Despite the economic downturn, online ad pricing are increased in 2009, until reaching the top in December 2009. Recently, PubMatic has launched the Ad Price Index 2009 which show the strong recovery(about 111%) between the last quarter of 2008 and the last months of 2009. The factors that are led to this recovery are 5:
- Real-time bidding: Real-time bidding allows to value the specific combination of context and audience for a given ad impression and bid appropriately.
- Increased Usage of Audience: DataPublishers are generating increased eCPMs and advertiser ROI from the superior targeting to understand their audience.
- The Rise of Demand Side Platforms (DSP): Publishers using demand side platforms to connect to improve performance and ROI for an online display campaign, control budgets and campaign rates, capture and manage brand data, integrate reporting of campaign performance across multiple media.
- Continued Strength of Ad Networks: Publishers using ad networks to differentiate their core offerings and improve their audience targeting capabilities.
- Improved International Monetization: Publishers could monetize also the traffic coming from Europe, which is the 20%-40% of the total traffic that online publishers receive.
PubMatic AdPrice Index 2009
Image Credit: Heberger Site
Ad Pricing Recovers In 2009
The recession hit online publishers the hardest in 2008 with ad prices falling to new lows, but 2009 proved to be a rebound year where ad pricing increased significantly and steadily. Each quarter since the beginning of the year saw big gains in premium publisher ad pricing, ending with a surge that raised December 2009 prices even higher than pre-recession prices.
Sequential changes in ad pricing:
- Q1 2009 – Q2 2009: 57% increase
- Q2 2009 – Q3 2009: 31% increase
- Q3 2009 – Q4 2009: 42% increase
Year on year changes in ad pricing:
- Q4 2008 – Q4 2009: 111% increase
Drivers of Ad Pricing in 2009
There were likely many contributing factors to the ad pricing rebound of 2009, starting with the slow overall economic recovery in the United States.
However, rapid innovation of targeting technology from publisher vendors and better monetization strategies from PubMatic publishers helped to unlock the greater value of publishers’ ad space.
Contributors include:
1. Introduction of Real-Time Bidding (RTB)
PubMatic launched the first sell side real-time bidding platform in January 2009. While RTB-purchased impressions are a relatively small segment of overall online ad revenue, PubMatic data shows that publishers can achieve a more than 60% increase in eCPM when comparing RTB campaigns to non-RTB campaigns, and some publishers are achieving more than a 100% eCPM increase.
Real-time bidding was originally conceived as a method to allow advertisers and agencies to more granularly value and purchase ad impressions for a particular campaign. With RTB, the advertiser can uniquely value the specific combination of context and audience for a given ad impression and bid appropriately. This is in contrast to typical media and audience acquisition methods, in which a single price is set for a broad array of ad impressions.
With advertisers willing to pay a much higher price to reach specific users, the value of ad space goes up and there is a potential for publishers to earn a much higher eCPM.
2. Increased Usage of Audience Data
Creating a clear strategy to better utilize audience data for increased ad revenue was a hot topic in 2009, and for the early adopters the results have been significant. Nearly every campaign that PubMatic helps to facilitate on behalf of publishers has audience data layered into it.
As more advertisers were persuaded to put more money online during the recession, they wanted to know that they had a safe environment to reach their target audience. In 2009, many of PubMatic’s publishers leveraged new capabilities to better understand who their audience is and how to package it for advertisers.
As media is increasingly sold based on the audience behind the media, publishers are generating increased eCPMs from the superior targeting and advertiser ROI that results.
3. The Rise of Demand Side Platforms (DSP)
Demand side platforms, known as DSPs, gained significant traction in 2009 in terms of both scale and improved technologies. DSPs enable advertisers to aggregate media from many sources and to target audiences customized to advertisers’ specifications, rather than the segmentation proffered by publishers, networks and data providers.
PubMatic is partnered with all of the major DSPs, and has seen that the improved campaign performance that they provide to advertisers has also translated into higher publisher eCPMs.
4. Continued Strength of Ad Networks
While some industry analysts predicted the demise of many ad networks, those predictions have not yet been realized. In fact, many ad networks experienced better than expected growth by working to differentiate their core offerings with better targeting capabilities. In 2009, the number of ad networks that PubMatic had relationships was double what is was in 2008, and pricing from ad networks saw similarly significant increases.
5. Improved International Monetization
Premium US publishers typically have 20-40% of their traffic coming from Europe, and monetizing an international audience is best done leveraging local ad sales teams. Last year, PubMatic expanded into Europe having publisher and ad network representation on the ground in London, Hamburg, Paris, and Amsterdam. The result has been increased ad pricing for international traffic, a goal that publishers commonly have difficultly with.
Conclusion
2009 turned out to be a much better year for online ad pricing than many expected, but many challenges still exist.
It is impossible to predict what will happen with online ad pricing in 2010, but the year is off to a promising start and new opportunities will be available to help publishers unlock the true value of their audience, including the broader adoption of real-time bidding, increased abilities to better monetize audiences, and extending ad network optimization to publishers’ mobile platforms.
Written by PubMatic, and originally published on “www.pubmatic.com/adpriceindex“.
About PubMatic
PubMatic is a global ad revenue optimization company with 6,000 large and medium publishers that provides online publishers with a service solution to manage and monetize non-Guaranteed ad inventory.
PubMatic’s is a real-time ad monetization and management solution that let the online publishers get the most money from their advertising space by deciding in real-time which ad network or exchange can best monetize each impression.
