The Metric Every Publisher Should Use in 2019: “Revenue at Risk”
I was recently speaking with the head of operations at a large news publisher about their 2019 advertising strategy. His company is focused on a mix of initiatives, from private marketplace deals to video to better viewability metrics. What immediately became clear was that in order for these goals to be met, everyone across the company would need to be aligned. From experience, I know this is easier said than done.
For many publishers, the problem isn’t in the goals themselves, but how they are measured. While sellers work for topline revenue gains, operations teams focus on CPM, or fill rates, while billing is looking at bookings vs. earnings. With so many metrics at play, it’s nearly impossible to align teams. “Revenue at risk” (RAR) is one metric that is rarely used, but that can successfully unite publishers around a strategy or goal.
What is Revenue at Risk?
Revenue at risk identifies and projects how much revenue is at risk if an advertising campaign doesn't deliver. This ensures that operations teams are keeping sales expectations in mind and are aware of any shortfalls that would cause a delta between those expectations and reality.
Revenue at risk is not just “what is left in the campaign” -- it’s a data point illustrating the critical value at risk that will not be earned if a change to a campaign or larger relationship is not made. It’s the signal of lost revenue if no action is taken. This can be measured at the campaign level, or the totality of the business, aligning teams in an understanding of how much of the total business is at risk on a given day.
Communicate Around the Universal Language of Dollars
I have a lot of sympathy for the team in the back room. While the sellers are out wining and dining the media buyers, operations is crunching numbers, sweating broken creative issues, and setting up tags at 10pm on a Saturday night. Sellers bring in deals, and then operations teams analyze them and try to make them work.
It can be hard for an operations manager to communicate effectively with their sales (and business development and finance) counterparts without being skeptical or talking right past each other. Without a measurement metric to unite teams, sellers could easily bring in a deal that has terrible fill rates, or operations teams could miss chances to improve campaign performance mid-stream.
As an example, if a publisher has a strategic client that planned to spend $100k on a targeting campaign, but the company is having trouble finding the right audience at scale, a “revenue at risk” calculation would be able to flag, in dollars, how much of the original campaign was not likely to deliver. Rather than sending alarmist emails using technical audience segment details, the operations team is suddenly speaking the sales team’s language.
What’s more, using a revenue at risk metric helps operations teams escalate issues to management and to product and technical teams, as it can help reconcile the value of a particular request against everything else going on. Say fill rates are down 5%. That number might be meaningless to a senior tech executive, but the corresponding revenue at risk amount of, say $2 million, for the rest of the year helps put it in perspective.
RAR Is a Global Metric
Magna Global predicts that more than half of global ad spending will be digital in 2019, a major tipping point for premium and global publishers that were still favoring offline revenue across broader markets outside the US.
Many publishers are staffing up their analytics and data teams in order to keep up with the complexities of digital advertising. Creating a universal language for these growing teams will help integrate them into the fabric of current sales and operations, and foster the collaboration that is needed to capture revenue and grow.