More ad inventory is a bad sign as it signals less interest from specific advertisers. I have noticed this immediately after some of my large advertisers reduce budget, like after a particular campaign then the number of ads rise. Also using the ad-balancer reduces the number of ad exponentially. That is because the devoted advertiser are willing to spend the money to be seen, whereas the bottom fishers aren't. They low ball everywhere and eventually win a few auctions here and there, where ever then end up finding unsold inventory.

This is a classic example of the Pareto principal, 80% of your ad revenue likely comes from 20% of the advertisers. If one advertiser in that 20% leaves then you will need 10 to replace it.

More ad inventory is a bad sign as it signals less interest from specific advertisers

Not what I am seeing at my sites, nor the couple I manage.

Over the last year I've made diligent efforts to get marketing companies to include these sites to the inventory they offer their customers. I've also made sure to allow these marketing bots and keep close daily watch.

There are definitely a large number of low bidding advertisers, but there are also a growing metric of advertisers putting in high bids, reflected by RPM.

but there are also a growing metric of advertisers putting in high bids, reflected by RPM.

I am not disputing this claim by any means. Despite the fact that I have seen nothing but a steady decline in RPM. (but that is a topic for another thread)

My point is that the number of ads seen in ARC are biased towards ads that are seen for few impressions (which tend to be low paying) whereas the high paying inventory will tend to be visible for many impressions and only appear once in ARC. Take 1000 impressions, say you have one high paying advertisers, the advertisers has one ad unit that consumes 500 impressions, then the remaining impressions are purchased by ads that appear for only 1 impression each. ARC will show you 501 ad units. If you advertiser doesn't buy the 500 impressions the next day, you will see 1000 ads in ARC.

Without any further information, to me, a steep rise ad units in ARC is a bad sign.

counter intuitive, maybe...

Of course different types of site, with different content, show different results.

One of the sites I manage is a popular media site. The advertisers that grab the prime ad spots pay pretty well for them. I don't often see these same advertisers at other media sites I watch, but sometimes.

My personal site gets a lot of edu related advertisers. Not big spenders, but not the worst either.

The metric I see returning good results comes from local search.