Eliminate The Word “Remnant” From Your Yield Strategy

peterspandesellsiderThe Sell Sider” is a column written by the sell side of the digital media community.

Todays column is written by Peter Spande, chief revenue officer at Business Insider.

I want to get out ahead of all the year-end stories about resolutions and predictions. If you are in charge of yield for a publisher and are still calling your indirect revenue channels “remnant,” you need to switch terms now. You can’t wait until 2015 to make this subtle but important change.

Remnant. It’s a word used to describe the leftover items sent to outlet stores or the scraps of fabric or dough that remain after constructing your primary product. Is this what you want your unfilled inventory compared to?

I realize it’s just a label, but it signals – both externally and internally – that this inventory is an afterthought, only slightly more important than waste. Unless you consistently sell out your inventory, you can’t afford to hold this attitude today, and you most definitely won’t be able to afford it in the future.

Like many things, the term “remnant” comes from the peculiarities of print publishing. Unlike in digital publishing, where ad supply and demand are loosely correlated, in print you can run remnant ads in the leftover pages of a folio. For example, if you sold 50 ad pages in a magazine, with a 50/50 ad-to-edit ratio, you’d create 50 pages of editorial. If you sold 35 pages of ads in the next issue but wanted to keep the same 50/50 ad-to-edit ratio, you’d generate 35 pages of editorial and wind up with a 72-page folio, which leaves two extra pages that would be sold off as remnant. Remnant was a very controlled part of the publisher’s business.

But online? If your sales team sells 10 million impressions of advertising and you generate 8 million impressions, you have a problem. But what if you typically generate 20 million impressions and sell 10 million? The remainder is not a rounding error. Yet for much of Internet publishing’s history, we have approached remnant the same way that print publishing does.

For many publishers, the inventory formerly known as remnant became a major part of their revenue mix years ago. Some publishers see equal or higher CPMs from indirect channels than they do from their direct sales teams. More publishers see inventory growing far more rapidly than direct sell-through, which requires a thoughtful, strategic approach to programmatic and other revenue-generating partnerships. Others still see the majority (or the entirety) of their revenue coming from indirect channels. Remnant no more!

So make the change if you haven’t already. Dropping the “remnant” terminology signals a willingness to engage the marketplace through multiple channels in order to make maximizing yield, not direct sales, your first priority. And it demonstrates an understanding that your future success is tied to your ability to maximize all revenue channels available to you.

So why do I care about the labels so much? Is it really that important? Absolutely.

Do your board members and senior management, and your business development, sales and operations teams get excited about remnant? Do your customers?

Language is important, but it isn’t enough. The simple change of terminology from “remnant” to “indirect” produces little impact if you stop there. However, as a first step toward allocating more thought, resources and energy to indirect sales, the change in language is necessary. You must also change the way you approach and talk about your business. Don’t wait for the New Year to do it.

Follow Peter Spande (@PeteSpande), Business Insider (@businessinsider) and AdExchanger (@adexchanger) on Twitter.

 

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