Vantage Points: Building Rate Cards for the Pandemic Recovery
In this edition of BIA Advisory Services’ Vantage Points series, Emilee Bond, director of the media vertical at Revenue Analytics has a conversation with BIA’s managing director, Rick Ducey, about using data, analytics, AI and a software platform to automate the process of building rate cards in the post-pandemic period where historical pricing signals may be more confusing than helpful.
The Vantage Point series taps the perspectives of various lookout points from around the local media and tech sectors. Email us to discuss a topic for consideration.
RD: At this point in the pandemic, how are you seeing media companies faring?
EB: Just a short year ago (or maybe a lifetime?) the ad industry was upended as a result of COVID-19 lockdowns. Media organizations are still haunted by the second quarter of 2020 – a year that was predicted to have significant ad growth potential – when ad sales all but stopped as local businesses shuttered, the travel industry halted, auto factories closed, and most consumers were only leaving the house to scavenge for toilet paper.
Today the economy is turning a corner, which can be partially seen in the regrowth of the ad industry, as illustrated in BIA’s 2021 forecast for local ad sales. But the ad industry is not out of the woods yet, making it a critical time for media organizations to quickly discern patterns and trends in their returning business, then take action.
RD: So how exactly should broadcast media organizations set themselves up for success in setting pricing and building rate cards during this phase of the pandemic rebound?
EB: Although the future looks brighter every day, we are still in the throes of a pandemic recovery economy. As media organizations continue their journey down the road to a rebound, their ability to lean into data now sets them up for a successful long-term transformation.
We’re in a time when every dollar counts more than ever before so it’s imperative that broadcasters become more data driven during the recovery. By using data and predictive analytics, broadcasters can drive top-line growth through better pricing and inventory decisions.
RD: Although the overall ad spend growth trajectory is positive, the current demand for ad inventory varies greatly by market and category segments. How can media sales manager feel confident that they are pricing inventory correctly in this environment?
EB: In addition to more active rate card management, stations should strategically try to pull back on those no-charge spots they gave to loyal advertisers in the height of the pandemic. For national and multi-market advertisers that require added value, heavy up in markets and on stations that have inventory to spare, while protecting properties that are starting to slowly become inventory constrained. Utilizing different strategies by segment – market, station, daypart, and client – is crucial in shaping demand to best fit your needs.
These actions will help sales managers prioritize demand and set pricing across sectors, such as home improvement and health & fitness that are booming. Other industries seeing a slower recovery, including automotive, which has a heavy reliance on foreign supply chains will have a different demand curve. This uneven speed to recovery also holds true on a market basis, with some markets recovering more quickly than others.
RD: It’s clear that one impact of the pandemic is we are seeing buyers want flexible terms, including last minute buying. This pushes sales managers into a posture of almost setting real-time pricing. With such volatile data, what’s the best lodestar to inform pricing?
EB: While 2020 data on its own is not reliable for forecasting demand, stations that want to take a more sophisticated strategy with their proxy data can use a blended approach. Utilizing a fusion of 2019 and 2020 data could provide valuable insights in forecasting demand in the 2nd half of 2021.
Many advertisers who once engaged in annual, seasonal, or upfront buying have moved to a scatter mindset, placing business on a last-minute basis as a safeguard amidst shifting consumer behaviors and supply challenges. This trend of last-minute ad buying has made it difficult for stations to anticipate future demand, in turn making a guessing game out of pricing ad inventory.
At Revenue Analytics, our recommendations is that stations need to more effectively model how demand is materializing to have the confidence to increase rates. The traditional practice of exclusively using year-over-year pacing to gage future demand won’t work in this current phase of recovery. Recency is key because comparing 2020 pacing to 2021 pacing is like comparing apples to oranges.”
RD: For media sellers adopting these strategies, what are the best practices for tracking success?
EB: What we say is that by using analytics and AI, media companies can analyze thousands of microtrends in historical and current ad spend behaviors, providing insights on how to maximize revenue as we forge into the recovery and beyond. The organizations that realize this, and reset accordingly, will be the ones that emerge from this pandemic stronger than before.
Tracking and understanding successes and shortfalls plays an essential role in a pandemic recovery tactic. To do this effectively and on a timely basis, sales managers will need revenue management software to drill into achieved rates by industry, advertiser, agency, market, station to quickly identify trends.
There is a lot of data to track and understand such as:
- AEs that are consistently attaining high or low rates.
- Which advertisers are getting your best inventory despite low rates/low spend level?
- How rates compare across advertisers within the same category.
- Ratios such as recommended rate versus sold rate.
Emilee Bond is the director of the media vertical at Revenue Analytics, a company that offers solutions to many of the top broadcast groups facing complex pricing challenges with next-generation software for revenue management.