Holistic Yield Management
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Holistic Yield Management uses different forms of price differentiation aimed at maximizing a company's total revenue, and at the same time includes the components needed to achieve this goal. Yield stands for return and Holistic for wholeness.
Holistic Yield Management focuses on including all sources of demand simultaneously, i.e. to take into account both direct sales and programmatic sales. According to the holistic approach, it is a matter of price differentiation. Prices are, however, not reduced to the product level alone, but used after a quota allocation. In this way, earnings are managed holistically. Holistic Yield Management is used in airlines, car rental and hotel industries, among others.
Example of holistic yield management
To better understand the approach of Holistic Yield Management, it is worth taking a look at an airline and its ticket pricing. When numerous new low-cost airlines appeared on the market, a new calculation of the prices began. Many airlines started to create certain contingents and thus sell tickets at different prices. Particularly inexpensive tickets are offered to customers who are prepared to make a binding booking quickly. But when this quota is reached - for example, the first 30 tickets are sold for a very low price - the subsequent tickets cost the original regular price.
This creates the impression that prices rise as the capacity utilization of the aircraft increases, but this is actually based on a holistic strategy aimed at increasing total sales. This approach is especially used to maximize sales when demand fluctuates.
Distinction between holistic yield management and header bidding
Sometimes there is confusion between Holistic Yield Management and Header Bidding. The main difference, however, is that header bidding (also known as pre-bid or advanced bidding) uses a pre-bidding process to sell the individual impression at the highest possible price, while holistic yield management, in accordance with the holistic approach, involves the broadest possible use of the interaction of direct and programmatic inventory environments. While header bidding focuses on the individual product and its price, Holistic Yield Management pursues the goal of increasing overall sales. Header bidding can certainly be part of Holistic Yield Management, but the reverse is not the case.
Holistic Yield Management as an Instrument for Budget Creation
If Holistic Yield Management is to be used for budgeting, all marketing activities must be included. This enables a balanced utilization of capacity, even when demand fluctuates. Holistic Yield Management can therefore maximize the total return of a service unit, even if average prices were lower than originally planned.
Yield management is often equated with revenue management, but in fact these two approaches are different. Yield, which has its origins in commercial aviation and its regulation, deals without exception with improving the quality of bookings through targeted and appropriate pricing strategies. In revenue management, additional parameters are added to optimize the booking volume in a targeted manner. Yield management can therefore be described as a component of revenue management, since the key parameters used for both complement each other.
Holistic yield management in digital advertising
In the digital advertising world, Holistic Yield Management is used to automatically and directly balance advertising spaces in such a way that an increase in total advertising revenue is achieved. This approach can be beneficial for both publishers and marketers who sell digital advertising space and are concerned with the principle of automated ad sales. While demand sources were initially only considered separately, Holistic Yield Management allows advertising sales to be shifted towards Programmatic, and advertising placements are designed more automatically.
Significance for online marketing
Holistic Yield Management is a term that AdServer providers like to use to differentiate themselves from their competitors. However, as mentioned above, the importance of Holistic Yield Management is often not correctly interpreted, so no concrete advantages have yet been achieved for online marketing. In addition, the holistic approach only works properly if different approaches are combined to suit the respective industry. This can be done holistically if ad serving, holistic yield management, the supply side platform, video in stream and outstream formats or mobile web page formats and mobile in-app formats are used.
The interlinking of different approaches is intended to increase efficiency gains. In this context, we also speak of a full-stack solution that combines the most important sales channels - i.e. programmatic and direct marketing.