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Online Ad Inventory: 2 Tactics That Increase Revenue

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Online ad inventory

A Web site without ad inventory for key sections is like a grocery store with empty shelves.

Sites that manage online advertising inventory will almost certainly generate more revenue than sites that don’t manage it.

Oddly, the concept is rarely discussed in the industry because it is easy to overlook when so much else requires attention.

Think of ad inventory this way: Is it better to have a site with 100,000 page views a month and three ads per page or a site with 200,000 page views a month and two ads per page?

The first site has 300,000 ad impressions a month while the other one has 400,000 a month.

That’s a no brainer. The second site has 33% more ad inventory and therefore is more valuable.

It also has a better user experience because it loads faster, and the odds are good that the ads have a better click rate because only two of them are competing for attention rather than three.

Managing ad inventory is easy and requires only a few minutes of effort each month. Two tactics deliver the necessary results: increasing inventory quantity and increasing inventory quality.

How to Increase Inventory Quantity

Inventory quantity matters for the simple reason that more ad impressions will mean more potential for revenue.

If the average RPM per ad unit is $10 for either site, the first site will deliver $3,000 a month ($10 x 300,000 / 1,000) while the second will produce $4,000 a month ($10 x 400,000 / 1,000).

A site can increase ad inventory through some ways that are obvious and some that are not:

Grow audience through marketing efforts, i.e., advertising, search engine optimization and social media marketing. This is the most obvious approach.

2) Increase the number of ad positions. This seems obvious, but it comes with a risk. More ads require more images and scripts, thereby slowing the page load. Sites that overdo it will end up with bad user experiences and in some cases an actual decline in audience.

3) Conduct a site audit. When I was responsible for 30 sites as an online general manager, I conducted a site audit that required going to hundreds of pages to ensure every one of them had three ad positions per page. Fortunately, it did not take as much time as it sounds.

Because of the size of the network and number of employees, numerous changes over time had resulted in some pages losing one or more ad positions. The site audit increased our revenue by six figures in a single year.

4) Increase visitor frequency. The ratio of visits to unique visitors — a way of tracking frequency, loyalty and retention — doesn’t receive much attention. But consider this: increasing the average return visits from two per month to three per month will result in a 50 percent increase in ad inventory.

5) Increase pages per visit. Like the frequency number, increasing pages per visit has a major impact on increasing ad inventory. Taking the pages per visit from 2.0 to 3.0 delivers another 50 percent increase in total inventory. One way to increase PPVs is by focusing on pages that encourage clicks to other pages and staying away from pages with a high bounce rate (visitors who go straight to that page from search engines and leave the site again).

How to Increase Inventory Quality

Online news, weather and forums do not attract nearly as much top-paying advertisers as travel, help, finance, automotive, real estate, employment and other categories.

Online TV and newspaper sites have a problem with the quality of ad inventory because so much of it is in the news section and so little in other lucrative sections, especially classified ad sections such as automotive, real estate and employment.

“Increasing the quality of ad inventory is a global view of management.”

Increasing the quality of ad inventory is a global view of management. It means developing the ability to track average RPMs for every section on a site and rank the sections by RPMs.

In an era of stiff competition for ad revenue, almost nothing is more frustrating than landing a new client with $10,000 to spend on a site section that doesn’t have enough inventory for the budget.

That lost money may never come back, especially if the client thinks the site can’t produce enough inventory. The client may go elsewhere next time.

A simple spreadsheet updated monthly will be enough to track RPMs and total inventory by section.

Once the quality issue becomes stable, the next step goes back to quantity, but this time it’s quantity at the section level. Focus product and marketing efforts on the sections that deliver the best RPMs.

The result of these tactics will be an ad inventory system that will produce more revenue and higher RPMs for the site over the long term.

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