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Rate Card Update - The Heartbeat of Your Pricing Strategy (And Why It Matters) · The Yield Doctor with James Deaker

• 0:00
  If you are a publisher with a direct
• 0:03
  sales team and you change your prices on
• 0:05
  your rate card too often, then you run
• 0:08
  the risk of confusing your own sales
• 0:10
  team and your advertisers.
• 0:13
  However, if you don't change them
• 0:14
  enough, then you slowly drift out of
• 0:17
  sync with the market and you leave money
• 0:19
  on the table. So, what is the right
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  balance? And just to be clear, I'm
• 0:24
  talking about situations where you're
• 0:26
  updating the prices on the rate card,
• 0:28
  not redesigning the entire rate card.
• 0:32
  Structural changes usually only occur
• 0:35
  every few years, whereas pricing changes
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  tend to occur much more frequently. In
• 0:41
  practice, there are a couple of ways
• 0:42
  that teams approach this. And I'm going
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  to address the more uncommon one first
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  because while it does exist, I want to
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  get it out of the way. One approach that
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  you can do to update your rate cards is
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  very mechanistic. And basically, you
• 0:57
  might have a rule in place. And the rule
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  might go something like this. If my
• 1:02
  sellrough rate is over 80% across my
• 1:06
  site, I need to raise my prices. If it
• 1:09
  is under 50%, I need to lower my prices.
• 1:14
  The advantage of a rule like this is
• 1:16
  that it's very easy to implement. You
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  can have a rule, you can give it to an
• 1:21
  algorithm, you can give it to an AI
• 1:22
  agent and it implements the changes. And
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  I have seen rules like this operate in
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  the real world. I don't usually
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  recommend them for a few reasons. The
• 1:33
  first is that you run the risk of
• 1:34
  whipsing your sales team and your
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  advertisers.
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  If your thresholds are slightly off, you
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  can create changes more quickly than the
• 1:44
  market can absorb them. The second is
• 1:47
  that the rules may react to the wrong
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  signals. And I'll give you an example.
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  If you might see a drop in your
• 1:55
  sell-through rate because you had a lot
• 1:57
  of turnover on your sales team and your
• 2:00
  execution weakened for a particular
• 2:02
  period of time, that doesn't necessarily
• 2:05
  mean that your prices are wrong or need
• 2:08
  to be changed.
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  Third and and most importantly, these
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  rules are not grounded in changes in the
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  underlying value of your product.
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  Pricing decisions should reflect how
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  advertisers value your inventory in the
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  market. And that type of signal is not
• 2:27
  normally captured in rulesbased systems.
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  So the other way that publishers update
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  their rate cards is on a fixed schedule.
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  And to be clear, this is by far the more
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  common approach. This is largely because
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  it is easier to operationalize and
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  easier for the sales teams and buyers to
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  understand. It aligns well with planning
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  cycles, with budgeting, and with the
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  ways most organizations run their
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  business.
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  For a small publisher who is just
• 2:57
  starting out, they may put a rate card
• 3:00
  out there and change the prices after a
• 3:02
  year or two when they get to a certain
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  scale. And in general, the cadence tends
• 3:08
  to increase with the maturity of the
• 3:10
  organization and the amount of data that
• 3:12
  they have available.
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  However, there are some limitations to
• 3:16
  this approach. The biggest is that it
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  can become calendardriven rather than
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  market driven. Markets don't necessarily
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  move on an annual schedule. And if you
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  are only updating prices once a year,
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  you can miss meaningful changes in
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  demand, competitive positioning, or how
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  your product is valued.
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  In practice, many companies say that
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  they update on a fixed schedule, but
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  they might only make partial changes, or
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  they may carry the assumptions forward
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  from previous periods. And over time,
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  this can lead to a gradual drift away
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  from where the prices might or should
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  actually be. So, I usually encourage my
• 3:57
  clients to update at least on an annual
• 4:00
  cycle. I have seen examples of monthly
• 4:03
  and weekly updates, but in general,
• 4:06
  that's going to be too fast. So, what's
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  the Goldilocks timing here? For most
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  publishers, it's going to be a quarterly
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  review. That doesn't mean that you have
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  to change all of your prices every
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  quarter, but I encourage teams to that I
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  work with to at least go through the
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  process every quarter of assessing
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  whether anything has changed. You can
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  think of the timing of your rate card as
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  the similar to the heartbeat of the
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  organization. It sets the rhythm of your
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  pricing, your yield analysis, and how
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  your sales team operates. If that
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  cadence is too fast, you create
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  instability. If it is too slow, you
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  become unresponsive to the market. So,
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  it's important to get it right. And just
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  like a real heartbeat, that cadence may
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  change over time. A smaller early stage
• 5:00
  organization may operate at a different
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  rhythm than a more mature one.
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  Because I am the yield doctor with a PhD
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  and not a medical degree. I'm only going
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  to go so far with this analogy. But the
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  core idea holds. The timing of your
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  pricing changes is what sets the pace
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  for how an organization responds to the
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  market.
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  At the time that you go through the list
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  of all of your pricing inputs and run
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  your models, um you need to look at
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  those inputs. And so I'm going to link
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  here to a separate video I created on
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  the list of pricing signals that a team
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  should look at. But to give you a sense
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  for the examples, one might be if you
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  see that a competitor is making changes
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  to their pricing, that may require that
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  you respond in kind. Uh a second
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  precipitator of the need to make changes
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  is if there's a significant change in
• 5:56
  the market. For example, a regulatory
• 5:58
  change or a legal change in the industry
• 6:01
  that is affecting demand.
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  Often in digital advertising, we find
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  that one quarter can be significantly
• 6:08
  stronger than others. And for many, it
• 6:11
  tends to be Q4 when the holiday shopping
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  occurs. But you can often see examples
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  of niche sites that have spikes in d
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  demand around other times of the year
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  and they may choose to have different
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  rate cards during those quarters. The
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  variation in demand across different
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  quarters further reinforces the fact
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  that you should be reviewing your
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  pricing on a quarterly basis.
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  I am James Deika. I am the yield doctor.
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  I work with my clients on issues and
• 6:44
  problems just like this to help them
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  make more money from their digital
• 6:48
  assets. Thanks for watching.