Just What Is Online Inventory?

by Thomas Pace, May 21, 2004, 12:00 AM

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Car dealers have "inventory." Storekeepers shutdown to do "inventory" once a year. Just what is online ad inventory?

It is simply all the places on a website where an ad unit might run. Each site has a different amount of inventory. For example, if your entire site is a single page, you might have three places where you can place an ad. If you decide to turn over those spaces say, every 10 days, to new advertisers, your total monthly inventory would be 30 units.

Those would seem to me to be fixed positions. What about ad units like interstitials, pop-ups and shoshkeles (that appear for a moment then evaporate). Are they also part of my inventory? And if so, how many do I have per month on my hypothetical one-page deep site?

Yes, they too, are part of your ad inventory. How they are counted in your inventory depends on how long they run on your site. For example, since most buyers want to register clicks on their ads of this kind, you might have to run the units until you have served up all the clicks (or alternatively "impressions"). Let's say you get 100 unique visitors to your one-page site each month and you have sold a shoshkeles ad promising that it will get 75 clicks. You then are obligated to run the ad until 75 of your 100 monthly visitors have clicked on the ad. That could take 5 minutes, it could take 25 days; you might end up at the end of the month not delivering 75 people, so you either have to rebate some money to the buyer or "make good" the ad, that is, run it until finally 75 people click on the ad.

How am I supposed to keep track of the inventory I have on my site, and for what period of time?

Well, if you really only have a few pages on your site, you could probably manage with Microsoft Excel spreadsheets to track what inventory is available overall, as well as the inventory that's reserved by each sales person. But, using a spreadsheet becomes difficult to maintain as the website grows and more salespeople are added, or if you are partnering with a rep firm that is helping to sell along with your internal sales staff.

Additionally, accounting for overlaps of inventory becomes difficult to do and many turn to using pivot tables within Excel. Not everyone is an expert in pivot tables. Overlaps occur when inventory must be accounted for on many locations of the website so as to not overbook available spots. Therefore many websites turn to outside vendor solutions to help them manage inventory in a more automated fashion.

How can an outside system know the status of my inventory and further, help me decide how to price it?

What's past is prologue. Outside systems can use historical delivery from the client's adserver as the basis for building inventory forecasts. This is how most inventory forecasting is done today. Capturing many data points over the past year gives a more accurate view of what the inventory should be. This is done for ALL locations of the site, so the client can run a query for any location to determine what the forecast is for any date. After the inventory management system builds all of this upfront information, it then maintains, in real time, what the site has for reservations ("reserved" inventory), booked contracts ("booked" inventory), and what is still available. This means that any time a reservation is made or contracts are booked, systems like ours will automatically update overlapping reservations to reflect this information. This helps the site keep from overbooking or underbooking valuable inventory.

Outside systems cans tie in cost models and pricing at the reservation level, and thus track pricing for every aspect of the site's inventory. This translates very easily to tracking, over time, how the site is pricing their inventory in correlation to what locations of the site are selling out. The client can then proactively reprice their inventory up or down as necessary, depending on demand.

Tom Pace is president and CEO of Solbright, a provider of sales and revenue management software for online advertising.

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