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3 Tenets of Portfolio Optimization Every TV Seller Should Know

Posted by Ashley J. Swartz on Apr 21, 2020 1:00:00 PM

3 Tenets of Portfolio Optimization Every TV Seller Should Know

Similar to investors, sellers of TV advertising should be actively managing their individual “assets” (i.e., their ad products) to ensure they’re optimizing the value of their portfolio, as described in a previous blog post. This calls for continuously assessing the relative contribution of each ad product category to total revenue and rebalancing available inventory allocation to ensure that clients are well-served and the greatest total revenue is achieved.

This approach is fundamentally different--and much more subtle--than just selling every tranche of inventory for the highest price it will fetch. It’s predicated on the idea of hedging bets and not going all-in on shiny objects by default when demand is high. Here are three principles that your organization needs to live by to make your portfolio optimization strategy a success:

1. Bring Down Silos to Focus on the Same Goals

For your portfolio optimization strategy to succeed, teams and individuals need to be incentivized to work toward the same revenue goals that have been set at the organizational level. But many seller organizations are still siloed, with teams solely dedicated to linear, digital or specific ad products, which can be counterproductive.

If digital salespeople’s core compensation and bonus are predominantly tied to how much digital inventory they sell, they’re probably going to be laser-focused on digital at the expense of all else. (Many will even think that growing their company’s digital business at the expense of linear is a good thing.) But when silos are brought down and a larger share of comp packages are tied to portfolio value, salespeople will become less territorial. And they’ll be more likely to work collaboratively and make decisions that result in inventory being sold for its true value.

2. Prioritize Data Management

Your organization has troves of data, including historical sold inventory, rate cards and program/daypart performance, that can help bring the true value of inventory to light. But it needs to be accessible and clean to provide the necessary visibility. This means data management and transformation have to become core competences within your enterprise.

But don’t let this faze you; you don’t need to achieve this all from within or build this function from the bottom up. You can select external partners to help you set and implement your IT infrastructure strategy.

3. Make Progress Toward Portfolio Optimization Measurable

Introduce quantitative metrics that your entire organization, from account executives and ad traffickers to your senior leadership, can tap into quickly to understand the progress being made toward portfolio optimization. Consider introducing a KPI like inventory efficiency to measure the efficiency of every dollar spent by your top 20 advertisers, for example.

This principle is really about change management and shifting employees’ behaviors in small but important ways. You need to make sure that people at all levels and functions understand the focus on portfolio value and the shift away from business as usual (e.g., selling inventory at a certain price just because that’s the rate it’s historically commanded.)

In other words, you want your people to focus less on the revenue secured and more on the revenue left on the table. And you need to give them the tools to visualize it.

At the end of the day, every media seller should be focused on packaging and pricing inventory in a way that maximizes yield, or the total revenue available from their entire pool of inventory. This is a fundamentally different way of doing business, and you can only get there by recognizing the need for change throughout your organization.

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