The ad tech business is naturally a forward-looking and future-oriented one. We’re all interested in the next big innovation around the corner because our clients demand that we stay abreast of the latest marketplace changes. We’re all excited by revolutionary new ad platforms, ad units, and monetization schemes because material first-mover advantages often accrue to savvy marketers who are first to “crack the code” with these innovations.
However, at the same time, it’s important to not lose touch with how marketers are actually using ad tech right now. Doing so can serve as a “reality check” and a benchmark against which future developments can be measured.
This past week, AppNexus, a company providing an auction-based ad platform with enormous reach of 45 billion ad buys per day, released its advertising index for Q2 2015. This included the spending and pricing data from more than 83,000 ad campaigns conducted between April and June of 2015.
Here are a few findings from this report that show – as the report puts it – that while change is constant in this industry, “Some things remain very much the same.”
Desktops Are Still King
Despite predictions that mobile ad spend will account for 50 percent of digital ads next year, AppNexus’ data shows that desktop users are soaking up a disproportionate share of ad impressions. 64 percent of display advertisers limit their campaigns to desktop users, with 47 percent of them targeting mobile users, and 32 percent targeting mobile app users.
What keeps desktop-targeted advertising alive and humming? Well, it’s a mature advertising paradigm with known rules and customs. People might find desktop-based ads annoying, but not “disruptive” in the way they are on mobile. I’m generally bullish on the potential of mobile ads, but I am greatly concerned about consumer acceptance. Ads appearing on a mobile device are often far more annoying than those appearing on a desktop device. Consumers are waking up to the risks of letting personal information be mined by unknown third-parties. The result could be a wave of ad-blocking that could become a flood when Apple’s new mobile OS – which allows ad-blocking add-ons – becomes available in a few weeks.
For the moment, the battleground for attention continues to be fought primarily on desktop screens, and this situation will likely be with us for several years ahead – perhaps much longer. Revolutions rarely happen overnight: they’re more often slow slogs that take decades to accomplish.
Banners Ads Still Rule
Is the banner ad dead? Not according to AppNexus. This 20 year old graphic workhorse is still available, still cheap at $0.16 CPM, and still relatively robust with 0.043 percent CTR. Ironically, all the “banner is dead” discussions in the ad-tech press may have restored the format’s credibility. According to AppNexus, “It’s possible that all the talk about the banner’s decline might have negatively affected how buyers view that inventory, leading to added value for those that chose to purchase it.”
Pricewise, the familiar 728 x 90 banner remains the most expensive type of banner at $0.45 CPM , more than twice as expensive as other banner types. Who’s buying these banners? Telecom providers collectively represented a whopping 29 percent of ads purchased on the AppNexus platform, followed by alcoholic beverages at 11 percent, financials at 9 percent, and automotive at 7 percent.
Sex, Deals, Education, Tobacco, and Sports Make for High CPMs
Vendors of products related to sexual health, education, smoking, and sporting goods paid the highest CPMs for ads on Appnexus’ programmatic exchange. The reason for these high CPMs appears to be the result of an imbalance between the demand for such ads and the limited number of websites providing ad space for such placements. Perhaps there’s an opportunity here for publishers willing to step up and develop blogs for some of these categories to ease some of the supply imbalance.
Cleaner Inventory Makes for a Better Marketplace
Programmatic media exchanges have suffered from a number of acute problems surrounding viewability and ad fraud. AppNexus was roundly criticized last year for allegedly failing to verify a significant – 30 to 40 percent – share of its served impressions. To address the problem, it overhauled its system to provide more transparency to advertisers about the placements purchased, and instituted screening practices preventing unverifiable ad slots from entering its markets. The result of these reforms was lower impression in volume, but higher RPM for advertisers.
Let’s hope that we’ll see other platforms do similar things in the next few months. Anything that can reduce uncertainty in the programmatic ad space will be good for both buyers, sellers, and the market at large.
Lessons from Offline Media
Most of the offline media hasn’t died off yet, despite predictions of doom. TV and radio are chugging along and perhaps even adapting. Magazines and newspapers are the hardest hit, but still represent a significant chunk of ad spend. In the same way, banners may be around longer than you think.
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