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Why Yield
Management?
The Perishable Asset
The airline
industry began using the concept of yield management first,
after the airline deregulation. They realized how much money
they were loosing in unsold seats. Similarly, yield managers in
the broadcast industry began to realize just how perishable an
avail was. When a stop set runs with empty avails, the
opportunity to sell those avails is lost forever. This is why
we apply the principles of yield management. Every other
industry has been capitalizing on the benefits of a yield
management system, why shouldn't we.
What Is Yield Management?
Flex-Rate yield
management attempts to leverage the selling of all your
available inventory to make the maximum profit possible. If an
avail is not sold the station looses the ability to ever make a
profit on that avail again. Flex-Rate yield management attempts
to sell all the avails at the highest price that the market will
bare, otherwise called the optimal price. However, it is almost
impossible to reach sell out with every avail priced the same.
This is where the complex algorithms of a yield management
system come into play. It will discount the less demanded
avails to the current market value in order to maximize your
profits. On the other end, it will increase your prices on
highly demanded dayparts, again to maximize your profits. A
yield management system will also reward good buying habits by
discounting advanced buys and long-term buys. These systems
work in real-time and dynamically change prices based on demand.
Characteristics Of A Company In Need
Of Yield Management
The
following list is provided by
www.itech2000.com:
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Perishable Inventory (Avails) |
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Relatively Fixed Capacity (Fixed Spot Sets) |
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High Fixed Costs & Low Variable Costs |
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Advanced Reservation\Long-Term Buys |
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Appropriate Cost & Pricing Structure |
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Unbalanced buying patterns (Unbalanced inventory) |
Why Broadcasters Use Yield Management
Broadcasters use Yield Management systems to:
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Maximize profits on every avail sold. |
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Balance their inventory and begin selling avails that normally
don't get sold. |
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Reward good buying habits. |
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Avoid the hassles and limitations of rate cards. |
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Avoid approvals for every order. Everything in the system is
pre-approved. |
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Apply dynamic pricing information to the advertiser in
real-time. |
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Determine the most effective way to price and allocate their
avails inventory to reach every future advertiser. |
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Click here
to Download
Flex-Rate! |
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Click here
to find out what Flex-Rate can do for your station (may take
several minutes to load). |
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Click here
for more information on Flex-Rate Yield Management.
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