How automation of rate cards can help TV sellers achieve a 10% revenue lift
For the most part, the process that seller organizations use to create and update TV pricing hasn’t changed much over the past few decades. Sure, today’s analysts and sales managers use Excel instead of a pencil and ledger, but they generally aren’t taking enough important historical sales data into account, since the volume of it is far too much for Excel to handle. As a result, sellers have to settle for averages and aggregates to inform pricing decisions, making across-the-board percentage increases instead of program specific rate changes based on data. Because of this, the rates being charged aren’t optimal, particularly for high-value inventory like Prime and Sports, and money is being left on the table.
More importantly from a revenue management perspective, linear sellers often under-value their inventory through this process, since they can’t adjust prices in response to constant changes in the marketplace. The weeks and months after the pandemic hit are a prime example of this. COVID wiped out much of the existing high-value programming, which changed the inherent value of what remained. Many rate cards weren’t updated in time to enable sellers to capture more revenue from programming that suddenly became more valuable.
The cadence and frequency of rate card updates (usually quarterly at best) only adds to the difficulty of rate optimization. A low frequency of updated rates, coupled with a lack of comprehensive historical sales data used in rate calculations, results in a tremendous missed opportunity. By automating the rate-card process and using data-driven pricing methodologies, Furious has found that sellers can achieve a 10% revenue lift and save time and effort in the process.
Here is a perspective on the ROI of rate card automation from Dominick Latorre, Sinclair Broadcasting’s Senior Director of Yield and Inventory Management:
“The ability to maximize our revenue, optimize our inventory and improve our efficiencies with centralized pricing that not only delivers data-driven rate cards, but an entire suite of yield management tools will allow our executive team to better assess areas for growth and opportunity along with allowing our sales leaders to do what they do best.”
As with any change to an organization’s operation, effective planning, implementation and operation are key, and automation should be rolled out with a focus on these five processes and workflows:
- Automated rate card updates and delivery
The automation of data ingestion (i.e., getting the data out of current legacy systems) and processing (i.e., cleansing and normalizing that data so it makes sense) means we can more accurately calculate and frequently update optimal rates to maximize revenue. Automating the delivery of updated rates gives salespeople more consistent tools to optimize yield.
With tools in place to automate rate card delivery, sellers should also ensure that rates are informed by future forecasts of supply and demand. Rate cards informed by accurate forecasts typically deliver higher yield, since they raise prices when inventory is constrained.
Automated rate cards will only deliver more revenue if they’re used, and that means having governance over what rates and discounts are actually being offered by salespeople. Today, determination of price is often delegated to sales teams and driven more by gut than by data, which—again—risks leaving money on the table. As a result, tools are needed to monitor rate card adherence and ensure processes are in place to change rates only when market or competitive intelligence warrants.
You can’t know what you don’t see, and sales organizations that rely on Excel for reporting are effectively flying blind with only aggregate data to guide them. Granular, transaction-level reporting with actual prices recorded by client, program and daypart should be readily available to members of sales, sales operations and pricing and planning teams. The availability of detailed reporting will build confidence and increase adherence to recommended rates over time, resulting in sustainable yield increases.
- Methodology selection
Finally, because a manual, Excel-led process can’t handle high volumes of data to calculate rates, it typically results in only one methodology being used across all programming types. (That methodology is often historical AUR, with or without an increase over last year’s prices.) Automation enables sellers to use different methodologies for different programming types to ensure that pricing is optimized. For example, the methodology for calculating core, daypart rates should be very different from the one used for high-value sports, given the unique role that league type and geography play in determining the value of sports inventory.
By taking steps to incorporate automation and data science into your pricing processes and workflows, you can begin to truly optimize yield and maximize revenue. To learn more about the unique challenges of pricing in the TV advertising business and how your organization can start automating rate cards and pricing, download Furious’ Pricing Playbook here.
Archie Gianunzio is SVP Sales, Furious Corp. For more information about rate card automation, or a demo of the Furious PROPHET platform, please contact him at [email protected]