Use Your Inventory: Low Price, High Dividends

It’s no secret that most major web sites and ad networks don’t even come close to selling the majority of their ad inventory. However, many sites maintain the philosophy that it’s still best to sell the small fraction they can at a premium, and to recognize their opportunity costs at year’s end.

This approach does have some merit to it, since it forces buyers to place a higher value on publishers’ traffic when ad prices are negotiated. However, the question still remains, “What can be done with this extra inventory?” If only it could be put to good use!

And then comes the good news that something productive (although not necessarily profitable in the short run) can be done so this excessive inventory does not go to complete waste. Aside from offering the best buying price possible (which every buyer believes they are receiving anyway), why not give the larger media buyers incentive to keep coming back?

Although this concept can apply to ad networks as well, it really applies more to the larger sites and portals that own all their traffic and incur minimal incremental costs for serving extra ads (i.e., they do not have to pay sites within a network for their ad traffic).

If a site’s traffic is going to be generated regardless as to how many ads are sold, then why not use it as a sweetener toward a repeat buy next month (or in the case of an agency, the possibility of other clients’ ads on your site)? It’s a negligible price to pay to help build long-term relationships that vendors require to succeed over the long run.

A typical situation where an overdelivery could easily be applied to an ad campaign is when a publisher delivers the requirements very quickly (for example, he or she delivers all impressions in two weeks instead of four). However, once your ads have been fulfilled and have been pulled from the rotation, the publisher implements a high concentration of public service announcements (we’ve all seen them the ads promoting recycling and the Environmental Defense Fund).

There are two problems with these. First, these default banners thrown into the rotation to fill unused space do not generate much (if any) revenue to the site. Secondly, the Internet and digital technology already support the paperless society, thus promoting the recycling movement online is likely a wasted effort!

But putting our environmental concerns aside, these publishers should continue to serve the ads provided by their paid advertisers instead. It helps the advertiser reduce effective costs by achieving some extra exposure, and it helps the vendor develop a better relationship with advertisers by surprising them with a free bonus to the campaign. It costs the publisher very little and is very helpful in future negotiations with media buyers.

The second scenario that comes to mind is a campaign placement that achieves a very low response rate, either due to weak creative performance, lack of optimization, or poor targeting. It can benefit both the advertiser and publisher to provide some bonus exposure so the campaign can be salvaged. And, the advertiser will realize that the placement was beneficial and worthwhile.

This is not to say that most publishers today do not try to provide their advertisers with some bonuses along with the buys. There are a select few that always stick with the status quo and never deliver a single impression beyond what has been agreed upon. Of course, they do not owe anything above the agreed terms, but the relationships that truly benefit both parties are those that last longer than the immediate sale at hand!

Every industry has its own strategies and techniques used by vendors and buyers to help sway negotiations in their respective favor. Overdelivery is one simple and inexpensive sales technique that has been around for a long time, because it continues to pay solid dividends in the form of repeat sales.

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