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We culled through brand campaign data provided by vertical network platform Adify, called some of the larger ad agencies, and various publishers and sales agents to determine that:
- Display CPMs were down double-digits in Q409 compared to Q408, but experienced the biggest sequential quarterly improvement for all of 2009.
- The size of the average campaign grew during Q4 versus Q3.
- behavioural targeting campaigns are growing as part of the overall online media buy.
The data indicates that a recovery in display continues, but its unclear if rates will return to the frothy levels of 2006 through most of 2008 as display becomes increasingly commoditized.
Ad networks continue to grow and increasing behavioural targeting initiatives make the publisher less important than the individual reader. As a result, if this trend continues, smaller niche sites could continue to feel pricing pressure over the next 1-2 years even as overall spend recovers.
Q409 DISPLAY CPMS DOWN 15% FROM Q408, BUT UP 30% FROM Q309
For the most part Q409 rates were still well below those during the same period a year earlier, but seasonal strength drove nearly 30% CPM increases over Q309, driven by strong seasonal categories. This marks the biggest sequential increase all year, following modest sequential increases during Q209 and Q309. Categories that showed particular strength:
- Beauty and Fashion – not surprisingly brands in these “gift-heavy” categories were willing to pay large premiums for the best placement during the holiday season.
- Consumer Packaged Goods (CPG) – gains were modest in this category, but increased spend from the large brands that make up this category is encouraging.
- Luxury Goods – high-end items are usually strong during the holiday season, but continued increases would indicate confidence from brands that consumers are feeling more comfortable spending on non-essential goods.
Data is limited, but anecdotal evidence from our conversations points to continued sequential increases in Q110 with year-over-year declines becoming smaller. Still, rates appear to remain below those of a year ago and well below historical levels of 2007 and early 2008 (before the recession began).
behavioural TARGETING BECOMING MORE PROMINENT IN THE AVERAGE BUY
The major portals have been pitching behavioural targeting campaigns much harder this year than in any previous year as agencies are looking for better ways to target display campaigns and publishers try to maintain and grow rates. Yahoo in particular has ramped up its offerings, with some success.
Adify has been working behavioural targeting into its auto offerings throughout 2009 and saw behavioural targeting campaigns increase by 50% in Q409 as a percentage of total auto impressions.
We’ve heard behavioural targeting campaigns can earn CPMs in excess of 10% to 15% higher than the average display campaign.
If agencies continue to spend more of their budgets on behavioural targeting campaigns smaller niche publishers will have a hard time competing for these dollars with the portals and networks with much larger audiences. This will cause smaller publishers to join networks that offer behavioural targeting and split revenue with them, cutting into their margins.
SIZE OF THE AVERAGE BUY BIGGER IN Q409
Advertisers were increasingly comfortable throughout the year putting more dollars to work on the average buy, indicating increased confidence in the economy. This trend continued in Q409 – some of the gains were seasonal, but a lot was likely a continued firming in the ad market. Data is limited, but we estimate the size of the average campaign buy increased 10% to 20% in Q409 over Q309.
Not surprisingly Beauty & Fashion and CPG saw the biggest increases in the size of the average buy.
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