MIAMI – A lack of television advertising inventory yield optimization by media companies can lead to “extreme volatility in pricing” to the tune of nearly 10% of topline revenue. “That is ultimately what is driving the opportunity cost of not maximizing yield,” says Furious Corp. CEO Ashley J. Swartz.
Furious Corp. began operations in 2014, with Nielsen as its largest investor. Swartz says the plan was pretty straightforward: create a yield optimization solution based on data from a few media sellers, from Nielsen and from other sources, that could be used across the board. It didn’t quite work out.
“What we ultimately found, and what we found about television, is that every client, specifically every media company or seller of advertising, is a snowflake,” Swartz explains in this interview at the recent Beet Retreat Miami 2017. “What we found is that using that small subset of a few clients, some anonymized emulated data, wasn’t enough.”
So Swartz and her team took a step back and regrouped. In 2016, Furious on-boarded more than 15 media companies, mostly from North America, including the largest ones, onto the platform. It chose seven of the 15 to use in a revenue linkage analysis involving at least a year of transactional data—campaign-level and in some cases spot-level—to examine pricing and inventory utilization.
“Across most of those clients, what we found was that ultimately, pricing inefficiency and the lack of optimized pricing was what was driving a lot of the cannibalization of yield or the revenue that was leaking as a result of it,” Swartz explains.
One surprise in particular was based on the presumption that media sellers still cling firmly to their advertising rate cards.
“But ultimately, when you start to unpack consistently every client you see such extreme volatility in pricing, and that is ultimately what is driving the opportunity cost of not maximizing yield,” with the exception of syndicated TV, says Swartz, .
The company’s message to the companies involved in the analysis was to show what might have been had yield optimization been place.
“With those clients, we have found that when you look at both inventory and pricing optimization combined to provide yield optimization, we have not found less than a 9.5% lift in topline revenue, had a portfolio level yield optimization solution like ours been place.”
This video was produced at the Beet Retreat Miami, 2017 presented by Videology along with Alphonso and 605. For more videos from the event, please visit this page.