Originally published on AdExchanger
Measuring the comparative value of media inventory has been a longstanding challenge. For both sides, the relative value of media inventory is the most important measure to determine price.
At the heart of the problem is the fact that each buyer measures value differently. While that is true, the questions each buyer asks to find value are the same. Being able to answer these questions about available media inventory means that the optimal mix of targeted inventory, given current market conditions, can always be found.
If a media-buying team can answer all of these questions about all if its inventory sources, it can confidently say that it is always buying the best-performing inventory at the lowest price, given the condition of the market.
Since guaranteed deals set the price before the deal is done, the exact value of each possible deal can be compared to determine which will provide the greatest amount of value in budget.
How did the media I bought from this source perform on each metric?
In media, value is measured by the amount of performance achieved. Since performance happens along multiple measures, viewability, click-through rate and conversions, we can think of each of these as a measure in the value space.
Simply put, the best answer that a targeted inventory source can provide is that every impression is viewable, every impression results in a click and every impression converts.
The worst answer is when viewability, clicks and conversions all total zero. When everything converts, every last bit of value was captured. When nothing converts, no value was created.
How efficiently was this source’s inventory moving prospects through the funnel?
The next challenge in measuring value has to do with how steep the sides of the funnel are. In other words, how efficiently does the audience of this inventory source move from the top of the funnel to the bottom? Low viewability and a high conversion rate are just as inefficient as a high viewability and a low conversion rate. The efficiency of the funnel measures both. The wider the funnel is at the bottom, the better.
How much performance and efficiency am I getting from this inventory source at this price?
In the end, it is about effectiveness. Inventory that delivers high value may be important, but if the price is too high, it might actually be less effective than something cheaper. So when comparing different media inventory, it is the combination of value and price that drive the decision.
How much audience scale does this inventory source have?
Having fairly priced and efficient inventory is great, but there is still another piece missing: the amount that is available for sale. Being able to achieve campaign goals with the least number of sellers is important in keeping down the cost of the media buy and ensuing administrative costs.
If the media-buying team can answer all of these questions about all of its inventory sources, it can confidently say that it is always buying the best-performing inventory at the cheapest price, given the condition of the market.