Ad Inventory Management

With products that serve adverts, whether display (banners/interstitials), audio, video, or some other format, consideration should be given to the placement, type and number of advertisements that will be shown, as well as how these adverts will be delivered.

User experience, and hence user behavior, may be altered by the decisions made regarding advertisement:

  • Serving too many adverts or interrupting the user experience with intrusive ad formats such as videos (even if skippable)  may reduce user engagement and retention with the core product and cause negative user sentiment (though may also generate more advertising revenue).
  • In some cases, users may be less inclined to make purchases if they encounter adverts before becoming a paying customer.  Conversely, some products offer an ‘ad free’ experience to users who upgrade to a premium subscription or pay a one-off fee via IAP.
  • ‘Click-outs’ (clicking on advert and being redirected to a website / app) halt the user’s current session in the product; in the worst case, they may never return.
  • Loading times for advertisements that are not pre-cached natively could cause performance issues and consume mobile data.  If partnering with an ad exchange, it may be hard for the publisher to directly control these factors since ads may be downloaded from the exchange via a black-box SDK with little configurability.
  • Advertisements from unscrupulous (or downright fraudulent) advertisers may be served in the product, which could result in irate users and increased churn.  Ad quality is hard to police, since adverts are often served programmatically via bidding platforms, making checking every advert impossible.  The only way to be 100% sure that all adverts will be suitable is to directly sell advertising units in the product to brands, which is unfeasible for most publishers.  Working with trusted networks can help, although many networks trade traffic and ad inventory between themselves, which increases the chances of a weak link that lets in poor quality adverts.

When considering these factors, trade-offs will be made between short-term ad revenue and longer term retention, engagement.

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