The Myth of Unlimited Inventory


The Sell-Sider” is a column written by the sell-side of the digital media community.

Today’s column is written by Jim Spanfeller, CEO, Spanfeller Media Group, a new age media company.

It has often been said that due to nearly “unlimited inventory”, pricing on digital advertising will continue to decline.  This is a thought that has been taken as gospel for some time now, but in the light of day is, in fact, simply not true.

How so? Well let’s look at this from both ends of the telescope. The first is the belief that an overwhelming abundance of impressions results directly in lower CPMs; the second is the reality of those impressions in the first place.

Is the apparently unlimited amount of available banner inventory at the root of the continuing downturn in average online CPMs? I would tell you no. In just about every other medium out there (with the possible exception of Network Television) there is available inventory well beyond what the demand curve calls for. One can always add another form to the folio in a magazine or newspaper, there are more than enough available placements in radio, and spot, fringe and cable television rarely sell out.

So the implied supply and demand curve logic might be true for widgets, but has never been true for media. Media costs have always been the result of ongoing negotiations between buyer and seller. Of late, and especially true in the digital world, the buyer has been doing a much better job of negotiating than the seller.

But the issue in the digital world is twofold. The seller side of the negotiation is not helped by the appearance of way more inventory than there really is — which is the other end of the aforementioned telescope.

All too often, what passes for good inventory is anything but. It is either within environments that are corrosive to the advertising message or, as we have recently learned, is simply never in view — which means it was not really inventory in the first place.

When one distills down these issues it becomes quickly apparent that true “premium” inventory (and while there are varying definitions of premium in the digital world, almost all them would work here) is actually very much limited.  We have been living a lie for some time now. And while that lie has served a few players well, a majority of the most important participants in the marketplace have been negatively impacted. It is clear that publishers are getting rates well below what they should, but equally notable (or perhaps even more, given that marketing dollars fuel the industry) is that advertisers have been dealt a blow by seeing big percentages of their spend go to useless impressions (not seen) or, worse yet, destructive placements that actually hurt brand perceptions.

As we move further down the path of programmatic sophistication, and as more and more marketers work hard to realize metrics that go well beyond the click, the reality of these issues will become increasingly obvious and slowly they will recede into our past.

As Abraham Lincoln said, “you can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time.” Slowly but surely, we are getting to a point where the reality will simply win out over the bad actors. At first, some of the people, and then, all of the people, will no longer be fooled into acting on assumptions that are based more in myth and obfuscation than in reality and transparency.

Follow Jim Spanfeller (@JimSpanfeller) and AdExchanger (@adexchanger) on Twitter.

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