Programmatic media firm Goodway Group on Wednesday projected that programmatic display ad pricing will increase by 15% to 20% by 2018. The prediction was part of Goodway’s “2017 Programmatic Pricing Forecast,” which includes projections for programmatic pricing over the next year.
The report also cited trends poised to accelerate in 2017, including a continued industrywide shift to dynamic CPMs, the use of header bidding, and ad tech’s embrace of artificial intelligence by next year.
In formulating its forecast, the company’s data science team analyzed billions of bids and weekly median media prices in the U.S. from September 2015 through September 2016. The analysis revealed an average price increase of 2% per month across all programmatic display purchases. Goodway took into account predictable fluctuations over the course of the next year in estimating 2018's 15% to 20% increase in programmatic display ad pricing.
“The key challenge for so many marketers and agencies is to think in terms of conversions and business objectives instead of media weight," Jay Friedman, COO, Goodway Group, told Real-Time Daily via email. "[They think] 'if we spend $1, it doesn’t matter if that buys us 100 impressions or 1,000 impressions. What matters is that we buy each impression at the right price to maximize successful outcomes for what we’ve spent.'"
Friedman said he expects increases in pricing in 2017 due to changes in the market, including the fact that the industry is getting better at removing fraud and improving viewability, which causes the pool of ad inventory to get smaller. If there's less inventory, prices increase.
In addition, the report found that the industry is shifting away from fixed CPMs to dynamic CPMs (dCPMs). While large agencies and marketers have migrated to a dCPM strategy, regional marketers and agencies need to catch up. The trend is likely to impact smaller advertisers with limited ad budgets. These advertisers are more likely to look to dCPMs to help optimize ad dollars by paying for impressions based on specific conversion goals and bidding on a wider audience. And the emphasis will be on maximizing the market value of the inventory in real-time.
The report found that header bidding will continue to advance while more work is done to ensure that it doesn’t slow page load times. In addition, advertisers are looking to machine learning and artificial intelligence to improve bid price and discovery practices.