CPMs Will Increase for Programmatic Video
by Rodger Wells, CEO
(as published on VideoNuze)
Supply-side platforms (SSPs) love to tout unique and premium video inventory. The reality is premium video inventory is scarce, and unique premium video inventory is even rarer.
To put it another way, “if you’re a content company and you’re not Facebook, Google, and Snapchat, you’re in the niche ad business,” said Meredith Kopit Levien, EVP and CRO of The New York Times. The good news: Scarcity is a good thing.
Scarcity Will Continue
eMarketer predicts U.S. digital video ad spend to reach over $11.7 billion in 2017. ZenithOptimedia expects an increase in programmatic video demand of 20% this year. As the market appetite for engaging video continues to grow, premium publishers want to deliver more video and advertisers will buy it. Low supply and high demand translate to higher CPMs for publishers.
Programming with premium, brand-safe inventory at scale is neither easy nor cheap to produce. Publishers can expect to see higher CPMs driven by a limit in the available amount of long-form, in-stream quality spots as dollars continue to flow into the marketplace.
Better Technology, Better Quality
Programmatic is designed to improve digital advertising by increasing transparency and maximizing efficiency. It has fallen short of expectations while the ad tech landscape has grown increasingly complex. The good news is the market is changing as publishers improve their offering.
Over the last year, publishers have made improvements in viewability and worked hard to combat fraud and non-human traffic. Advertisers are smarter, asking for guarantees on viewability and other measures.
Last Sunday at the IAB Leadership Conference in Ft. Lauderdale, Florida, Marc Pritchard, Chief Brand Officer for P&G, the world’s largest advertiser, announced a four-point mandate for a clean and productive media supply chain. P&G will be requiring the MRC-validated viewability standard, MRC accredited third-party measurement verification standards, transparency in agency contracts eliminating media float and rebates, and requiring all entities in their digital media supply chain are TAG-certified.
P&G spends “enormous amounts of time trying to understand, analyze and explain the differences between Facebook, Instagram, Twitter, Snapchat, Pinterest, Pandora, YouTube and the dozens of different viewability standards claimed to be the right metric for each platform,” Pritchard said.
Better standards and verification will result in prices moving higher, as the more stringent requirements will be harder to satisfy. Marketers are willing to pay to make sure their videos appear in front of intended audiences, in context, and are verified and measured.
Better Use of Data
Publishers are becoming more sophisticated at mixing data into their offers, letting preferred clients combine their data with the publishers’ to increase advertising effectiveness.
It’s a win-win. The buyer gets a matched target and added information while the publisher enhances the data pool, increasing performance and overall ad revenue.
Video Differs from Display
The price push in video differs from display, where spots have become commodified as publishers cram pages with ads and use tricks such as pageview stuffing, page-splitting and artificial slideshows.
Most of those tricks are not possible in narrative, long-form linear video formats. Buyers want their video ads placed in verified players, with industry-standard tracking and verification if possible. They want to know their videos not only are on the page and seen, but also are viewed fully and completed.
Publishers know that “premium” means the user experience is paramount, and tricks that bring on ad blocking or abandonment hurt the business overall. Higher quality means more limited supply and higher prices.
CPMs As High as $100 and more?
Scarcity, as we said, can be an advantage.
In exchange-driven auctions, publishers with premium video spots experience a seller’s market. The desirability of digital video, paired with the growth in quality and targeting capabilities, amounts to higher CPMs.
Video inventory made available in exchanges lets publishers capture budget assigned to programmatic in a way that truly competes with direct sales channels. Assuring buyers of the quality of their audience with incremental data around demographics, engagement and intent creates more market demand for their content and audiences.
Premium publishers are further able to maintain prices by offering the most desirable insertions to only to preferred clients in private marketplaces, often with guaranteed minimum buys and fixed CPMs.
Publishers today need to offer the combination of value additive data, increased audience quality, higher budgets and scarcity to yield higher revenue.