Premium Inventory: Understanding Highly Desirable Ad Locations and How to Use Them

Premium inventory has long had a place in a marketer’s toolkit, though the locations and technology have changed in the digital era. Conceptually, though, premium inventory refers to high-quality, top-tier ad space on reputable platforms. Each industry and platform might be different, but generally, premium inventory is available space that an advertiser considers the highest value, guaranteed to get attention and engagement from the right viewers.

It also comes at a high cost, so premium inventory has to be used wisely, and measured carefully, as part of an ad campaign.

What Is Premium Inventory?

Premium inventory ad placements vary widely depending on the industry, time of year or season, and website. While these may have been a full-page or above-the-fold ad in the newspaper era, now, premium inventory might refer to a coveted newsletter position, an exclusive website banner, a sole sponsorship of digital content, or other prime website real estate.

Examples of premium inventory in the modern digital era include:

• Exclusive sponsorships, such as high-visibility ads on top 100 sites (think New York Times or Forbes), or branded content.
• TV and video, like sound-on ads that can’t be skipped during streaming content or as commercials in live sports.
• High-impact spots, like above-the-fold banners, newsletter positioning, or homepage takeovers.
• Private marketplaces, where advertisers bid on invite-only, high-quality inventory.
• Targeted placements, where ads are guaranteed (due to first-party data use) to appear in high-quality, relevant environments.

Core Characteristics of Premium Inventory

Visibility

Premium inventory ads are premium because they’re highly visible, meant to be seen by as many qualified users as possible. They might be above the fold on a site, or in another high-traffic area, or even out of home (OOH), like a billboard in Times Square.

Safety

Premium inventory space is also safe for brand reputation. Ads will show up on trusted, reputable sites, without the risk of appearing near harmful content.

High-Performance

Premium inventory should perform well in terms of conversions, because the ads are designed to generate high user interaction, such as in premium video placements or full-screen mobile spots. Or, they’re targeted to niche or high-value demographics to drive engagement.

How Premium Inventory Is Valued

Session Depth and Placement Priority

Within digital advertising, premium inventory valuation takes into account a combination of high placement priority and low session depth. That means that ads are served early in a user’s visit, or toward the top of the page, to the most engaged users. So, these ads put a premium on the first impressions of a user’s visit, and apply settings to make sure the most valuable ads come up first.

Market Supply and Demand Dynamics

The factors of market supply and demand dynamics within premium advertising take into account the economic concepts of supply and demand. Premium inventory for advertising, which could include high-demand ad space, luxury goods, or infrequently available spots, can command higher prices because of its high demand, such as its uniqueness or the value it offers. Premium inventory pricing is often scarcity pricing.

It can also be related to timing, such as during a peak season, when prices go up as demand goes up for a certain amount of time. Time-sensitive inventory, like hotel rooms during the Super Bowl, depend on speed to sell before the inventory becomes worthless (or at least, worth much less) the day after the game. Finally, brand-safe, targeted inventory can command higher prices because advertisers know they’ll see better return on investment (ROI) and engagement.

Pricing and Guaranteed Deals

Within the premium inventory market, programmatic guaranteed deals are a way for advertisers to avoid auction volatility uncertainty. They can fix the audience and placement ahead of time and are able to plan the cost as well, which can offer peace of mind and predictable performance for a campaign. Publishers can also benefit, since they don’t have to rely on unpredictable markets themselves.

Premium inventory pre-set pricing can be useful for predictability and planning, too. Pre-negotiated pricing can often be more expensive for premium ad inventory, but the guarantee of a prime ad spot might be worth it to an advertiser, depending on their goals and the situation.

Programmatic vs. Direct Sales Channels

There are a few options for premium inventory sales, depending on what an advertiser wants to achieve. Programmatic sales use real-time bidding and can bring lower costs, plus add scale and efficiency, if an advertiser can bid or use an advertising platform to take care of bidding. When efficiency, reach, and performance are the top priorities, programmatic sales can help a brand get more for their money through automation and careful audience targeting. Plus, this option can help to get the most performance out of leftover inventory.

Direct sales require higher, guaranteed prices (CPM) that ensure exclusive and brand-safe ad inventory. This is a high-value, low-volume strategy, but it gives an advertiser full control over where the ad goes and what content is around it. For brand-building, takeovers, or other high-impact ads, this can be impactful.

It’s also possible to use a hybrid approach, choosing direct sales for higher-tier inventory and programmatic sales to get more for your money.

Premium Inventory Channels and Formats

With many creative options for premium inventory advertising, these are the channels and formats to know:

Benefits of Premium Inventory for Advertisers

Targeting Precision

Premium inventory is premium because it’s in a prime position, so lots of users will view it. Along with that benefit, premium inventory includes precise targeting of specific audience segments based on high-quality data. You’re able to better control who sees your ads, where, and when, bringing guarantees that aren’t possible with other ad inventory selections. Targeting these days is often AI-driven, bringing better ROI and increased reach.

Brand Protection

Depending on your brand reputation and goals, you may choose premium inventory to make sure your content won’t be associated with any inappropriate ads, and cut down on the risks of exposure to bots or fraudulent traffic. Premium inventory ads only appear on reputable, trusted sites.

Better Performance

Using premium inventory as part of an ad campaign will likely show better performance, whether those metrics are click-through rates (CTR), engagement, conversions, or others. One study found that ads in premium, high-quality environments increased purchase intent by 40%.

Challenges and Limitations of Premium Inventory

Cost

It’s not always possible to use premium inventory in an ad campaign, since these spots are expensive and often out of reach, especially for super-premium, more rare placements. At some point, the high cost might be impossible to justify against return on investment measurements.

Availability

Premium inventory spots are premium for several reasons, but availability is often one of them due to scarcity, demand surges, timing, and more. You may need to plan far in advance or forgo the premium spots when availability dwindles quickly.

Suitability

A B2B company may never require a Super Bowl advertising spot, because the audience might not overlap at all with their target audience. Creative formats can also play into premium inventory decisions, since the format, audience, and placement all have to line up to make it worthwhile.

Alternatives to Premium Inventory

Premium inventory can be an important tool for advertisers in particular industries or with a robust budget. There are other ways to think about targeting and engaging audiences, though. Consider these alternatives to premium inventory.

Direct Deals

Programmatic direct deals can be useful for niche or contextual ad networks that are well-matched to the brand. These deals offer a first look at ad inventory at set prices, and cost less than guaranteed premium inventory. It’s a way to target audiences without going over budget, or to use occasionally or when guaranteed spots aren’t as crucial.

Remnant Inventory

So-called remnant inventory is unsold, lower-cost ad inventory that’s long tail or especially targeted. Consider this when you’re working with a smaller budget and can use real-time bidding to find just the right spot for your creative and audience.

How to Measure Performance on Premium Inventory Ad Placement

When you’re paying premium inventory prices, measuring and evaluating performance will be essential. With continuous performance monitoring, advertising teams can adjust bids, targeting, and creative for each premium placement. Keep these factors in mind to gauge whether and how well premium inventory ads are working for your business.

Key Metrics for Performance Evaluation

Some metrics will be more useful than others when evaluating the performance of premium inventory ads:

• Gross margin ROI to evaluate the profit generated from investing in inventory, especially for high-value items.
• Stock-to-sales ratio compares stock levels to sales to make sure that premium items are in stock, but not overstocked.
• Inventory turnover ratio to measure how often premium inventory turns over, or is sold and replaced, with a high ratio indicating desirable or fast-moving spots.
• Sell-through rate measures how much inventory was sold versus the amount received; higher rates mean there’s a strong demand for premium goods.
• Inventory carrying cost is the total cost of holding inventory, which should be low to protect margins when it comes to premium inventory.

Other premium inventory performance metrics might include perfect order rate, backorder rate, and deadstock rate.

Viewability, Engagement, and Conversion Outcomes

When measuring premium inventory performance, keep in mind there are generally much higher benchmarks than open exchange inventory. So, premium inventory should have higher viewability metrics — meeting or exceeding the standard of 50% pixels in view for one to two seconds. Premium placements also lead to higher viewability. One study found these placements can lead to 73% viewability compared to 45% for below-the-fold ads. Viewability can even get to 100% for full-screen, unskippable ads.

Engagement measures the interaction and focus of users with premium ads. Research found that premium inventory outperformed open exchange inventory by 143% in terms of attention and engagement. Video performance is also high with premium inventory, with 90% or more completion rates with higher quality content.

The essential measurement of conversion matters greatly with premium inventory. It’s possible to use premium inventory to help move users from attention to conversion. The nature of premium inventory can improve conversion rates, too: brand-safe impressions drive a 233% lift in conversion rates, while combined viewable and brand-safe impressions drive a 57% conversion rate.

Attribution Challenges

Premium ad inventory attribution is part of the bigger picture of how premium placements are performing and whether they’re worth the cost. Challenges to understanding attribution include data loss due to privacy regulations; cross-device, nonlinear journeys; and last-click models that don’t or can’t value brand awareness efforts. In the case of some premium spots, like streaming services, the positive signals remain within that silo, making it difficult to incorporate them into broader metrics tracking. Premium inventory placements often drive long-term brand lift or offline-to-online effects versus easily trackable clicks in the moment.

Aligning Inventory With Campaign Objectives

Using premium inventory as part of an ad campaign has to take into account the attribution challenges as well as the goals or desired outcomes. Especially because of the costs likely involved, advertisers should have strategic goals that align with using premium inventory placements. These high-quality ad placements promise brand safety, engagement, and viewability, which often line up well with brand awareness, conversions, or guaranteed access to new or desirable audiences. Premium ads can also be a way to augment audience targeting data when trying to increase user engagement and attention.

Key Takeaways

Premium inventory for advertisers can bring great visibility, engagement, and performance, but it also comes at a cost. Premium inventory might be the top of the page on a hugely popular website, a site takeover on a launch day, or ads running during a most-watched streaming show. Advertisers can take advantage of premium inventory to get guaranteed, brand-safe placements, but at that cost, they also have to consider the best ways to use premium inventory under budget. Consider how, when, and how often to incorporate premium inventory into ad campaigns to get the most out of this option.

Frequently Asked Questions (FAQs)

Why should advertisers prioritize premium inventory in their campaigns?

Premium inventory typically offers advertisers some enticing factors: high-quality audiences, brand-safe environments, and reliable visibility. These all help to increase engagement, improve campaign performance, and reduce risks associated with low-quality or non-brand-safe placements. Depending on budget and campaign goals, premium inventory can offer a lot of return for advertising teams.

How can advertisers optimize campaigns across multiple premium inventory sources?

There are lots of premium inventory sources available today, whether high-visibility, popular websites or streaming services. Advertisers can optimize campaigns across multiple premium inventory sources by continuously monitoring performance metrics for each source and examining them as a whole. They can also adjust bids, targeting, and creative for each placement continuously to make sure they’re spending wisely. Using programmatic tools and cross-channel analytics helps maintain consistent reach and engagement across different publishers.

How does creative format influence performance on premium inventory?

There are lots of creative ad formats to consider, and the choice of creative format — such as video, native, or interactive media — can have a big impact on engagement and conversion rates when it comes to premium inventory. Advertisers should match the format to the audience and placement context to maximize visibility and user interaction.