Not all Internet Inventory is Created Equal.

We have all argued at one point or another that Internet impressions are a bit like airplane seats: any revenue is better than no revenue. When an impression leaves the proverbial gate we want an ad on it. Afterwards, it’s gone for good and the opportunity with it. With the growth of social media (I read somewhere that the rise of social media had tripled – maybe quadrupled –  the number of impressions online) the Internet is awash with impressions and it’s starting to cause a panic that we’ll never be able to monetize them all. Worse, those people that are panicking about unsold impressions are causing other people to panic about the corrosive affect all those unsold impressions are having, generally, on the value of Internet inventory.  Martin Peers wrote about this in the Wall Street Journal yesterday.

The answer to this problem will be in the middle, as always. No one, even airlines, actually ever lets the inventory go for the change in your pocket lest it pull the value of what’s for sale completely under.  For now – especially given the economy -  the perception of the problem looms larger because the dominant advertising constituency online is direct response, or performance advertising. Everybody needs and wants a piece of it, including brand publishers that would consign it to the back of the plane if times were any better. Instead, they have to compete with social network inventory where direct response may comfortably thrive for as little as a nickel per thousand…or less.

But not all inventory is created equal, nor is all advertising.  Despite the existence of a 24 hour programming day, I watch maybe two hours of television a night when I get home, deciding between four channels out of 800. As far as I’m concerned, the world is equally awash with television. But, after a few generations of trial and error one person’s Super Bowl ad is another person’s Ginsu Knife.

Online Ad Networks and the IAB/Bain Pricing Report

Here is a look at 7 online publishers and how online ad networks affect their business:

IAB/Bain Digital Pricing Study

This is interesting on two levels:

1. Clearly, there is a need for publishers to better manage the yield on their inventory. While it is still safer to let an ad impression go unmonetized than it is to let an airline seat fly empty, knowing when to make those decisions in order to maximize revenue is the next big challenge for online publishers. Very few ad servers (our AdConductor platform and 24/7 Real Media’s OAS) work for the publisher in that regard.

2. Ad networks are sopping up excess inventory. The issue though is that they are sopping it up at bargain-basement rates. Publishers need to think about the options they have for ad networks, deciding between blind and transparent networks (for the publisher to see the advertiser), those who manage block lists well, and those that will sell the value of the remnant inventory to the right advertisers to keep advertising quality high. As publishers and ad networks learn to get along better to fill excess inventory, these trade-offs will become part of the discussion of where to place great, albeit not premium, ad space.