Real-Time Selling: Your Buyers Know How Much Your Inventory Is Worth - Why Don't You?

"The Sell-Sider" is a column written by the sell-side of the digital media community.

Tom Shields is CEO of Yieldex, a publisher yield optimization company.

Tom Shields of YieldexLet me be the first to introduce you to the hot new TLA (three-letter acronym) for 2010: RTS. 2009 brought you RTB done by DSPs. On the other side, we've just been introduced to SSPs, so that means they should do - you guessed it - Real-Time Selling!

I am only partly joking here. As I've written before, RTB continues to skew the power in favor of the buyers. A healthy ecosystem requires a balance of power between buyers and sellers. To help restore the balance, publishers need a complementary system - an SSP - and part of what an SSP should provide is real-time selling.

So, what is real-time selling? We define it as the ability for sellers to set floor prices in real time to make sure they're getting full value for their inventory, in the same way buyers can set bids in real time based on available information at the time of the impression request.

One of the major selling points of DSPs is they can incorporate information from many sources - agency and advertiser data, third party providers, and the publishers themselves - and use it to decide how much an impression is worth. Somewhat less obvious is that the worth of the impression is actually just a ceiling on what the buyer is willing to pay, and sophisticated bid management programs often bid much lower in an attempt to get the impressions for the lowest value. This means the publisher may get much less than the buyer would have been willing to pay.

This is why publishers need to use all available information to set their floor price for an impression. Some of the information they might want is unavailable - agency or advertiser information, or certain re-targeting cookies - but any third party and publisher data can be incorporated. Then, sophisticated analysis is required to detect segments of inventory where floors should be raised or lowered - the closer to real-time the better. These algorithms will no doubt continue to be refined over the next several years.

Premium publishers have a much more complex problem: they also sell guaranteed impressions over a period of time. As long as those up-front CPM-based buys were much more valuable than the secondary channel, this was easy to solve: serve the guaranteed ads first, them look at the exchange or network. But as the secondary channel begins valuing some impressions more highly, the publisher needs to manage global yield optimization across multiple channels, and the floor-setting algorithms need to incorporate that data as well. This may seem like it's years off, but several of our customers have asked us about this capability, and we've applied for patents in this area.

Lots of three-letter acronyms have been proposed in the last couple of years, and it's way too early to tell what the final landscape will look like. That said, forward-thinking publishers who are looking at technology platforms to serve them for the next decade or so should be asking about their plans for Real-Time Selling.

Follow Tom Shields (@tshields), Yieldex (@yieldex) and AdExchanger.com (@adexchanger) on Twitter.

6 Comments

  1. Jeff Rosen

    I too have been working on this very topic for over two years having filed a patent in January 2008.
    Why should a publisher ever sell at a price that is unjustified. Why do they allow valuable audience members to subsidize the less or even worthless audience members.
    What is ultimately important is determining what the Fair Market Value of your content really is, regardless of whether compensation is cash or ad supported.
    This can be accomplished by embracing transparency, not unlike financial markets.
    To accomplish this you need to make consumers part of the process, a daunting task, but achievable.
    If you are aware of anyone other than myself working on this topic, please let me know. I could use some guidance from someone within the industry.

    Reply
    • Josh Kaner

      Jeff-

      Shoot me an email at jkaner at undertone.com - would be interested to talk to you about this.

      Reply
    • Jeff - I'm currently working on something in the space & would love to chat as well. vadim at liftdna.com

      Reply
    • Another important aspect is that not all your inventory should be valued same. Each request is a different kind of inventory and ideally should be biddable separately.

      Reply
  2. Jeff,
    I have been involved in publisher optimization for some time now. Would love to chat with you, drop me a line at schopra @ yahoo-inc.com
    Cheers,
    Sahil

    Reply

Add a comment

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>