SpectatorBytes

Recent report by Pubmatic (see here) over the past week indicate that online advertising prices are declining. This trend had already become evident as leading Web players announced their Q1 results.

The forces that have enabled the growth in advertising on the Web now seem to be working against it.

Direct Response advertisers have driven the growth of online advertising. These advertisers, however, put significant pressure on CPMs as they focus primarily on performance. As DR advertisers have grown more comfortable with ad networks, it is becoming harder to sell premium inventory.

Increase in usage has allowed the creation of new inventory. This has led DR advertisers to enjoy an abundance of advertising options. There is no scarcity premium on the Web, and thus DR advertisers are being able to buy inventory at lower prices.

Ultimately, this has led to little to no differentiation between premium and non-premium inventory.

To break from this depression, we need to work to find solutions that attract brand advertisers. I have written about this in the past (see here). These new ad solutions are focused on delivering guaranteed levels of engagement within the right context. Also, these ad solutions need to be custom but scalable.

In addition to ad solutions, advertising networks need to identify how to most effectively serve brand advertisers. Selling premium online advertising is very different from selling ad network solutions. Premium advertisers want customization, unique engagement metrics and transparency. Ad network sales focused primarily on performance and reach.

Lastly, we need to work quickly to create standard metrics around these new solutions for brand advertisers.

The quickly we start working on solutions for brand advertisers, the faster will be able to overcome this depression.