Commentary

Brand Or Commodity? It Takes Two (Types Of Inventory)

With Google selling other media and advertisers ready to test an eBay-powered national TV marketplace, some publishers worry that automated, auction-based ad systems may be out to replace the brand ad sales executive.

There are many reasons why this won't happen, regardless of whether these high-profile efforts are successful. But this doesn't lessen the need for both media sellers and advertisers to start thinking about separate strategies for inventory used for branding and inventory best used for achieving performance objectives such as efficient reach or "cost per whatever" (hat tip to Dave Smith, Mediasmith).

Resource-starved ad agencies typically can justify high-touch treatment only for top advertisers and their most strategic campaigns and media partners. Within these constraints, buyers need competent ad sellers who can simplify the arduous process of planning and buying online media and add measurable value to every campaign.

Meanwhile, media sellers realize that monetizing all of their inventory is too difficult to do alone, no matter how large and proficient the staff. Creating relationships and big brand deals takes time, teamwork and constant nurturing.

This sums up why ad networks prevail today. After top sites, category leaders and portals sell their home pages, section fronts and targeted deals, buyers and sellers still need to match ads with remaining inventory on hundreds of billions of pages. Networks can help, but no single network can fill your inventory without dai sy chaining and the attendant loss of revenue and control of what's happening on your own site.

What's a publisher to do? Start by acknowledging that you have two different types of inventory:

  1. What your direct sales team sells to advertisers and agencies; and
  2. Everything else.

The catchall includes what you currently offload to networks, plus house ads, makegoods, bonuses and other non-revenue filler. (Remember that Google AdSense is a network and Ad.com, ValueClick, et al are also networks, not "agencies.") Your "everything else" may also include performance-based and other pre-emptible, untargeted campaigns scheduled to run "as available."

Take an honest accounting of your inventory and your "everything else" may represent as little as 20 percent of total impression volume or more than 80 percent. Most publishers fall somewhere in between.

How do you turn "everything else" into meaningful revenue?

  1. Get better at everything you do to attract and retain a valuable audience for your target advertisers. Field a winning sales team that can convert more of your leftover inventory to direct-sold deals. Then ...
  2. Realize that what remains after your best sales efforts is viewed by the market as a less-valuable commodity that may be most effectively managed and traded using tools that automate pricing, optimize and measure performance separately from your premium inventory.

As brand dollars migrate online, advertisers often come up short in the scramble for prime inventory suitable for creating emotional connections with audiences. Paradoxically, with two distinct inventory classes you may be better prepared to help them and to benefit from the expected growth in brand spending.

After you sell the inventory that everyone wants, you spend most of your time persuading advertisers that what remains is equally valuable. Don't stop trying, but be smart about it. You won't sell it all, and sending it to multiple networks merely invites them to bombard users with the same ads too many times, resulting in poor ad performance, low revenue and unhappy site users.

But if you separate your class 2 inventory from premium, impose proper quality controls, and manage it separately, you may be able to drive more value for each impression by using tools that force your networks and media partners to compete with one another.

There's inventory directly suitable for brand-building, and there's other inventory that can perform better and yield more than it does now if managed well. As a publisher, you already have both types of inventory. Turn your sales team loose on the highest value opportunities and take advantage of auction-based ad systems to manage the rest.

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