Internally we’ve seen CPMs carve out a bottom ahead of the year’s biggest week for ad spend. According to eMarketer, an estimated $39B will be spent between Thanksgiving and Cyber Monday. The frenzy from Black Friday and Small Business Saturday spills over into Sunday too, culminating in peak spend by consumers on Cyber Monday ($12.89B est!). Safe to say, ad spend and anticipated consumer spending are highly correlated, reflected in rising CPMs. And what we’re seeing in CPMs is a sharp and volatile bounce off the bottom, followed by a rising frenzy.
OAREX Data Shows CPMs Bottomed
This week, requests for funding by media buyers and sellers hit an all time high for us; funding requests from existing users increased 400% versus last year. Because we fund across the media ecosystem, our CPM data is a “barometer” of the industry (similar to our Payment Data is a barometer for the credit of the industry).
OAREX’s Diverse Set of CPM Data
As advertisers anticipate consumer spending, they spend ad dollars. As they spend ad dollars, the cost per 1000 “views” of their ad goes up (also known as a CPM). As CPMs go up, acquisition campaigns become more profitable. As media buyers and sellers see new profits, they request funding from us. This gives them the cash on hand needed to squeeze the most juice out of campaigns, maximizing return-on-ad-spend (ROAS). As a result, we obtain a diverse set of CPM data.
Will the CPM bounce last?
We believe this bounce in CPM data won’t just continue to rise, but that it’s the start of a new, long-term bullish trend. Yes, there a few short-term drivers, but there are also structural changes occurring which, when coupled with the dynamism we know to be the case, suggests the long-term trend is here to stay.
Short-Term Positives for Programmatic CPMs
Outside of the holidays between Thanksgiving and Christmas, there are three main drivers in the short-term: the Facebook boycott, and anticipation of a vaccine, and fear of missing out (on sales).
Many advertisers boycotted Facebook this year. That forced them into programmatic channels using intermediaries like TripleLift for traffic acquisition. That extra demand from Facebook to Programmatic hasn’t entirely gone away. In fact, post-election, it may be increasing as right-wing advertisers are boycotting Facebook for other channels.
Anticipation of a Vaccine
Ad spend is a result of anticipated consumer spend. Optimism rises in expectation of a vaccine. That will drive optimism to keep spending on ads.
FOMO on Sales
Everyone believes when a vaccine comes out, things will return to normal. So from a business owners perspective, they’d rather not miss out on things when there is a vaccine. That means preparing themselves for it now (i.e. build your pixel data so you’re ready to go when things are normal).
Long-Term Positives for Programmatic CPMs
There are three main, long-term drivers that underscore our belief in this new, bullish trend.
CPM Inflation in 2021
With the US dollar being devalued, the end result is a rise in CPMs. But we believe there will be significant inflation in CPMs in 2021. As mentioned, FOMO will have a short-term effect on CPMs in that people want to be positioned for when a vaccine comes. But doubling down on ad spend to make up for lost sales in 2021 will push CPMs higher. Advertisers are going to double down on what they know works (or quickly learn what doesn’t anymore).
Structural Shift from IOs to Programmatic
During the pandemic, many advertisers switched from Insertion Orders (IO) advertising to programmatic. IOs are popular among direct deals in advertising, where advertisers want to advertise in a specific context. In a specific context, competition is limited to fewer types of publishers, not many. During the pandemic, many advertisers continued to spend the same amount of ad dollars, except they spent on programmatic instead, pitting many publishers against one another. While that may reduce CPMs in absolute terms, the sheer volume of the switch to programmatic seems like it’s been a net positive. And we believe this change is here to stay (for now).
Dynamic Character of Digital Media
Every few years, new digital mediums begin popping up. We do not expect that to change any time soon. As new mediums pop up, entrants pursue those mediums (i.e. see OTT/CTV). As new entrants capture market share, they will use OAREX to finance that growth.
Open an Account, Finance Growth
Media buyers and sellers can take advantage of rising CPMs now and in the future with OAREX. Once they open an account on our exchange, users can list invoices in exchange for cash up front. This enables users to exploit winning ad campaigns to the fullest.
2021 will be a year of explosive CPMs, with new opportunities rising every day. Start exploiting them today.