Historically, video ad CPM rates have increased and always been much higher than other ad formats, such as standard display ads. In fact, desktop pre-roll video advertising has steadily increased for several years, with prices ranging anywhere from $9-$20. A recent analysis of EMX proprietary data, however, suggests the trends are changing.
Instead of a continuous increase in video ad CPM rates, prices are plateauing. In 2017, video ad CPM rates saw a number of high fluctuations based on inventory and industry shifts. In 2018, however, our data shows a steadier marketplace with CPM rates averaging at about $13.63 for open marketplaces and $13.48 for private.
In a recent whitepaper, our data points to a number of reasons that can be attributed to the shift in trends. The following three of which are impacting trends most:
1) Smarter Strategies
Buyers are shifting their budgets to smarter strategies. With the challenges that face open auction (transparency, quality, ad tax), buyers are putting their spend into PMPs. PMPs allow buyers to direct their premium ad dollars towards niche inventory, in an attempt to curate higher quality traffic and impressions. Investing in PMPs could cause lower quality inventory to drop in price, attributing to a steadier video ad buying average.
2) A Shift Towards Premium Formats
Many buyers are shifting their budgets away from traditional digital channels and moving towards more premium formats, like Connected TV. As more publishers look to capitalize on buyer demand for the premium formats, Connected TV inventory will continue to expand—potentially setting the course for more even CPM rates.
3) Maturing Formats
A leveling of video ad CPMs could be a sign of format maturity. As programmatic video advertising matures, buyers are analyzing their data from past campaigns, helping to distinguish behaviors and benchmarks. As a result, buyers can measure the effectiveness of specific ad spend in correlation to the success of past campaigns.
“Companies can now look at past performance data and say, ‘Historically, $10 has gotten us to our goal, so let’s aim for that.’ Consequentially, video ad CPMs are leveling out as they come closer to reflecting what they’re actually worth.”
– Cory Schnurr, EMX Director of Demand Strategy and Partnerships
While many reasons can be attributed to shifting programmatic advertising trends, one thing is certain. As programmatic advertising evolves, video advertising will continue be a dominant format. In fact, according to eMarketer, by 2020, 75% of all digital video ads will be bought programmatically. Exactly how much programmatic video will cost, and how that money will be spent, however, is another story.