Video Insider: Online Video CPMs Bound To Drop As Display Ad Budgets Head South
Online Video CPMs Bound To Drop As Display Ad Budgets Head South by Alan Schulman , Tuesday, November 11, 2008
AMIDST THE GLOOMY PROGNOSTICATIONS OF '09 advertising budget declines, one area that's due for certain course correction is online video CPMs. We've heard everything from big media's projections of 20% across-the-board declines in overall ad spending to the more optimistic flat spending in broadcast while magazine and newspaper tumble further. But one thing's for certain: digital budgets are in for a wakeup call in 2009.
Whatever breed of "digital futurist" you trust -- agency holding company, major online publisher or Silicon Valley technology fund analyst -- this creative chooses instead to trust the tried and true forecasts of Mary Meeker of Morgan Stanley. After hearing her recent run through the digital trends and spends at this past week's Ad:Tech, I couldn't help but wonder whether or not her forecast for relatively flat to moderate search increases, while online display advertising spend heads south, doesn't spell a course correction for online video CPMs as well.
Publishers and video ad networks who have enjoyed a two-year spike in online video CPMs might just find themselves in a buyers' market with too much inventory to fill and not enough juice left in the "pre-roll exclusivity" argument to continue eclipsing broadcast and cable CPMS. What's more, NBC's Total Audience Measurement Index (TAMI) that surfaced during Advertising Week demonstrated that the percentage of online viewing audience during the Beijing Olympics still paled in comparison to the live viewing audience. So in an economic climate like this, is pre-roll exclusivity destined to become a luxury? Without the benefit of a CPM to CPM comparison from Olympic advertisers like Johnson and Johnson, VISA or GE, one can only speculate that, in a recessionary climate, we're bound to see a leveling of online video CPMs. After all, ad buyers are likely to be under pressure to squeeze the same awareness and purchase intent thresholds out of even fewer dollars in '09.
What's an online publisher or video ad network to do to compensate for the course corrections headed their way? Good question. Try looking outside the media world and consult the creative community. Differentiation in a time of commoditization is most likely to come from two places -- better content and ad unit creativity. From a content standpoint, smart publishers should be investing in exclusive online video content whose attributes and narratives not only attract quality reach, but also create unique and elegant opportunities for brands to be adjacent. From a contextual standpoint, it's high time we digital creatives put some new juice in the pre-roll ad unit(s) functionality that both extends engagement and offers creatives new tools to expand and grow the format.
Remember, the digital programs and ecosystems that we're busy creating don't treat online video ad units as a standalone "thing." They're part of a program of digital elements that make up a brand's larger digital ecology -- which, this coming year, is going to be all about lead generation, incentive/trial activation and loyalty programs. So if you think we're all out here thinking about our rich media banner awareness campaign in a vacuum or our online video ads as a standalone awareness campaign -- think activation.
From this creative's perspective, we've got to get busy enhancing the opportunity for online video ad units to function as an exclusive and more compelling opportunity for advertisers to reach a quality prospect with a more engaging message. That means we had better get busy making them more interactive and more "activation"-focused than ever -- rather than simply looking at them as another awareness topper that's in line to take a big budget hit in the year ahead.
Alan Schulman is Chairman and Chief Creative Officer of U. DIG > The Digital Innovations Group. An industry leader in the development of new ad units for new and emerging platforms, Alan works with a variety of brand marketers on digital education, online and mobile creative innovations and digital integration.
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