Art and science of rate cards in online world difference across cultures

Abstract

In this report, we develop an understanding of rate cards by exploring different rate card models and create a rate card for mobile advertising. First, we start by explaining how rate cards help to increase the economic value of any product or service and the basic methods involved in finding the right price. The two models viz. the cost-based approach and value-based approach are elaborated and their applicability to pricing mobile ad inventory is analysed. Second, we delve into the structure of rate cards and explain the art and science involved in designing a rate card by studying the rate cards adopted in four different situations viz. vegetable market, restaurants, airline tickets and online advertising. We develop an understanding of the value, price and cost levers used for setting prices and explain pricing mechanisms such as yield management and performance-based pricing. Third, we explain the mobile ad ecosystem and identify the roles played by different players in the industry. The importance of rate cards as an indicative pricing instrument in an auction-based environment is developed and the critical factors to segment customers are identified. Finally, we segment the mobile ad customers based on these parameters and create a rate card for brand advertisers who pay for the impressions served. We conclude by providing an indicative rate card for different countries and OS types and provide a regression-based method to find the actual prices