SpectatorBytes

Online Ad optimizer, Pubmatic put out once again their findings about online CPMs (See Here). Pubmatic found that CPMS are stagnant at best on average and dropping across several categories. This research is in line with what most large networks have also reported about their CPMs in the last couple of quarters.

The problem is simple. The Web offers advertisers an abundance of display inventory. Since the majority of the advertisers participating in the market today are direct response/performance-focused advertisers, they are relatively indifferent about the specific inventory they buy. As long as the inventory performs, they will buy it. Publishers are struggling to differentiate their inventory. As I said before, behavioral and increased transparency will help increase performance. However, pricing may still not rise given inventory abundance. If this is the case, exchanges are unlikely to drive an increase in prices.

Search has proven to be a great application to capture intent behavior and offer high response rates to ads. Other applications across the Web (social networks, mail and even content sites) not only offer levels of response rates but also generate too much undifferentiated inventory. This dynamic is not likely to change any time soon and thus prices are likely to remain low.

In addition, the more the large networks focused on performance display rather than brand premium offerings, the quicker and longer online inventory is going to get devalued.

As an industry, we would benefit if we move quickly to rethink how we package non-search inventory for “brand” advertisers rather than “performance” advertisers.