The Leaky Bucket Problem: Why Poor Inventory Management Is Costing Publisher's Ad Revenue
Let's say that you have to fetch a bucket of water. You assume that the bucket is sturdy and has no holes. But by the time you return, you realize it's been leaking the entire time and you've only been able to collect 80% of a full bucket. Worse yet, you don't know where the holes are, and even if you did, you don't know how to fill them.
The leaky bucket is an ongoing problem plaguing publishers who are often unaware that they are losing print and digital ad revenue due to problems that frequently originate during the pre-sale phase. It is one of the most overlooked problems that publishers are facing today.
Why The Leaky Bucket Is a Problem
The biggest holes in the bucket are errors in inventory management, which lead to campaign under-delivery - mostly due to the sale of non-existent inventory. In addition, publishers end up collecting only 90% on sold inventory. This poor performance tarnishes publishers' reputations, and it costs them clients and revenue.
Why Are There Holes?
Poor inventory management is one of the leading causes for oversold inventory. Simply put, you can't sell something that doesn't exist. But it happens when poor record keeping allows that inventory to be kept on the market. Worse, there are some rogue salespeople who will intentionally sell nonexistent products to boost their numbers.
Moving past the sales phase, a frequent lack of oversight and campaign management tends to leave errors overlooked and unresolved. Typically, this is due to poor communication between the ad operations and sales teams, who have to work in tandem to deliver a successful campaign. Trafficking errors lead to under-delivery, which then translate to client billing issues for finance. It's a circular process, and the bucket is leaking revenue the entire time.
Plugging The Holes
This is a simple, transitional hand-off issue that could be resolved with a more streamlined communications system.
Inventory management first needs to be improved to ensure sellers aren't overselling inventory. The "bucket" should not have holes during the pre-sales process. If publishers centralize the product catalog and improve taxonomy, then they can resolve these inventory management issues before the sale even begins.
Publishers can improve communication between sales and ad ops by adopting a single methodology for media plans. The IO and any additional terms with the sale should be clearly translated in the hand-off between the two departments, using a standardized product list stored in a single centralized location.
Next, first and third party delivery data need to be aligned in real-time, rather than waiting for reports of discrepancies after the campaign has ended. Monitoring and optimizing campaign performance early on is like finding the holes and plugging them before you even fill the bucket with water.
If these issues are managed appropriately, publishers can raise their revenue by at least 10%. The solution requires a combination of people, process, and technology and will improve a campaign's performance before it even begins.
Lorne Brown is the CEO of Operative, the creator of a cloud-based platform that helps publishers manage sales, ad operations, and finance on a central hub.