Let’s assume that you are a Publisher and the Total available overall ad inventory is one million impressions.
In Direct method, let’s assume, you sold 70% of Ad Inventory to available advertisers or Media agencies which is known as premium inventory. This can be done with the help of ad management platforms like Google Ad Manager. Whatever the leftover 30% inventory is known as Remnant or Unsold Inventory.
Likewise, any publisher may have these situations of having remnant inventory at any time.
Here are some reasons for Remnant inventory
You may not find more advertisers because of not having more direct contacts with agencies or advertisers or
you’re small publisher not having enough resources to sell the inventory and get the advertisers
large publishers with large scale of inventory could not sell all inventory and may have some portion of inventory unsold
Even if you are a large publisher with having a a good team to find the advertisers, you may not ready to sell below Floor price that you fixed for your ad spaces
There is a sports page in your website and you want to sell Leaderboard ad space for a minimum CPM of $5. That means ad space is ready to sell only for the price which is equal to or greater than $5. This is known as Floor Price.
If I am an advertiser and ready to buy that inventory for a maximum CPM of $4 and not ready to pay above that price. Likewise advertisers whoever want to pay less than the minimum price $5, you are not ready to sell that inventory. This is another reason that inventory becomes unsold and Remnant inventory.
If there is a shortfall of pre-sold inventory due to low traffic or any other reasons,
If you don’t find any alternative way to sell that Remnant Inventory, then you earn nothing from those inventories. Also, you miss the chance of making revenue out of it.
Now you need someone who can help to sell those remnant inventories of unsold inventory. Then ad networks come into the picture.
An Ad Network is a company that buys inventory from a specified group of publishers and sells that inventory to Buyers or Advertisers who are in demand for that inventory.
To explain it, let’s take a real-time example
When you want to sell some portion of your land and no one is ready to purchase from your known contacts, you will approach some middlemen who work on commission to find buyers who show interest in purchasing that space. Among those buyers, you will decide to whom to sell once they meet your sale price.
Likewise, ad networks also act as a middleman who works on both sides of Advertisers and Publishers and earns some commission from them.
When Publishers are ready with remnant inventory, Ad Networks acts as buyer and aggregates & buys those Inventory at low price from Publishers and These ad networks again acts as sellers and sell those purchased ad inventory to Advertisers at a high price and earn revenue out of it
They can earn commission working for both Advertisers and Publishers
For example, an ad network purchased ad inventory from one publisher at CPM of $1 and they sell it to advertisers at CPM of $1.2. Here he earns some commission of $0.2. This is just an example to explain how they make business
There are a large number of ad networks grown on the display advertising ecosystem and these ad networks get demand not only from Online Publishers but also from Online Advertisers.
Examples of ad networks on Publishers side is Google AdSense which provides access to demand from advertisers from Google Network. This helps to monetize websites, blogs etc.
Ad Networks on Advertisers’ side is Google’s Ads where advertisers can show ads on Google Network of publisher websites.
Now, as a publisher, one can use Adsense to fill their Remnant inventory and make at least some money instead of getting them unfilled where you earn nothing. Just because something is better than nothing.
On the other hand what do you think that advertisers can use that remnant invetnory, the answer is simple. They can take advantage to show their ads large number of sites across the internet without direct buying with those Publishers.
Also, It allows them to sell their remaining part of their Planned budget
Let’s understand more about Ad Network in general terms
Having data and targeting segments integrated to those impressions, can be sold at a higher price and add more value in selling those.
These remnant inventories may be related to different sections, topics like sports, Health, Technology, Business, Lifestyle, Educations, News, movies, etc.
Adnetworks buys those inventory in segments and helps them to charge a bit more for advertisers or buyers by selling those. This helps Advertiser to find the audience related to their campaign and spend it smartly with more reach
Vertical Networks focus on specific verticals or segments or audiences. Examples are video only, Travel content only, etc.
This helps advertisers to choose content related to specific verticals for their ad content
Ad Networks can charge a premium price, with quality content
Another type is Horizontal ad Networks
Unlike Vertical ad networks, these horizontal ad networks cannot get the content specifically. The inventory is not transparent.
Advertisers can purchase at less cost