Oxyfish

I’ve been talking to a lot of publishers recently, and I’ve gotten some very consistent feedback: a relatively small percentage of their impressions often make up a disproportionate percentage of their revenue. This is not news, it’s a classic 80/20 rule (although the numbers may differ – some are 90/10!). And every publisher knows what inventory I’m talking about: it’s perennialliy sold out, and the sales guys are all fighting over who gets to sell it next month. Here’s a slide illustrating what I’m talking about:

Now this is oversimplified, but typically this “premium” or even “super-premium” inventory is sold to brand advertisers. Deals can be time-based sponsorships (typically with impression guarantees) or guaranteed-impression buys at relatively high CPMs. The remaining inventory is generally either sold on a CPA/CPC basis, at much lower eCPMs, or sent to a remnant network or ad exchange for a low CPM or revenue share.

What is interesting about this from an industry level is the amount of time and energy the industry has spent on optimizing the value of the 80% of the impressions that are not premium, and by comparison how little progress has been made on increasing the value of the inventory that makes up the majority of the revenue. Performance-based ad networks have sprung up everywhere, and ad serving providers like DoubleClick have products that are focused on increasing click-through rates, and therefore revenues, from performance-based ads. But these only help turn your $0.25 CPMs into $0.50 CPMs, they don’t do anything for your $10 CPM premium inventory.

The reason is not hard to guess: performance ads, because they are directly measurable, are much easier to optimize. Lots of people have had roughly the same idea: if I crunch enough data, I can more accurately predict who is likely to click on which ads, and therefore I can get more revenue out of less inventory.

Brand advertising is much less amenable to optimization in this same way, because click-through rates aren’t typically a good proxy for brand campaign objectives (look for a future post on this topic). To get more out of your premium inventory, you have to either make it more valuable to the advertisers, by adding more data and targeting more tightly, or you need to utilize it better, so you waste less through fragmentation and inaccurate allocation. Yieldex is focused on providing tools that help publishers maximize the value of their premium inventory, which is the 20% of the inventory that results in 80% of the revenue.

This entry was posted on Monday, March 10th, 2008 at 8:19 pm and is filed under Advertising, Yieldex. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.