Last month, eMarketer published its Digital Ad Pricing StatPack, which compiles a Q4 2016 snapshot of programmatic display CPMs from more than two dozen participants, including PubMatic, along with Conversant, Facebook, Index Exchange, InMobi, OpenX, Rubicon Project and Videology.
Backed with data contributed by programmatic solution providers and interviews with thought leaders, the study also sheds light on the trends that affected the cost of programmatic display ads on both the buy and sell sides in the closing quarter of last year.
eMarketer warns, however, that pricing averages should not be mistaken for industry norms as levels vary depending on myriad factors, including seasonality, goals and advertiser type to name a few.
Three key takeaways from the report surfaced that we believe should be of interest to programmatic media buyers and sellers, from robust programmatic video CPMs to the still competitive CPMs paid for desktop display ads and predictably high prices for social media inventory.
1. VIDEO PROVIDES THE HIGHEST PROGRAMMATIC CPMS
Whether they are viewed from a buy- or sell-side vantage point, programmatic video CPMs exceeded all other formats or channels for which eMarketer collected information. In-stream pre-roll video across desktop and mobile web CPMs were highest, but out-stream video CPM averages were only marginally lower.
At least some of the increase in programmatic video CPMs was credited to header bidding and the spread of private marketplace deals. “Header bidding has made access to premium video inventory more readily available through programmatic pipes [and] private marketplaces also continue to be a strong channel for programmatic video,” said Index Exchange principal analyst, Jocelyn Gillespie, in an interview for the report.
The rise of these tools appears to have emboldened TV advertisers to shift more dollars toward digital video. “More brand dollars are moving online, and to programmatic. Those brand advertisers are big video advertisers. Juxtapose that [increased demand] against the constraints of supply, and prices continue to be pushed up,” said PubMatic CMO, Jeff Hirsch.
eMarketer principal analyst and report author, Cathy Boyle, also noted that scarcity and brand safety are other factors affecting programmatic video CPMs:
“Video inventory is still skewing towards desktop when you look at the total, specially in programmatic environments. And also, there’s still scarcity of quality video inventory available through programmatic channels. Partly that is because publishers know they can get the highest CPM for their video inventory, so they are holding that back. Video is really vulnerable to ad fraud. [For] publishers to keep control of their video inventory and have a more direct relationship with the buyer, they’re doing that to ensure the buyer that there’s not fraud happening.”
2. MOBILE DISPLAY CPMs JUMPED, BUT DESKTOP DISPLAY PRICES REMAIN COMPETITIVE
Boyle noted that, programmatic desktop display CPMs didn’t jump as high as those for mobile display. Desktop was still quite competitive in Q4, and surprisingly rose even on Facebook, where the majority of the usage is on mobile. Some of the growth on desktop was attributed to e-commerce advertisers, as users remain more likely to make purchases on a desktop computer than on a mobile device. Since the inventory was more limited on desktop, demand is greater, driving advertisers to bid more heavily.
The study found that header bidding had a greater impact on desktop display prices than mobile web or in-app display among publishers in Q4 2016. But a significant increase in premium inventory availability may have prevented greater lift in overall programmatic display prices, even as more advertisers joined the bidding for quality impressions.
All the while, mobile display pricing averages for mobile web and in-app CPMs stood mostly below desktop prices. There’s a key reason behind the current dynamic. “In-app advertising is not being leveraged by enough advertisers, despite very strong results,” said InMobi SVP of global brand and programmatic, Anne Frisbie. She added, “Investment [in Q4] was still muted because of the challenges that exist in attribution.”
eMarketer anticipates that in-app CPMs will increase quickly as more advertisers embrace the sophisticated targeting capabilities and attribution methods apps offer.
3. SOCIAL PROGRAMMATIC DISPLAY PRICES REMAIN HIGH AND [MOSTLY] GROWING
Widening adoption of high-impact ad formats such as Dynamic Ads, Carousel Ads and video ads pushed Facebook and Instagram impression prices reported by vendors on the buy side up by double-digit YOY rates in all but one instance in Q4 2016. The outlier case of Facebook CPMs paid on the buy side was up by about 3% since 2015.
Experts see further opportunity in social programmatic. “Facebook is still trying to get the algorithm right for Instagram. If inventory goes up and performance goes up as Facebook and advertisers get smarter about Instagram, then prices will climb,” said Ampush VP of marketing and communications, Matt Collins.
eMarketer found that e-commerce advertisers paid some of the highest CPMs, exceeding Q4 averages for both Facebook properties reported by buy-side platforms. Paradoxically, the pushing of social inventory into mobile seems to have boosted social CPMs on good old computers where e-commerce vendors are trying to connect with shoppers. “Desktop inventory was hotly contested among e-commerce advertisers. They generate the vast majority of the spend in Q4 and they know some of their most valuable users are on desktop,” said Nanigans market insights manager, Andrew Waber.
For the complete set of trends from eMarketer, you can access the report on the eMarketer website, or listen to principal analyst Cathy Boyle as she highlights some of the key findings in a recent episode of eMarketer’s “Behind the Numbers” podcast, “How Much Does a Digital Ad Really Cost?”
