Solving The Banner Glut

Last week’s Iconocast featured an article entitled, “Less Is More,” in which Michael Tchong suggests a counter-intuitive reaction to the glut of banner inventory and falling prices. He says,

    “If you believe in the immutability of the law of supply and demand, the only answer is: ‘Cut supply.'”

If you look beyond the web, you’ll quickly see that his suggestion is not without precedent. Magazine publishers traditionally set book-size (the number of pages they’ll print in a given issue) based on the number of ad pages they expect to sell. They assign editorial coverage to fit the planned book-size not the other way around.

Broadcasters generally work with formatted segments, where ad avails for a given time spot are pre-determined. Prices are set based on expected ratings (viewership), with an eye toward minimizing unsold spots. Radio is similar.

But, forecasting is not an exact science. Despite careful planning, circumstances do arise, even in conservative businesses, where unsold avails do exist. So how does traditional media cope? There are two general solutions for filling unsold ad inventory off the web: Remnant pricing and filler ads.

The web market has a fair understanding of the remnant route. There are multiple good options for outsourcing the lowest return part of your “product line.” Handling that less profitable inventory internally is a more questionable strategy, as it distracts your sales force from the best use of their time; but that’s another column.

We’ve been less proactive, as an industry, at building a pipeline of filler ads. Filler generally falls into two types in the print world: free or near-free ads for other divisions of your parent company (or even products your publication is selling), and ads from bona fide not-for-profits.

Every magazine I’ve been involved with has had a drawer full of such ads, with permission to run them as we see fit, free of charge. The not-for-profits supply the creative, with the understanding that we’ll use it whenever we have an unsold space to fill.

The advantage to the charitable organizations is obvious; they get media-reach their limited budgets couldn’t support. For the publishers, the value is equally compelling… no last minute calls to running advertisers offering to cut-rates to fill that blank page, no fire drill among the sales team, keeping them from what they should be doing (selling the next issue, and at full rate), no downward-rate pressure as advertisers figure out that by waiting till deadline they might get a deal… you get the picture.

I’m not talking about a well-planned remnant program. I’m talking about avoiding the reactive, short-term emergency that arises when a scheduled advertiser cancels and the page has to be filled. NOW.

Yes, it means running a page for free that might have garnered some revenue. But if it protects rates on every other ad you sell, then that may be the right call.

So, let’s get back to the web and Tchong’s suggestion to cut supply. He suggests limiting the pages on which banner avails run, and that certainly makes sense. Still, running filler ads from charitable causes, organizations that will never be paying advertisers, yet who can really use the public awareness….. that makes sense too.

Your site gets to do good for causes you care about (one site I know holds an all-staff vote to choose which charities to run) and web publishers begin to assert some control on the supply and demand, and therefore pricing. That is necessary if this medium is to continue to thrive.

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