Pricing programmatic inventory: using data and insights to get it right

(This is Chapter 6 of the Adomik Programmatic Yield Management Handbook)

Effective Pricing of Programmatic Inventory stems from knowing your inventory
Pricing is obviously the key in programmatic yield management. Once you command your Seller Trading Data and consequently understand how buyers behave in each programmatic channel (PMP, Programmatic Direct and RTB), you will be able to recognize the value of what you sell: what inventory has higher value, lower value, what are acceptable price points, where do you have lots of competition and thus more leverage to increase prices, etc.
To assess the value of what you sell, your analysis should be based specifically on what inventory you make available in the marketplace: specific placements or content packages, sizes, geographies, user data, etc. Each of these components can influence the behavior of buyers and thus be offered for a specific price. As an example, we often see combinations of geo & size & device that are more valuable to buyers than some premium content packages and thus call for a higher price. Keep in mind that different buyers or brands can also react differently to these components depending on their strategy and user knowledge. In theory each combination of inventory ingredient and buyer groups could have a specific price.
The best practice here is to use technology to support proper data-driven analysis, insight discovery and setting and revising prices at scale in a real-time manner. The multiplication of buying patterns and inventory components in programmatic makes it almost impossible to achieve manually the agility and analysis required to capture value from the hourly changes in the marketplace. To be efficient, crunch the data in an automated fashion and implement updated business rules (pricing)  as fast as the market requires.
Programmatic publishers need to be agile, aware, and confident
As a seller, you have to make sure that you remain in full control of the price setting process and, based on your knowledge gleaned from analysis, leverage your own insights about your inventory’s buying patterns. Bear in mind the following:

• You should always be able to adapt your pricing based on your overall business strategy, market positioning and relationship with selected buyers.
  • Example: you have a yearly agreement with a buyer and want to adapt a specific programmatic pricing strategy with them while using the knowledge you have of inventory value from this contract to maximize yield and pricing across your RTB sold inventory.
• You need to monitor how buyers react to your prices and change their buying activity. Your pricing can disrupt the market and you need to be careful about this. You want to maintain very high liquidity to promote competition when you can to Still, do not blame your prices for all the changes you see. Buyers can also be affected by other sellers prices or the evolution of your inventory volume (among other factors)… and again each buyer has their own strategy and valuation for impressions. Proper Seler Trading Data analysis is required here to see clearly! In a situation where your prices are having an impact on liquidity, you need to be in a position where you can quickly adjust or explain if needed.
  • Example: you have increased the minimum bid on a valuable pocket of inventory so high, such that you are losing two of your largest buyers interest. As a result of this knowledge, you decide to reduce the increase for these two buyers.
• Last but not least, you should have the ability to simulate price changes and their effect before making “real” decisions, thus avoiding making blind choices that will have a negative impact. Your Seller Trading data can also be used for testing different scenarios. Once you have these tools and understanding you can more confidently price your inventory.
  • Example: if I decrease the price of this inventory segment, how will the fill rate evolve and buyers react?

To be successful in managing prices on the programmatic market programmatic, sellers must find the right balance between their yield technologies and teams. Your technology will bring the “science” and you will bring the control and “art” of yield. Both sides of the equation are required to get the best revenue.

Key points:

• Gather the knowledge and insights to recognize the value of your inventory across all its dimensions.

• Use technology to define your prices at scale

• Remain agile, aware, and confident: and in full control managing your strategy and reaction to buyer feedback.

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