- Forecasting and Rate Optimization
A large media company was struggling to maintain their rates during the recession and was experiencing downward pressure from competitors. To maximize revenues based on current market conditions, they worked with Revenue Analytics to develop a granular forecast and rate card optimization capability that fit within their existing rate management architecture, resulting in an estimated $50M in incremental annual revenue.
A massively integrated world is expanding consumer options, leading to the well-recognized fragmentation of the Media and Entertainment industries. This, combined with the cyclical nature of discretionary consumer spending, creates the potential for revenue turmoil, whether the revenue streams are dependent on consumer spending or advertising spend.
More than ever, improved analytical capabilities are essential to predict future demand and understand consumer response to price, promotions and packages.
The fundamental concepts underlying advanced Pricing and Revenue Management are particularly suited to this rapidly evolving environment. Revenue Analytics has partnered with clients to develop technologies which construct millions of forecasts daily, creating accurate pricing and discounting for advertising spots over the next 365 days.
In addition to constantly monitoring the price and availability of demand for future spots, we have assisted major broadcasters in developing Proposal Optimization capabilities which simultaneously optimize the placement of commercial spots and CPM.
Forecasting
In addition to being the foundation for all business planning, forecasting is the bedrock on which successful Pricing and Revenue Management programs are built. We partner with clients who seek to evolve their forecasting and demand planning to:
- Predict customer demand by product, market, channel, day part, day of week and customer segment
- Incorporate price sensitivity, seasonality and trends into forecasting algorithms
- Leverage forecast to streamline programming, traffic and business planning decisions
- Forecast ratings, make-goods and liabilities to improve pricing decisions
Cross-Platform Optimization
Many firms have sophisticated tools within each platform (television, web, mobile, etc.) that optimize the performance of that group, but they lack the ability to efficiently sell an optimal bundle of spots across all platforms. Using cross-platform optimization, we work with our clients to:
- Unify and rationalize platform (TV, web, mobile) pricing and inventory to create a one-stop shop for proposals and quotes
- Understand cross-product effects and advertisers' total budget to maximize share of advertising wallet
- Develop cross-functional coordination between inventory management, sales and traffic to enable cross-platform decision making
Quote & Proposal Optimization
With myriad programs, advertisers, reach, CPM and demographic requirements, companies in the media and entertainment industry struggle to determine the inventory mix and price that maximizes contribution for a proposal. Understanding price responsiveness by micro-market segment is key to improving pricing and profitability in this industry. We partner with clients to design custom quote and proposal optimization models and processes and:
- Create proposals that meet or exceed the advertiser's requirements while allocating inventory in the most efficient manner, reserving higher value spots for future demand to come
- Incorporate price sensitivity, competitive pricing information and forecast of demand-to-come to determine optimal pricing for each individual proposal
- Develop comprehensive sales processes and change management plans to ensure sales force adoption of proposal recommendations
Rate Card Development
With inventory by day-of-week, day part and station / site, management of the thousands of potential rates in a year becomes difficult in the media industry. We have experience working with clients to:
- Optimize rate cards, incorporating price sensitivity and a granular demand forecast
- Design what-if tools to simulate changes in rates based on forecast adjustments or competitive/market changes
- Develop and implement rate card discounting and authorization processes for the sales force
- Integrate ratings forecasts into the pricing process, anticipating future impacts on rate
Local Market Optimization
Many media companies have customers with varying market needs – some need national exposure while others want targeted, local coverage. We partner with our clients to leverage our expertise in inventory management to:
- Utilize historical inventory data and forecasts to optimize inventory allocation between National and Local business
- Create tools to automatically allocate inventory between National and Local markets
- Develop business processes to incorporate market optimization tools in National and Local sales decisions processes
Pricing and Revenue Management Program Development
Leveraging our experience across multiple industries, we help clients create and enhance Pricing and Revenue Management programs that deliver sustainable results. We combine our knowledge with our clients’ insights into their own organization and culture and partner with them to:
- Collaborate with the executive team to determine roles, responsibilities, fit within the current organization and success criteria
- Develop a Pricing and Revenue Management organizational framework
- Design process flows to smoothly integrate new Pricing and Revenue Management group operations with current operations
- Build consensus throughout the organization to determine priorities, identify “Quick Wins” and ensure new Pricing and Revenue Management group acceptance
Pricing and Revenue Management Scorecard TM
An objective, comprehensive, and quantitative assessment of Pricing and Revenue Management strengths and weaknesses in comparison to the competition and Revenue Management best practices is a powerful tool and a strategic advantage. With our Pricing and Revenue Management ScorecardTM, we benchmark the core business competencies of organization, systems, analytical tools, processes and practices, and strategy to:
- Perform comprehensive evaluation of the current state of Revenue Management
- Provide insight into competitive structure, techniques and strategies in the form of quantitative and qualitative metrics
- Rank current Revenue Management practices versus the competitive set and cross-industry Revenue Management best practices
- Incorporate recommendations for elimination of gaps and weaknesses into a transformational plan