The idea of infinite digital inventory has been batted around as a concept among colleagues for a long time. Every time I hear this, I get pissed. The reason for this reaction is that I know some folks are turning a blind eye to what is actually happening in advertising markets. There are four ways in which the lie of infinite media is created.
In reality, there is too little real supply. If real supply and demand are in balance, there is very little room for shenanigans.
First, let’s prove media is not infinite. Then, let’s examine why people think it is. Lastly, let’s contrast the idea of infinite inventory with the idea of finite attention. I’ll use the analogy of data transfer. To illustrate, let’s think of inventory as the volume of data and attention as bandwidth. The idea of infinite inventory is like saying you have unlimited data on your internet service. Everyone can effectively download an infinite amount of data, the question is how fast. If you try to watch 4K video over DSL, you will get 10 seconds of buffering for every 1 second of video. In this same way, the idea of infinite media ruins the attention experience. If a single user has limited attention bandwidth than the sum of all users also has a limited attention bandwidth and therefore media is finite. The essence of media is the content consumed and attention opportunities it creates not the number of ad placements served.
Now, let’s examine the lie of infinite inventory. Let’s start by assuming it is correct, there is infinite inventory. If true, it is important to consider some possible causes.
1. There are so many users and so many ads served that there is not enough demand to meet the supply. Supply is growing faster than demand making supply effectively economically infinite.
2. Infinite supply is produced to syphon off known demand: bots and non-viewable inventory.
3. The accuracy of and transparency of 3rd party audience derived from lookalike models. Overly broad segment definitions can create the illusion of far more inventory than actually exists.
4. The way in which the amount of inventory is measured yields a false count.
Now, let’s address these one by one.
In relation to bots and non-viewable inventory, tomes have been written. In reality, this is inventory that provides zero real audience attention. If media really was infinite, than fraud and ad blocking would not be real issues. Blocking ads, in other words removal of supply, is not a problem when supply is infinite. Further, adding supply via bots, should also have no influence on the market as we could simply replace the lost and fraudulent inventory with real inventory. Further, if $7.2 billion of fraud will take place in 2016 as the ANA study finds, it should leave a pretty big ‘mark’ in the marketplace. It is really hard to hide $7.2 billion. If all programmatic spend in 2015 was $14.2 billion, according to Magna Global, there are a lot of folks making a significant portion of their revenue via fraud. I’m not a tin-foil-hat conspiracy kind of guy, but if some players in the industry are profiting from this fraud there must be many other players who are happy to look the other way. Said otherwise, if you are willing to buy fraudulent traffic, there is an infinite amount.
Overly broad audience segmentation models are also perpetuators of this lie. For example, a couple of hours of research shows that about 6% of US households replace their car every year. Add to that the fact that the buying consideration period is about a month, then only 0.5% of the population is actually in market for a car at any given point in time. Said otherwise, any data provider that tells you that a general interest or news site can sell you auto intenders that represent more than 0.5% of their audience over any period of time, is likely broadening the model to ‘create’ audience inventory. Using lookalikes may yield lots of opportunities, but do you know how many of those auto intender lookalikes are really auto intenders and not just people with similar behavior? What behaviors drive the model? Just because I visited ford.com and gm.com does that mean I’m going to buy a car?
Last is the way in which we measure inventory. Some buyers and sellers have overcome this measurement problem by transacting on share of voice. Using this model, deals are a commitment for a portion of the overall attention instead of the number of impressions. Measurement by impressions is very easy to manipulate, measuring by attention or share of voice is nearly impossible. If you were choosing between two inventory sources at the same price and you knew that one had 20 ads on the page and one had 4, you would choose to run your ad in the media that was less cluttered. Share of voice or share of attention based deals remove a publisher’s incentive to cram ads and guarantee the buyer is buying the attention that they bargained for.
It’s time to open our eyes. It’s time that legitimate advertisers and publishers take control of the market. Because in the end the lie of infinite inventory only hurts the good guys and makes money for the bad guys.