Fill Rate and increase of slots

EY-Parthenon Case: Virtual Marketplace
Neue Antwort am 19. Apr 2020
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Nadja fragte am 21. Mär 2020

Why should the amount of slots be increased if the fill rate is already only 33%. Wouldnt it make sense to be increase the fillrate by selling "rest spaces" for a reduced price?

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Daniel
Experte
Content Creator
antwortete am 21. Mär 2020
McKinsey / ex-Interviewer at McKinsey / I will coach you to rock those interviews

Hi Nadja,

Your idea is good in theory, but you risk to erode your own pricing if you do that. What would probably happen is that the advertisers wouldn't purchase the slots until the end of the period, when they know that you will decrease prices for the vacant slots. So, you risk actually getting less revenues if you introduce those discounts – and not more.

However, if you share your idea during the real case ("increase fill rate through discounts for vacant slots") but also share your concerns / limitations ("we need to be careful not to erode our pricing") – that would be an excellent point, which you should definitely make!

Hope this helps! If you want to discuss in more detail, just DM me :)

Best,

Daniel

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Titus
Premium
Kompetent
antwortete am 19. Apr 2020

This was my intuition at first as well, but keep in mind that 33% is only an average. The way the case explicitly mentions premium ad space I would assume that desirable ad space is highly concentrated on some pages (say, with listings in urban areas) where we actually have a very high fill rate. When I attempted a case I was actually thinking of a rather similar thing, but with dynamic pricing instead - so we can perhaps increase fill rate while keeping the same average price by selling premium ad slots more expensively and low-value slots more cheaply.

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Clara
Experte
Content Creator
antwortete am 22. Mär 2020
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

I agree with Daniel, the issue you can collaterally end up having is clients realizing, leading to price dumping.

However, it´s indeed a good intuition, and don´t hesitate to share this toughts as alternatives when doing the cases (with, for sure, possible consequences commented too).

Hope it helps!

Cheers,

Clara

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Daniel gab die beste Antwort

Daniel

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