advertising alchemy

Oriented Media Online Advertising Alchemy : a media accountant’s perspective

Web Wednesday - Guangzhou Wednesday 15th October 2008

Alchemy

In medieval times [in the West] admirers of alchemy tried to

prepare “philosophical stone”

the mythic substance capable of transforming ignoble

metals into gold and silver.

Bums on seats

An airline seat is the ultimate perishable item.

Once the aircraft has taken off with an empty seat, the airline has lost the opportunity to earn revenue.

Sir Colin MarshallCEO of British Airways in the 1990s

Simplistic View of Airline Revenue

Airline Revenue is a function of:•Schedule•Destinations•Fleet make-up•Class make up(seats per class)•Base currencies•Sales channels•Seasonality

Airline seat yield management

Based on real data built up over the years airlines look to maximize the yield at any point in time from: • each seat • on each and every aircraft • on each and every route • from each and every destination • from each currency unit…

Airline yield management: the alchemist stone of airline profitability

Correctly handled it can yield GOLDGOLD for the shareholders.

Badly handled it can yield DISASTERDISASTER. A failure in yield management amounts to a failure to make the most of a hugely expensive aircraft.

R f ([P x A x N x G] x [S x C] x [D]) x [Ym]

Bums on seats andOnline Advertising Alchemy


Revenue is a function of:

[Page Views x Adsize x Number of ads/page x Geographic locale] x [Seasonality x Content Channel] x [Number of Days after the month end that ad payments are received] x [Yield management – ad feed management]


Page Views matter: Content, Content, Content.

0 to 1 6 to 7 12 to 123 to 4 9 to 10 15 to 16

18 to 1921 to 22

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

Mon to Fri

Sun

Hour in day

Mon to Fri

Sat

Sun

Hour of day

% o

f tra

ffic

Monday Tuesday Wednesday Thursday Friday Saturday Sunday

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Day in week

Day of week

% o

f tra

ffic

Week 1: Week 2: Week 3: Week 4:

15.00%

17.00%

19.00%

21.00%

23.00%

25.00%

27.00%

29.00%

Week in month

Week of month

% o

f tra

fffic

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

Month in year

Month of year

% o

f tra

ffic


AdSize matters. Geography of visitor matters.

468x

60

728x

90

120x

600

160x

600

300x

250

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Ad

Re

ven

ue

Fa

cto

r

Africa

(ex

ZA),

SAmer

ica,

RoW

Asia

(ex

HK, SG &

MY)

HK, SG &

MY

AU, NZ

& ZA

EU (ex

UK)

USA & C

A UK0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Ad

Re

ven

ue

Fa

cto

r


The Number of ads per page (N) combined with Adsize (A) can have a significant impact on the revenue earning potential of a web page.

Economist.com6.8 revenue units!

728x901 rev unit

160x600just above fold2.5 rev units

300x2503.3 rev units


Seasonality matters. Content channel matters.

Mar Apr

May Ju

nJu

lAug

Sep Oct

NovDec Ja

nFeb

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Ad

Re

ven

ue

Fa

cto

r

User G

ener

ated

Conte

nt

Web

mai

l

Auto, S

hopping

Busines

s, T

ech, T

rave

l

Inve

stin

g, Par

entin

g, Gam

es IT0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Ad

Re

ven

ue

Fa

cto

r


• Currency matters.

• Cash flow is significantly impacted by the number of days after the end of the month when ad payments are received (D).

• When working with ad networks, revenue cheques are typically paid 30 to 90 days after the month’s end.

• When working direct with ad agencies cheques might be 120 to 180 days after the month end!

R f ( [P x A x N x G] x [S x C] x [D]) x [Ym]

Our goal of yield management (Ym) is to: • maximize the return from every banner• across every geographic locale / time-

slice• across every language• across every channel• across each advertiser supplier

(here an understanding their deal flow, their capacity and track record is important)

Airlines, online Advertising & Alchemy

Online advertising yield management is the alchemist stone for publishers.

It’s not a “black art” by any means, but a methodical process that involves both science and human judgment.

End

Thank you

A white paper covering this topic is available at:

http://www.activ8worldwide.com/download/Activ8OnHowToMonetiseYourWe

bsite.pdf

http://www.activ8worldwide.com/download/Activ8OnYieldManagement.pdf

Contact - Peter BurtonOriented Media Limited

[email protected]

mailto:[email protected]

advertising alchemy

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