Ad inventory

Ad inventory

Ad inventory is how much advertising space a website or an app has.

What is ad inventory? 

Ad inventory is the total amount of advertising space a publisher puts up for sale. The term originally came from print media, but now it primarily refers to internet ad space. Ad publishers can sell inventory to marketers in multiple formats, including desktop websites, mobile websites, mobile apps, and video ads.

Increasingly, app marketers buy ad inventory through advertising exchanges and intermediary markets. This ties in with programmatic advertising, which is when marketers use software to buy ads. Traditionally, you bought ads by manually contacting representatives at a publisher, but now you can buy ads with algorithmic software. As a result, marketers can purchase ad inventory much more quickly as it becomes available.

Why is ad inventory important? 

For marketers, ad inventory determines how much space they have, and where, to get their message out to customers. App marketers need to find the best ad inventory available at an ideal cost. Inventory comes in limited quantities, so bidding is a competitive process.

Ad inventory is also essential for publishers because the more space they have, the more they can sell. A publisher’s goal is to maximize revenue from the limited space they have for ads.

How do you calculate ad inventory?

Here are the four main ways to calculate ad inventory: 

  1. Page impressions: An impression is one user viewing one ad. Publishers can ask for more money for their ad space if they have high page impressions, because marketers will get their ads in front of a large audience.
  2. Ad value: Publishers determine ad value in various ways, but a common one is page impressions multiplied by the average number of ads on their pages.
  3. Fill rate: Fill rate refers to how much ad space a publisher has rented versus how much is vacant. For publishers, a higher fill rate is better than a lower fill rate because that means they’re making more money from their ad inventory.
  4. Revenue model: With the revenue model, the marketer only has to pay the publisher once the ads have generated a specific action. Some examples of these actions are the number of leads generated, the number of clicks on the ad, or sales gained from the ad.

Other factors can affect how much particular units of ad inventory cost, including:

  • Demographics: Data on a site’s users allows publishers to offer ad inventory that’s targeted and relevant to the marketer. For example, one website might have an audience perfect for a workout app, while another might be better for advertising a language-learning app.
  • Location of ad space: Ad location affects the value of ads because it affects how many people will see an ad. For example, banner ads (the ones at the top of the page before you start scrolling) are the most valuable because more people see them.
  • The number of ads: The more ads on a page, the harder it is to get the audience’s attention, which isn’t ideal for marketers.

What types of ad inventory are there?

There are two types of ad inventory you can choose from, depending on your goals and budget: 

  1. Premium advertising inventory refers to a website’s more desirable and expensive ad space, like banner ads. Premium ad inventory is highly visible to website visitors and thus valuable to marketers. With it, you get your app’s brand in front of many viewers.
  2. Remnant advertising inventory refers to the ad inventory that a publisher hasn’t been able to sell, so they offer it at a lower cost. You can think of it as “discount” inventory. Remnant inventory can be invaluable to marketers on a tight budget, as it lets them get their brand out to an audience for a relatively low cost.

How do you buy and sell ad inventory? 

There are several common methods used for buying and selling online ad inventory, including the following.

Real-time bidding

Ad inventory - Real time bidding

Real-time bidding (RTB) is essentially a real-time, online auction for ad space. The highest bid wins the inventory. You can get good deals this way, and it’s also an efficient use of time as it’s completely automated. Another benefit is that publishers and marketers can see their campaigns in one dashboard instead of having data in different places for different brands they’re working with.

Programmatic direct

Programmatic direct is a one-to-one ad-buying process. Sometimes there’s direct human interaction involved, for example if the publisher and marketer need to negotiate rates. However, a publisher can set fixed prices for the marketer to accept or decline, making it programmatic. 

There’s no bidding because only one publisher and one marketer are involved. Often it’s premium publishers who sell programmatic direct, because they can command premium prices from marketers who get guaranteed ad space not available to other brands.

Private marketplace

Ad inventory - Private marketplace

A private marketplace (PMP) is like RTB but invite-only. The publisher invites a select group of marketers to bid against each other for the inventory. With PMP, there’s no intermediary, so marketers have more control over which sites their ads appear on. Publishers get premium rates, and marketers can access inventory before the general public.

Direct sales

Direct sales are when a publisher’s in-house team negotiates prices directly with marketers with no programmatic element. This can mean a high level of exclusivity, or it could enable a marketer with a low budget and a very specific audience to reach out to a niche app with relatively few users. Based on this outreach, the niche app may place ads for the first time.

Key takeaways 

  • Ad inventory is how much ad space a publisher offers for marketers to buy.
  • You can choose from premium or remnant ad inventory. 
  • Ways to buy and sell ad inventory include real-time bidding, programmatic direct, private marketplace, and direct sales.
  • Understanding how to buy and calculate ad inventory, and which ones are the most valuable, will help app marketers get the most bang for their buck.
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