How to Solve the Digital Inventory Problem - Uwe Hook

Last week, Digiday published a story titled "Mobile's inventory glut grows".

"(…) only 18 percent of impressions were filled by the top 20 U.S. mobile ad networks, representing a decline from the 19 percent of ad slot they filled between April and June. Worldwide the issue is even more pronounced. The average fill rate stood at 10 percent in the third quarter, representing an 8 percent decline from the previous three months, based on the 70 ad networks, connected to the Smaato's platform."

Gresham's Law of the Web

Unlimited inventory, combined with an anachronistic understanding of advertising as "space" causes cheap ads to drive out the good.

This has clearly destroyed the design of content web sites, and is about to kill the content apps on mobile devices.

There are two solutions for this problem that has gripped the digital marketing industry since its inception:

• We need to reduce the number of ad position dramatically.
• Publishers have to charge more for ads.

We have to get away from the ad network model (Ad exchange, DSP – whatever you want to call it) and, instead, create sponsor relationships with customized packages. To drive real engagement (not some imagined engagement) a package has to be interactive and fully integrated with the content. Why do I need to leave an app when I want to engage deeper with an ad? I'm there to access content and an advertiser finds a way to engage me deeply: Keep me in the initial experience, don't just give me the option to leave the experience and end up on a brand page. Forcing me to restart the app or go back to the initial web site is a problem. Not a solution.

Responsive adaptability

There is no ad network or other company that serves desktop, mobile and tablet web ads at the same time, with the same insertion order. Just go to the major publications (NY Times, WSJ, etc.) and see that all the ads are different on various platforms. Some ads I can swipe away, some have close buttons, some are little bugs. And don't get me started if I want to experience the sites on my smart phone. Ads are unreadable unless I zoom in. And, who does that? No cohesive experience, nothing really to keep me interested. It feels like litter and not the interactive experience customers expect.

The whole industry has to work together to develop a responsive adaptability model for digital marketing. What does this mean? It's a model that adjusts the layout while staying on a grid, adjustable to any screen size. Since the industry moves slowly, the first order of business should be adaptability. Let's worry about responsiveness a bit later.

Disconnect between publishing and advertising

Digital Marketing has followed the print CPM model: audience and impressions trump good design and reader engagement. Because that static litter didn't work well, we created another artifact: Rich Media. Attention-grabbing, colorful and moving litter that was completely disconnected from the new design of sites (simple, direct, user-focused) that creates connection with customers. Just like Flash is fading away, we will see this litter discarded for CPM prices for 1/1000 of $1.

The print model for digital marketing is bankrupt. And, it's time to destroy it. The fluidity of current digital design is battling with the fixed and standard sizes of web ads. It's a legacy of a single-size page design, and the idea that a web page is "space" we carve up like an old newspaper. The value of homepage ads has peaked a long time ago when we moved from a digital portal economy to a digital link economy. A real sponsorship of content has more value and is more intriguing because it's part of the overall content, no matter where I engage with it. And, that's what we all want: Connection with the reader.

How to solve the digital inventory problem

We need to reduce the number of ad positions

Do I really have to explain this? Do you remember the 8 ads on Yahoo's homepage? Or the 11 ads on NYT's homepage?

We need to charge more for ads

That's a tough one. Sometimes it feels as if the whole digital marketing industry has signed a Grover Norquist-like pledge never to increase prices. Cheaper, faster, less effective has been the mantra of our industry. We need to change it to "Pricier, more engaging and effective".

Publishers need to focus again on sponsorships and stop littering their content with network junk. I'd be willing to pay more for exclusive sponsorships and positions through cross-platforms and supported by insightful analytics.

It comes down to good content and great stories. We have to rethink what worked in print and develop a new business model for the digital marketing community.

From hoarder to minimalist.

Good advertising is interesting and looks intriguing. Litter is never interesting and doesn't look intriguing.

Uwe Hook is the CEO and Co-Founder of BatesHook, Inc. (www.bateshook.com) and a veteran of the advertising and marketing industry with the goal of building connections between people and brands. Uwe can be reached at uwe@bateshook.com.

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