How does the ad industry get to "scarcity"? At the OMMA Premium Display conference in Los Angeles on Tuesday, Mike Rich, VP of media at comScore, said the ad industry sits at the crossroads of a "big transformation" in the way online media gets bought and sold. The industry needs to reduce the number of inventory on publisher sites, and ads that get served into them.
Between June 2011 and June 2012, the industry served more than 400 billion ads monthly on major U.S. publisher networks. Rich called 15% year-on-year growth "terrible news" because it means there are more ad units to fill, and there can't possibly be enough demand to fill the space, which drives down prices. It's not a sustainable path, he said.
How do industry leaders motivate companies to serve fewer display ads? For starters, companies need to reassess their networks. They don't have a choice. They must remove all the worthless supply by quantifying each ad. The results will help stabilize or raise prices. Rich said ads delivered to the wrong audience are overvalued, and companies must learn how to prove this.
While too much inventory can drive down prices, remnant inventory hitting the correct audience can also become undervalued, he said. "We think the CPMs will rise from $5 CPM to $6 CPM," he said. This should help to flat-line, stabilize or even grow the industry. Important metrics will become audience composition and targeting efficiency. Those who sell ad units will need to adapt quickly and measure visibility.
Rich said it's important for brands to understand how and when ads are viewed, and to focus on the basics of delivering realistic impression metrics that make sense and carry over a variety of media.
How long will it take to reach scarcity? "I don't think it will take longer than people want it to take, but stability should bring success," Rich said.