It’s an important study, as digital ad pricing is about as clear as mud. I often compare it to how airlines are pricing their seat inventory. On any given flight, two passengers seated right next to each other in the same kind of seat, traveling on the exact same plane to the exact same destination, may have paid a completely different price for that seat. The airline industry is champion of yield management, and its algorithms are masters at “knowing” what price points companies can get away with right up to the minute of departure.
This explains why a ticket between my hometown of Charlotte and Philadelphia can cost two to three times more than a ticket from Charlotte to New York or Los Angeles, both of which are farther away then Philly. And depending on the (time of) day or how long or short in advance I book, the price will differ (and this is before all the add-ons many of us have to buy separately).
The report authors have also tried to take into consideration some of the middlemen fees, which is kind of like trying to price out your airline ticket with all the additional costs. They peg the cost for middlemen services at around 40%, a number they have taken from sources that include the Association of National Advertisers.
In other words, out of every dollar a marketer spends on digital advertising, on average 40 cents never reaches a consumer due to fees.
Mind you, some of these fees are paid for very useful safeguards, quality measures and other services. But some are just upcharges, like getting an aisle seat at the front of the plane.
The additional fees for middlemen and other services vary year-on-year, which means that even in this trend report, cost comparisons with previous years is a little dangerous. This is probably why the report has an ominous warning on page 8 that states it contains pricing TRENDS and not benchmarks.
Still, the report provides a useful and current update on costs in digital advertising.
The general conclusions are that prices in Q4 of 2017 are higher than those in Q4 of 2016. Surprising? Probably not. Especially since high-quality inventory demand has increased as marketers are savvier about where and when to spend their digital ad dollars. And high-quality supply is a little tighter now that major inventory cleanup operations are underway.
Prices are not up for in-app advertising, which the report states might be due to a more mature market. That might be the case, but I think (from my own experience) it might also be due to marketers discovering less ROI from these types of investment and diverting dollars to newer or (perceived) more impactful platforms such as influencers, stories (Instagram, Facebook, Snapchat) and online video in general.
To that last point: online video is the most expensive form of online advertising as measured by CPM. The prediction is that online video ad cost will continue to rise as demand increases and remains strong.
The question remains, what that price actually is. Perhaps ask your fellow passenger on the right/left?