What is remnant inventory
Remnant inventory or unsold inventory is the advertising slot publishers cannot sell through programmatic deals. It refers to the remaining unsold ad impressions that exist even after fulfilling commitments made to advertisers for a specific period.
In the context of programmatic advertising, let us consider that a publisher expects to sell 1,000,000 ad impressions in a given month. But due to various reasons like limited demand, limited ads, or market fluctuations, the publisher could only sell 800,000 ad impressions through preferred deals. The remaining ad impressions are unsold during sales and will be classified as remnant ad inventory.
Publishers seek to monetize every ad impression to maximize their revenue potential. To achieve this, they need to manage their remnant inventory effectively.
Causes of remnant inventory
The main causes of unfilled ad inventory are:
- Low-quality ad inventory.
- Lack of demand during certain seasons.
- High premium ad inventory price.
Remnant inventory vs. premium inventory
The table below will illustrate the difference between remnant inventory and premium inventory:
|Remnant Inventory||Premium Inventory|
|Definition||The inventory left after premium demand is done.||The inventory that the publisher could sell directly to the advertiser.|
|Parties involved||Publishers, advertisers, ad networks, ad exchanges, and SSPs.||Publishers, advertisers, and their ad servers.|
|Advertisers who use it||Ideal for small or medium advertisers who seek to monetize in different ways. But big advertisers also use this.||Large companies and brands predominantly use them.|
Implications of remnant inventory
Both positive and negative effects occur from having a remnant ad inventory.
Advantages of remnant inventory:
- Unfilled ad inventory acts as an additional revenue stream from ad impressions.
- Advertisers can access a wider audience through their impressions, including users less likely to engage with premium placements.
- Remnant ad inventory helps publishers increase fill rates and ensure a higher percentage of ad inventory is utilized.
- Advertisers can benefit from low costs while purchasing remnant inventory. Since they are sold at a discount, advertisers can run their campaigns at a lower price.
Disadvantages of remnant inventory:
- Publishers might become overly reliant on remnant ad inventory revenue, which could lead to neglecting efforts to optimize and sell premium inventory.
- Remnant inventory has limited targeting options and could reduce the effectiveness of the ad campaigns.
- Lack of control over ad placements could lead to brand safety risks if advertisers' ads appear in a non-contextual location or alongside low-quality content.
- Since unfilled ad inventory is usually sold at low prices, it results in lower CPM. This can impact the eCPM and, thus, the overall profitability for publishers.
How to fill remnant inventory
- Preferred deals: Implement preferred deals and optimize impressions before entering the open market. Allow publishers to purchase inventory at a negotiated but fixed price. This will increase the likelihood of enticing higher-playing buyers, improving yield from remnant ad inventory.
- Opt for suitable selling models: Explore different monetization methods like video ads and affiliate links as impressions grow. Tailor the model for each strategy. For instance, use CPM for display advertising and CPA for affiliate ads.
- Enable precision targeting: Ensure targeted ads align with advertisers' campaign goals and tailor ads accordingly. This will increase the viewability score and help serve contextual ads.