Despite Their Challenges, Yield Management Solutions Will Become More Critical in 2023

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If you work for a broadcast TV or radio company, you're only too aware of an impending revenue drop-off in 2023 as political advertising falls away. Economic forces tied to inflation and a recession will only compound the problem. The concern that advertisers will tighten their budgets is real.

There's another matter to contend with: reduced linear ad sales, as marketers reallocate a greater share of their budgets to digital. eMarketer projects that digital ad spending will increase 12.9% in 2023. Growth for broadcast radio and TV pale in comparison. Radio is only expected to have a 1.9% CAGR (compound annual growth rate) from 2022 to 2028 globally, according to Grand View Research. Broadcast TV in the U.S. has a projected 3% drop in 2023, according to eMarketer.

In lieu of adding more inventory or hiking rates for price-conscious clients, where can you turn to improve revenue? Yield management (also known as dynamic pricing) could be the solution that keeps them on track. It's a proven strategy, but broadcasters haven't widely adopted it. Before suggesting a path toward using yield management, let me explain some of the issues.

Clearly, there are reasons to believe it can work. Airlines, hospitality, retail and live entertainment (see the case of the $5,000 Bruce Springsteen tickets) are great examples of industries that successfully use dynamic pricing. Broadcasters have dipped their toes into the practice, using various technologies and methods to offer up the "right" price. However, many express concerns that it's too complex, too expensive, or too hard to scale. Other issues relate to accurate data, granularity, and lack of parameters.

Then there's the issue of technology. Often, yield-management platforms aren't as user-friendly as they need to be for salespeople. Some systems keep accessibility out of reach, with clunky user interfaces and the need to get ad avail and other data from traffic systems, which have never been sales-friendly platforms.

Another challenge relates to the lack of granularity. Some tools don't price at a block level of, for example, 30 minutes. So, are you getting the best price for inventory? Demand fluctuates considerably around timeslots and programming, so having the ability to get granular matters.

In addition, ceilings, floors and discount tolerances need to be in place. Ultimately, you don't want to leave money on the table, nor do you want to miss sellouts, because once inventory is gone, it's gone. Setting ceilings and floors is possible with tailored rate curve algorithms. Regarding discount tolerances, you should be able to apply those at the seller level to avoid over-discounting, something that happens too often in pricing, even with yield management deployed.

Even if you remedy these implementation challenges, you may still have a problem that relates to data, which fuels spot-rate optimization. You need real-time avails delivered from traffic systems and historical data. Ratings data is critical as well -- as is data related to timelines. It may be difficult to integrate all this information into legacy traffic systems. Rarely do they play nicely with other systems. In some cases, exporting the data isn't possible without significant expense and integration.

These barriers put broadcasters in a position of being data-poor. If algorithms can't ingest real-time avails and ratings information, you're back to manual options for pricing, based more on intuition and complicated spreadsheets rather than clean data.

Few of the yield management tools available were designed for the media industry. Even some that were fall short for several data-related reasons. So, it's important to ensure that the system you choose allows for a clean integration between traffic and the revenue management tool for spot optimization. Also, confirm that you won't have to pay exorbitant costs to access your own data, which some vendors require.

You'll need to ensure you have easy access to data, and that will require integration. Your yield management platform should be traffic-system agnostic; otherwise, you'll need to adopt a new one, which comes with migration costs and learning curves.

In the end, it comes down to selecting the most robust platform that fits your needs, doesn't hinder data access, and has the features necessary for yield management to deliver the right spots every time.

No matter how far along you are in adopting yield-management solutions, chances are you can streamline it further to improve revenue with the right technology and data access. Granularity, ease of use, and scalability will impact your success. If and when you master those elements, your revenue prospects for 2023 will become much brighter.

Renee Ingenito is Vice President of Enterprise Sales at Marketron. Her division helps power the future of all media sales with strategies and solutions that deliver more scalable, predictable, and reliable revenue.

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