detail how an ABM platform provides all of the necessary functionality to fully productize inventory and the significant benefits it delivers.

• Holistically Organize Inventory to Increase Operational Efficiency. Because most publishers sell multiple ad types (e.g., display, mobile, video, rich media) and leverage various channels (e.g., direct, indirect), they oftentimes become enveloped in an extremely complex and fragmented spider web of technology solutions to support their revenue streams. Each of these systems comes with different ways of defining ad slots, which further complicates a publisher’s ability to follow a uniform approach to managing their product catalog. An ABM platform hooks into these various systems (see Figure 3), providing publishers a standard interface to capture all potential technical variances in how products and packages are defined. As a result, publishers can segment and organize their entire inventory in one system, displacing the manually intensive approach of managing multiple spreadsheets.

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• Product Packaging Enables More Sophisticated Revenue Opportunities. With product packaging, publishers mix multiple product offerings into a bundled offering. This makes more sophisticated revenue practices possible. Examples include:

• Bundling low-value inventory with some high-value inventory, while still maintaining a high eCPM.

• Representing the value of a bundled product to a buyer through all of the included products, while only guaranteeing impressions across the entire package.

• Offering multiple aspects of a contract (e.g., homepage takeover, microsite development and email blast sponsorship) as a packaged deal at one price.

• Sales Controls Maximize Revenue for Each Deal. Enterprise-wide sales controls help the publisher maximize revenue on an ongoing basis. As an example, auto-buyers inventory may garner higher CPMs on an open exchange, while others may perform better if sold directly. Sales controls ensure that all addressable inventory will always be sold through the channel that generates the highest revenue. Sales controls can also help the publisher avoid channel conflict and manage client requests such as advertiser exclusions.

Figure 3. An Advertising Business Management (ABM) platform provides the end-to-end infrastructure publishers need to properly productize all addressable inventory and efficiently execute sold products and packages through the rest of the value chain.

Media Productization: Realizing the True Value of Your Online Assets

A STRATEGY FOR ACHIEVING PRODUCTIZATION

Agency

Ad Network

Exchanges

Publishers

DSP

Data Broker

Display Ad Server

Mobile Ad Server

Video Ad Server

Publishers

Audience

Third-Party Data

CRM Tools Inventory Systems

REPORTING

INVENTORY MANAGEMENT

BUSINESS INTELLIGENCE & DATA WAREHOUSING

SALES AD OPERATIONS FINANCE

Product Packaging

Accounts & Contacts Mgmt

RFP ManagementCampaign Management

Invoice Processing

one

DEMAND SUPPLY

INTERNAL BUSINESS SYSTEMS

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Media Productization: Realizing the True Value of Your Online Assets

A STRATEGY FOR ACHIEVING PRODUCTIZATION

• Rate Card Tools Reduce Price Management Complexity. Integrated rate cards and management tools are absolutely critical for revenue optimization. These rate card tools enable the publisher to set standard rates for all its products by channel, including price goals and minimum floors. They also allow sales to sell the same inventory with different billable units, like clicks or conversions, and maintain an equivalent eCPM.

• Inventory Management Provides Transparency into Product Availability. The main source used by publishers to forecast available inventory is historical data from the ad server. By looking at what has been delivered in the past, it is possible to predict how much will deliver in the future. When all sold and reserved business is deducted from that prediction, it is possible to forecast how much inventory is still available to sell. Productization through an ABM platform automatically aggregates information from multiple sources, allowing publishers to provide sales teams with a consistent, standardized view into how much of each sellable product is available.

• Business Analytics Improves Business Transparency. Productizing significantly improves business analytics for the publisher. Because all sales teams and each sales channel are working with a consistent product catalog, the publisher can conduct in-depth analysis on inventory performance regardless of what buyer, seller or system generated the revenue.

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The number of technologies and services involved in selling ads today makes instituting a consistent selling strategy difficult. And as technologies evolve and new ones emerge, so will the demands of buyers. How can a publisher ensure they are posed to support long-term growth and innovation? The answer: A strong productization strategy coupled with the proper business infrastructure to support it.

Productization ensures that all of the publisher’s available inventory (e.g., owned and operated, available through a partnership, display, mobile, video) is categorized and segmented by value, not by addressability. This sales-oriented approach leads to easier and more uniform communication with buyers, more efficient and effective sales processes, and the ability to boost overall eCPM with intelligent product packaging. As discussed, an ABM platform enables publishers to implement productization best practices and carry them through the entire value chain.

Achieving true productization may feel daunting as it requires an investment of time and resources across the organization. However, by adopting a holistic approach and leveraging the proper business infrastructure, publishers will be poised for sucess in this ever-evolving industry.

REFERENCES1. Greene, M, Riley, E, van Geldern, K, & Polanco, A. at Forrester Research, Inc. (2011). The New Digital Publisher

Monetization Model.

2. Stanhope, J. at Forrester Research, Inc. (2011). The Forrester Wave: Web Analytics, Q4 2011.

3. Kawaja, T. at Luma Partners.(2011). Display Lumascape. http://www.lumapartners.com/lumascapes/display-ad-tech-lumascape/

4. Pubmatic Whitepaper: Audience Selling for Publishers, Part 1. (2010) http://www.pubmatic.com/audienceselling

5. Kane, C. at Turn. (2011). A New Approach to Media Buying. http://www.imediaconnection.com/content/29193.asp

CONCLUSION

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ABOUT OPERATIVEOperative Media Inc. is the advertising business management company. Our core purpose is to allow the media and advertising industries to run increasingly complex businesses with simplicity. Operative’s next-generation, SaaS based platform and technology-enabled services help media industry leaders and their partners balance operational efficiency with innovation to reduce transaction costs and boost advertising revenue. Launched in October 2010, the Operative.One platform brings together the business processes and systems necessary to package, sell, traffic, manage, optimize and collect revenue on advertising products. More than 200 industry leaders rely on Operative to manage more than $6 billion in global ad revenue annually, including The Wall Street Journal, MSN, OMD, NBC Universal and National Public Media.

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