What Is Ad Inventory?

How Is Ad Inventory Bought and Sold?

Mobile ad inventory can comprise multiple ad formats and types, such as video, audio, display, banner, and native ads. 

This mobile ad space is usually bought and sold through automated technology in real time. This ensures more efficient inventory management for both advertisers and publishers. We call this process “real-time bidding,” whereby various advertisers bid on a publisher’s available ad space, and the auction winner wins the ad placement.

In many cases, the process will look something like this.

How Is This Inventory Valued?

The value and cost of a publisher’s inventory is determined by several factors:

• Ad impressions on a mobile website or app – how many users does a typical ad in this space reach?
• Fill rate – how much of a publisher’s ad space is still available (unsold)? A higher fill rate is better for publishers, as it means they are making more money from this ad space.
• Revenue model – the advertiser only has to pay the publisher once mobile users have completed certain actions, such as clicks, installs (CPI), or ad impressions (CPM).

The volume of users a publisher can bring to advertisers is also a crucial piece of the puzzle – this is why the number of daily active users or monthly active users can also impact the value of mobile ad inventory. 

Other factors that might further influence the value of mobile ad space include:

• Premium inventory – this is high-quality mobile ad space that is more likely to bring advertisers a greater volume of higher-quality users. Advertisers ideally want direct access to this – simplified supply chains bring advertisers closer to this inventory.
• Demographic targeting – some advertisers want to pay publishers more if their ad space will help them reach a specific target audience more effectively. 
• Ad location – ad placements within an app also determine the price of ad space; some placements are far more visible to app users than others (for example, on the home page). 
• Ad format – some formats cost more because they are more visible to users, such as video ads. 

Why Is Ad Inventory Important?

For Publishers

Publishers can determine how great or low their revenue potential is from selling their mobile ad inventory. The higher quality their ad space, or the more ad space they are likely to sell, the more revenue they can generate because their ad space is what mobile advertisers want to pay a lot for. 

It’s therefore important for publishers to have an impressive number of daily active users. With this reputation, they can sell their ad space at a higher price. 

App publishers do, however, need to consider the number of ads they serve users in their app. Too many ads and they could alienate users and cause them to churn. They must therefore strike the right balance between monetizing the mobile ad space available in their app and delivering a positive user experience.

For Advertisers

It goes without saying that a publisher’s ad space must be relevant to the traffic advertisers want to connect with most. Advertisers want the mobile users viewing their ad inside a publisher’s app to convert and deliver a high return on ad spend. If the publisher app isn’t relevant, it is unlikely that users will convert after seeing their ad.

Besides inventory that is relevant for their target audience, advertisers buying inventory will often prioritize brand safety. They need assurance that their brand image will not suffer negatively as a result of where they place their ad. 

Conclusion

The goal for publishers is to increase the value of their mobile ad inventory – which they can do by monitoring and optimizing the following components: impressions, fill rate, user engagement, and ad format diversity.

Advertisers meanwhile should prioritize ad space that aligns with their target audience and maintains brand safety. This way, they can enjoy quality and scale when bidding competitively on ad inventory.