Local Media Programmatic: Low CPMs, But Long-Term Future Looks Bright

Local media programmatic CPMs are less than half of local advertising that is sold directly from traditional sales executives -- but long-term programmatic has a bright future.

New findings from Borrell Research say the average local media programmatic cost per thousand (CPM) is $3.88. The results were drawn from a survey of 154 ad managers from December 2014 through January 2015 -- with 44% from local broadcasting, 37% newspaper managers, and the remainder Yellow Pages and/or pure-play Internet companies.

“To make matters worse, 58.6% indicated that their average programmatic CPM was $3.00 or less,” the survey says -- but indicates the overall view of programmatic was a positive one for some 44% of respondents. The main upside: Increasing overall revenue. Other advantages -- greater access to quality advertisers, streamline ad operations, better value for customers, and cost savings.

On the down side, executives worried about “commoditizing” inventory, lack of experience, undermining direct sales relationships, and concerned that CPMs would decline.

Among those surveyed, Borrell says combined companies represented annual digital ad revenue of nearly $500 million, with an average of $5.6 million per publisher. Of those reporting digital revenue, 54% had $1 million or less and 19% reported $10 million or more.

More than two-thirds (68.6%) of local publishers surveyed said they participate in some form of programmatic selling. About one-fourth (26.5%) of those who are not currently participating said they do not intend to use programmatic in the next 12 months. 

Among the smaller publishers -- those with less than $1 million in total revenue -- 45% do not participate in programmatic. There’s a 13% non-participation in programmatic for publishers making $1 million to $10 million, and 6% for publishers over $10 million. 

Still, Borrell is optimistic: “CPMs are bound to increase as ad technology gets more sophisticated at reaching specific targets. Also, programmatic buying opens the door to a treasure trove of “national” advertising to which local publishers never had as much access.” 

2 comments about "Local Media Programmatic: Low CPMs, But Long-Term Future Looks Bright".
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  1. Ed Papazian from Media Dynamics Inc, April 23, 2015 at 8:26 a.m.

    Interesting report. One wonders whether the low CPMs for "programmatic" buys are because these are mostly concentrated in audience "inventory" that is marginal in terms of perceived content quality or whether it is due to the ability of the computers to "out buy" humans and pay less for the same degree of quality. In other words, how would programmatic compare with humans in buying exactly the same units of time and/or space?

  2. A.K. Ahuja from CRESCENDO, April 23, 2015 at 2:54 p.m.

    We deal with this on a daily basis with our direct vs. programmatic media buys...in general, programmatic limits the ability for placement on specific programs/dayparts, and that's one of the factors playing a role with the lower CPMs.
    I guess it comes down to what the campaign objectives are...in our case, we provide real-time performance analytics which include specific daypart performance (in addition to just program performance), so having the ability to control exactly what time our spot runs is vital.
    So I don't necessarily think that computers are truly "outbuying" humans and paying less for the same quality across all measures...certainly not in our world.

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