The article is pretty spot on about yield management. There are three requirements that need to be filled before you can launch a successful yield management strategy:
- That there is a fixed amount of resources available for sale.
- That the resources sold are perishable. This means that there is a time limit to selling the resources, after which they cease to be of value.
- That different customers are willing to pay a different price for using the same amount of resources.
Of these, number 3 is the one that is causing publishers problems. If advertisers are going to the networks to get the same inventory, the publishers are not doing a good job of segmenting the different customer bases. And that’s why Andy Atherton emphasizes why “good fences make good neighbors”.
Fences are the key to addressing channel conflict between networks and publishers without restricting revenue opportunities. I mean this in a very specific way. A “fence” in the lexicon of pricing & yield management (PYM) is a rule which creates purchase and/or use restrictions on a product with the intent of inducing customers to segment themselves, thus facilitating segmented pricing.
Despite the comments on the Mediapost article, the airline industry is a great example of successful yield management. Andy gives a few examples that use the product offering to induce self selection and maintain the segmentation of the market (airlines requiring a Saturday night stay).