Speculative vs. Concrete Value

Media websites would be wise to strike a balance between the concrete and speculative value of their advertising inventory.

The concrete value is a seller-side price, which generally encompass the costs associated with producing the product and delivering it to the consumer. The speculative value is a buyer-side price, which is amount of use that the expect to receive from the product.

Milk, as an example, has a certain concrete value, which is generally the approximate cost it takes to make and deliver it (cows, trucks, farmers, milk moustache paint). However, there is also a speculative value born by the consumer, which is how much of the milk they'll be able to use before it goes sour. Right now a milk drinker pays the same amount for milk that has a week left before it goes sour or a month. However, it would make more sense having each carton of milk change price depending on how many people thought they would be able to use the milk within the time it had left.

Even though this has limited use with static goods (imagine a poor stockboy running back and forth with a price gun), it has great value with online banner advertising.

Most websites that run purely on a CPM basis fine themselves running bucketloads of house ads during unexpected peak traffic periods. For sites that schedule ads to deliver a set number of ads steadily over a month, those unpredictable, but common, high traffic events can cause a measureable loss in revenue (with bandwidth/server charges going up while ad serving remains flat).

A better system would be to actual off the "speculative" advertising inventory, starting at the lowest rate that pays back the cost of delivering the ad (bandwidth, licensing, and production prices). This could allow advertisers to sneak into sections that were already sold-out based on the predicted traffic levels, or to get a much better CPM than through normal advertising channels. They couldn't be guaranteed much, but if it is a big traffic month it would pay off big for the speculator without any loss to the website.