When a sales representative sells a 100,000€ campaign with a CPM of 4€, the real value of this campaign is the revenue that would not have been made by the competing open-market request.
Here is an example on a simple auction with 2 header bidders (Index and Smart), Google AdX and the ad server.
Demand source bid proposed (CPM) :
In this example, the campaign was sold at a 4€ CPM by the sales representative and outbid AdX who was the winner on the open market. So, the campaign generates 4€ in revenue, but it only generates 1€ more than Google AdX.
Its added value is 1€, since AdX would have generated 3€ in revenue in any case if the direct campaign had not been there.
However, the sale of the campaign required a significant commercial effort.
The question that one should ask is: “Is the generated increment sufficient to absorb HR costs?”
Here is another example:
Demand source bid proposed (CPM)
In the example above, the campaign sold directly results in an impression because it has a higher level of prioritization in the ad server. However, the publisher would have generated more revenue if he had served the impression of AdX (5€ vs. 4€).
If we subtract from the total income generated by the direct campaign the total income that would have been generated by the programmatic partners, we obtain the real unique value of the direct campaign.
That is, a campaign sold for 100,000€ at a CPM of 4€ represents only 10,000€ of added value, once the revenues that the programmatic partners would have generated in all cases are deducted.
And so what?
Once this difference is well tracked for each campaign and you are able to calculate to the penny the unique value of the direct campaign vs. the open market demand. All that remains is to check if your direct sales prices are the right ones by taking into account HR costs, and if the prioritization on the ad server is right.
If you’d like to know what your other priorities as a publisher should be in the upcoming months, we’ve made a list to help you out : The top 3 Publisher priorities for 2021
And if you want to dig deeper into how to retain value from your bids, check out our article on granularity: "Price Granularity Unraveled: How to Retain Maximum Value"