CPMs and Pressure on Them

I've been talking with folks recently about ad networks, and how viable they are as a business. They can be, with enough volume -- especially if there's some differentiation, an argument one can make that it's not just another "me-too" network, but rather provides better targeting, more engagement, a new way to reach people in some way or other that's unique, or at least a unique mix.

Still, for a marketer, there's a balance of price and efficiency. If my ads are half as targeted over here, but cost 1/3 as much as buying them in the more targeted place over there, maybe I'm willing to put up with the inefficiency for the cost savings. So there's a lot of downward pressure on prices. The new CEO of an ad re-targeting company (the story linked below explains retargeting) of course makes the case that the network he's heading does have that targeting & efficiency offering. But this quote, I think, points out the challenge for ad networks today, and a reason it makes sense for content producers to look for multiple offsetting revenue streams.

"The difficulty today is there’s so much inventory. I really believe there’s going to be a further compression of CPMs as the proliferation of networks and DSPs and content continues to grow. One of the things that kept up at night was the ability to continue to hold onto high CPMs."

DIGIDAY:DAILY - Why Greg Coleman Bet on Retargeting