Remnant Evil

When it comes to advertising space, you can really have too much of a good thing. However traditional ways of dealing with remnant inventory - discounting and supply restriction - have caused chronic problems for online publishers. So, just how do you give advertisers more of what they want, and less of what they don't?

Both broadcast and publishing industries have developed their own ways of managing advertising supply and demand. Magazine publishers generally plan their book sizes, not on editorial but on the number of pages they expect to sell. TV broadcasters similarly, have a ratio of ad avails per timeslot which is fixed by format and occaisonally by legislation. Not only is scarcity a good way to control pricing, but it is also a means of protecting the value of sold spots to existing advertisers. The Clear Channel radio network, for example, last year took active steps to reduce clutter by imposing on a company wide ceiling on the number of advertising minutes per hour.

Unfortunately not all companies have the same view when it came to the web. Like Central American dictators who routinely fired up the Treasury printers whenever they needed more cash, greedy websites have also flooded the market with bottom of the page banners, excessive text links, ad boxes of every size and dimension, rotating logos and god knows what else. For a while, the resulting glut led to bottom of the pond CPM rates, and the unpleasant necessity of cutting backroom pure acquisition deals with media chop shop operators. And yet paradoxically, a small percentage of those ads - known as premium inventory and typically in key content areas such as technology or finance - would sell out completely, leaving publishers in a dilemma.

Smart web publishers are now being far more careful about the way they deal with remnant inventory. Running house ads is fine for a limited amount of impressions, but too much and you risk the effectiveness of other commercial campaigns. Many operators now use Google or Overture to resell space on their behalf, with keyword campaigns linked to relevant content on the page. Yields are not amazing, but they are a hell of a lot better than the kinds of deals that were taking place before search targeted marketing took off.

The real solution to the inventory paradox may come not through limiting supply, but rather through gaining greater insights into audience behaviour. Web analytics software increasingly allows publishers to track the behaviour of site visitors and tag advertising accordingly. So even all the finance related inventory of a site sells out, finance related ads can still be served to a viewer as they progress to other parts of the network. What is not yet clear, however, is whether advertising is significantly less effective when it is directly related to the content on page or just tagged to a reader's generic interests.

There is no doubt that web publishers have a bit to learn from the inventory management strategies of traditional media companies. However, the fluidity of web advertising can become a strength if publishers can find ways to focus their advertising efforts without resorting to the commercial cacophony that is a feature of so many sites.

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