What is yield optimization in programmatic advertising?
Yield optimization includes various methods and strategies to deliver publishers maximum revenue from their ad inventory.
Yield optimization consists of measures to refine ad campaigns and selling strategies to increase ad revenue both on desktop and mobile devices. The goal is to sell inventory at the highest prices/CPMs while achieving a maximum fill rate. Yield management looks at all types of digital advertising, including native ads, mobile ads, and video ads.
In today’s complex market, buying models, ad formats, price flooring, and ad quality are part of the advertising equation and publishers need advanced tools to manage and test yield strategies.
Achieving the highest ad yield isn’t easy in an increasingly complex market. For example, header bidding, an advanced programmatic advertising technique, enhances revenue by opening up inventory to demand sources before placing an ad call to the ad server.
Overall, a holistic yield management strategy starts with selecting the optimal auction model. Let’s look at the types of programmatic advertising deals and what they entail.
Real-Time Bidding (RTB)
RTB is an auction that allows multiple demand sources to bid for inventory in real time. In RTB, the ad server allocates the ad impression to the highest bidder. It is a strategy to increase competition among advertisers, which optimizes ad yield for publishers because it enables a variable pricing strategy. Inventory can be sold at its real market value, and remnant inventory can also be sold to demand partners for maximum revenues.
Header bidding gives publishers a significant advantage in digital advertising and can optimize ad yield by tens of percentage points.
However, not all header bidding is the same. There are two key wrapper types in header bidding, and the choice between them really depends on your technical abilities.
Proprietary wrapper: In this option, the wrapper providers manage demand partners and setup, simplifying ad yield management for publishers.
Open Source: This open-source wrapper technology lets publishers create their own rules and functionalities for their ad space. There are more options than in a proprietary wrapper—for example, publishers can identify the value of demand-side partners, set time-outs, shuffle bidder calling order, and even switch to HTTP/2 Protocol. However, the advantages come at a cost as publishers need to invest more technical resources to achieve maximum revenues and effective yield optimization.
Unlike RTB, this method involves direct sales and direct deals with buyers for ads. For example, a publisher can choose ads for a specific editorial feed through a direct deal without going through ad networks. Programmatic Direct helps publishers reach the optimal target audience for their available unsold ad inventory. Negotiations for programmatic direct sales are automated, but this strategy enables publishers to achieve more control over the process.
Private Marketplace (PMP)
Unlike Google Adx and other public ad exchanges, PMP is a programmatic invite-only marketplace. Falling under real-time bidding, PMPs allow premium publishers to select advertisers of their choice and organize a real-time private auction of their ad inventory. Publishers usually offer premium inventory on private marketplaces, and therefore the price floors are often higher and they are able to generate more revenue than in standard RTB auctions or even in direct sales channels.
A PMP offers publishers more transparency than standard programmatic auctions. Publishers can invite buyers who they are interested in, and be upfront about their financial expectations. There is often more demand for PMP on the buyer side because buyers know exactly where their ads will be displayed.
With so many elements to keep track of, publishers need a set of recommendations and key metrics for yield management.
Best Ad Yield Optimization Techniques for Publishers
Best practices for yield management enable publishers to achieve improved visibility and better yield for their ad inventory.
1. Choose the right ad server
If you’re like 80% of publishers, you’re using Google Ad Manager to monetize your inventory. The platform, which includes what was formerly known as Google Ad Exchange, caters to publishers and has many advantages as a yield optimizer.
However, despite its advantages, Google Ad Manager shouldn’t be the default choice. There are many reasons why another server might deliver higher revenue. For example, if you are selling remnant inventory on the open web, if you aren’t dependent on Google’s demand, or if all your campaigns utilize direct-sold inventory, you might get more ad impressions with a dedicated ad server. That’s why it’s always a good idea for publishers to evaluate ad servers based on criteria like ease of use, support, targeting options, compliance, and reporting.
2. Use the right formats and ad position
There are a lot of possible formats for ads, but when looking to achieve maximum returns, some are definitely more effective than others. It isn’t one-size-fits-all—it really depends on the publisher’s industry and format.
To achieve the highest yield, it’s important for publishers to test frequently, use data analysis, and change the types of ads they use to measure which type performs best and delivers real value for both desktop and mobile users. It’s also important for publishers to verify that demand-side platforms they work with offer creatives in preferred formats.
3. Use CPM floors
Small and large publishers can eliminate low-paying ads and increase revenue by setting hard CPMs instead of target CPMs.
UPRs (Unified Pricing Rules) are one way to access and modify pricing floors and create consistency among partners. Google Ad Manager makes it easy for publishers to create UPRs that prevent buyers from receiving impressions for subpar CPMs.
The unified pricing rule won’t be applied to, programmatic direct campaigns, including programmatic guaranteed (standard and sponsorship) and preferred deal line items. As well as AdSense backfill, House line items, Line items with a zero rate and no Value CPM set.
Pitfalls in yield management
Yield optimization isn’t only about pricing strategies. It’s also important to create a positive user experience for all content published, which means delivering quality ads to all viewers. But many publishers are vulnerable to pitfalls in ad targeting. For example, all types of advertisers have access to RTB platforms, even ones serving malware and explicit ads. That means that users may end up seeing offensive ads or clickbait scams that impact user churn and increase the bounce rate.
To entice users to become subscribers and achieve better ROI over time, publishers need more granularity and control over the ads shown on their sites. Real-time protection provides that control, blocking bad ads and replacing them with clean ads on the pre-impression level. It’s a critical element of the user experience and an important part of yield management.