Are Ad Prices Up or Down? Turns Out It's Complicated

  |  July 24, 2009   |  Comments

PubMatic reports effective CPMs for online display ads sold through networks are increasing. Not every one agrees.

In a surprise finding this week, an ad pricing index observed that effective CPMs appear to be on the rise for inventory trafficked through ad networks. Ad technology firm PubMatic, which produced the report, found average eCPMs for inventory sold through ad networks and exchanges have risen sequentially each of the last five months, and have climbed 35 percent since their low point in January.

But what does that mean, really?

According to Pubmatic, the data suggest "online ad pricing is turning the corner, possibly leaving the worst days behind us." Driving that change, it believes, are technology and efficiency improvements that have added value to previously untargeted inventory.

"Efficiency is driving prices in the right direction," according to Rajeev Goel, CEO of PubMatic. Goel argues a new breed of buy-side optimization and behavioral ad companies -- firms like Turn, Blue Kai, and Media6Degrees -- are helping ad buyers create more targeted buys, raising prices on ad inventory in the process.

Adam Kasper, SVP and director of digital media at Havas-owned Media Contacts US, sees limited evidence for the argument that targeting technology is driving ad network prices higher.

"There's a lot more targeting technology available that makes me as a buyer want to pay more," he said. "We're adding more technology onto our network buys."

For about the past year he said Media Contacts has steadily increased its use of targeting methods in conjunction with ad network inventory. However, he maintains ad network prices continue to fall.

So does Sarah Baehr, Razorfish's VP Media. "I'm surprised to hear anything about prices trending up this year," she said.

Baehr has an alternative theory about why prices of ads sold through networks have ascended. She believes the trend may actually be a symptom of publishers' pain rather than a cause for relief. Since many publishers are struggling -- and failing -- to sell inventory directly to advertisers, Baehr notes they're instead forced to dump it onto networks. Those more premium ad impressions are inherently more valuable, from a branding standpoint, than what's typically available on networks and exchanges.

"By default there's more premium inventory going into the ad network realm that is more valuable than the other stuff," she said.

PubMatic's Goel acknowledges this could be part of what's pushing up prices in its report. "It's definitely a possibility that better quality inventory is being sold thru networks," he said. "Take Yahoo. What they're not able to sell directly they now push into the Right Media exchange."

Also important to note, though perhaps obvious, is that the price increases called out by PubMatic happened over a brief time frame. When compared with the year-ago period, last month's ad price index is actually down.

PubMatic did not release exact prices. It reserves that information for its customers' use.

ClickZ Live Toronto Twitter Canada MD Kirstine Stewart to Keynote Toronto
ClickZ Live Toronto (May 14-16) is a new event addressing the rapidly changing landscape that digital marketers face. The agenda focuses on customer engagement and attaining maximum ROI through online marketing efforts across paid, owned & earned media. Register now and save!

ABOUT THE AUTHOR

Zachary Rodgers

Until March 2012, Zach Rodgers was managing editor of ClickZ's award-winning coverage of news and trends in digital marketing. He reported on the rise of web companies, data markets, ad technologies, and government Internet policy, among other subjects. 

COMMENTSCommenting policy

comments powered by Disqus

ClickZ Today is our #1 newsletter.
Get a daily dose of digital marketing.

COMMENTS

UPCOMING EVENTS

Featured White Papers

ion Interactive Marketing Apps for Landing Pages White Paper

Marketing Apps for Landing Pages White Paper
Marketing apps can elevate a formulaic landing page into a highly interactive user experience. Learn how to turn your static content into exciting marketing apps.

eMarketer: Redefining Mobile-Only Users: Millions Selectively Avoid the Desktop

Redefining 'Mobile-Only' Users: Millions Selectively Avoid the Desktop
A new breed of selective mobile-only consumers has emerged. What are the demos of these users and how and where can marketers reach them?

Jobs

    • Contact Center Professional
      Contact Center Professional (TCC: The Contact Center) - Hunt ValleyLooking to join a workforce that prides themselves on being routine and keeping...
    • Recruitment and Team Building Ambassador
      Recruitment and Team Building Ambassador (Agora Inc.) - BaltimoreAgora, www.agora-inc.com, continues to expand! In order to meet the needs of our...
    • Design and Publishing Specialist
      Design and Publishing Specialist (Bonner and Partners) - BaltimoreIf you’re a hungry self-starter, creative, organized and have an extreme...