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Why Packaging Should Be Treated as a Yield Process, Not a Sales Function

Posted by JT White on Apr 14, 2020 1:00:00 PM

Why Packaging Should Be Treated as a Yield Process, Not a Sales Function

As a seller, you presumably have collections of content that you bundle together based on audience, event type, and other variables (e.g., programming related to birds or cars). Then, you offer those bundles to clients for a “package rate.” That rate is usually either discounted to entice clients to buy at volume, or it’s limited inventory that you can charge a premium for based on availability (think NFL games).

In most seller organizations, the process of packaging is predominantly run by sales teams, who sometimes rely on market feedback from clients to decide which kinds of programming should be “packaged” together.

That feedback loop is an important one, but it can’t be your only signal. In essence, by letting the market dictate your packaging, you’re presuming that buyers know your audience better than you do. Or, even worse, you’re letting them cherry-pick premium audiences at a bargain.

To avoid leaving revenue on the table, it’s important to look at how packages are typically created today and how pricing and planning teams should ideally collaborate with sales to maximize revenue. Let’s go through what the consideration set should be when packages are created.

1. What impact does creating a package have on my other inventory?

Putting a package together has serious downstream effects. When you remove large swaths of inventory, you are stripping out chunks of time that would otherwise have been available for rotators or general daypart sales. In tight sales windows with high sellout, this creates churn for your inventory team, leading to make-goods and constant massaging of the logs. As a result, your salespeople may need to have tough conversations with clients about why certain spots didn’t run, which is far from ideal.

It’s also important to understand how siphoning off chunks of time to create packages can affect the rates of your remaining inventory. In an ideal world, you would see rate increases as a result of packages being put together and total inventory getting compressed.

But that’s often not the case; in practice, rates tend to remain exactly as they were prior to package inventory being pulled out. That’s because rate cards aren’t updated frequently enough to reflect changes to available inventory, or because salespeople who control pricing don’t have access to data that would help them make an informed decision. The bottom line is that revenue is often left on the table.

2. How does my organization price packages today?

The pricing of packages is often determined by reviewing last year’s prices or by applying a fixed percentage increase or decrease to current rates (depending on whether the package is a volume discount or a collection of scarce inventory).

While you certainly can price this way, it’s doing your portfolio a disservice. You are sitting on a treasure trove of data—including historical sold inventory, rate cards and your organization’s adherence to those rates, and program/daypart performance—that you can leverage to get accurate pricing. This requires looking beyond what you’ve gotten for your packages in the past and determining their true value.

It also calls for understanding the impact of your packaging strategy on the value of your portfolio as a whole, which leads us to the most important question…

3. Should this even be a package?

Resting on our laurels and doing things the way we’ve always done them is a consistent problem in TV. Knowing that we can get a specific amount of revenue for something puts us off asking the simplest of questions. Namely, is this really the most revenue I can make off this inventory?

Given how dynamic the marketplace has become and how quickly things can change, sometimes the package you don’t put together could have been your biggest windfall. Sellers must—and can—perform the math in advance to understand how much premium inventory to keep on-hand to sell at the rate it can really command. And that work needs to be driven by pricing and planning, not sales.

Ultimately, “packages” are created in service of your sales team. They’re intended to make buying easier, which in turns makes selling easier, and your organization should trust in its own data to inform pricing instead of taking it on blind faith that the market knows best. It’s your inventory and pricing and planning teams that have the data and analytical skills to ensure that these packages will be the right fit at the right time and for the right price, which is why it’s critical that they collaborate closely with your sales team.

It’s incumbent on the teams that have access to the underlying data to position the inventory in a way that makes salespeople’s jobs easier and alleviates the stress of “clearance” on your inventory team. For that reason, treating packaging as a yield process to be led by Pricing and Planning as opposed to a sales function is a must.

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Topics: Advertising Pricing & Planning, Advertising Yield Optimization