It’s time to (really) monetize inventory

7
2089

money_tree_small.jpgADOTAS — Sweeping generalization time: Publishers focus direct sales efforts on maintaining a $20 CPM and when they can’t sell it, throw those impressions to remnant networks and hope they get a $1 CPM for it.

As I said, it’s a sweeping generalization, but most publishers continue to struggle with getting CPMs that they feel they deserve or need to operate and if their efforts to sell inventory fails, the remnant CPM level is frighteningly lower than what they were hoping for. The disparity is rarely addressed as publishers continue to try and prop up their direct sales CPM through a variety of methods and spend as much energy trying to get that remnant $1 CPM up to $1.05 then $1.10 and so on.

It’s time for publishers to adjust their tactics and consider a three prong approach to generating revenue:
Don’t let innovation be a part time job. We’ll discuss this during our Online Technical Forum “Turning Ad Product Innovation into Revenue” on September 2nd.

The idea is that the entire company should take on the responsibility of creating innovative ad products that are effective, efficient, scalable and quick to market. Sales should be armed with something new each time they talk with advertisers and agencies. This can’t be done unless there is dedication to innovation throughout the company. Ultimately these innovative ad units are going to help achieve those premium CPMs.

Do a reality check on your remnant strategy. Publishers who attend our events are of many minds on the best way to approach remnant inventory and I understand those that refuse to run networks as well as those who fully embrace them. The key for all publishers is understanding the amount of energy that goes into monetizing unsold inventory and how much it yields. Raising the effective CPM from $1 to $1.05 may result in significant revenue, but at what cost? Would your directly sold campaigns perform better if they were the only advertising running on the page? Wouldn’t your energy be better spent on optimizing ad products that grow your business, not just your revenue?

In other words, the key is not to consider remnant on the same footing as your other revenue streams. Know when enough is enough. Whether that means outsourcing network optimization or taking the stance that you won’t put more networks into the mix unless they can guarantee a significant increase in CPM, remnant needs to be put in it’s place.

Develop a middle tier of inventory. The Rubicon Project in their Q1 2009 market report called it “secondary premium” inventory and I think this is where some opportunity lies for publishers. It is also the most difficult to execute on. It requires a hard look at your inventory and understanding what you know and don’t know about your inventory. I’ve mentioned it before in an earlier post that networks know more about an impression than the publisher does.

Going after this middle tier requires developing relationships with companies that will make transparent the true value of the inventory. It requires drawing new lines on what direct sales is charged with selling and what will be sold by partners. It requires new packaging that incorporates the innovative ad units mixed with this middle tier that provides value and maintains a higher effective CPM. When you consider the amount of work involved in going after this middle tier, you can see why I think less energy should be spent on remnant.

I’m not alone in thinking this middle tier of inventory is an area of opportunity for publishers. As I spoke with ad ops leaders who will be attending our upcoming Publisher Forum in Portland, I bounced these ideas off of them and found that many were thinking along similar lines. It’ll certainly be a topic of discussion at the event and I look forward to hearing from publishers having success generating additional revenue by better understanding their inventory and concentrating more time on the middle.

7 COMMENTS

  1. Rob, I completely agree and this is where Bizo plays for our pubs — they’re earning an average of almost $4.00 for their remnant from us. However, it requires 1.) a valuable audience and 2.) the ability to target beyond run of site.

    Data and targeting is a big slice of where the middle tier is going to come from (and it will also drive up the value of the top tier). Publishers need to be thinking “segmentation” of their audience — this is where they are going to find significant opportunities to increase their CPMs.

    Russell Glass
    CEO
    Bizo

  2. I agree – there will always be remnant inventory. A network can’t offer the same customization that going direct can. That is their value prop. So no need to compare apples to oranges. Publishers should embrace networks and network aggregators and learn how they can add significant value to their business

  3. I agree, the gap between Premium/Direct and Non-Premium is too wide… publishers and advertisers alike are missing a big opportunity to match the right traffic with the right campaigns.

    The benefits of this middle tier of inventory such as ad serving priority, ad placement and true audience targeting make all the difference when it comes performance and campaign goals (whether branded reach, pure direct response or a combination thereof)

    As this segment of inventory gains traction and awareness, we’re going to see it become a big $ opportunity in the market

  4. I think publishers should stop seeing “remnant inventory” as some kind of economic burden. Develop an exchange strategy. Go to the exchanges and set up your buying/link partners. Introduce your data into the trade.

    There are plenty of platforms out there that allow you to get insight into your data, and this will ultimately add value to the impressions you’re trying to sell.

    The networks and yield optimisers have an important part to play in raising ad prices, but publishers need to start looking at the trading platforms as an important sales channel.

  5. Leveraging ad networks can be highly dilutive to your own sales effort because of this disparity is CPM’s.

    We are a premium ad network that will guarantee a $15cpm to publishers that allow their users to select who gets to advertise to them. SponsorSelect is a self targeting platform that is reinventing behavioral targeting without the privacy concerns that are addressed in two articles in this newsletter.

    If you are a publisher and need incremental add dollars without diluting your own efforts, let me know.

    Shane Lundy
    slundy@sponsorselect.com

  6. OK, fine…

    I can minimise the effort on my remnant inventory, because it just isn’t worth the time…

    I’ll dump those visitors to the easiest, quickest available last resort…

    And they will be slapped in the face with, “Your Computer Is Infected!” While being invited to reciprocate by “Punch(ing) The Monkey.”

    After that first experience, they will stay away in droves.

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