Now more than ever, brands are aware of the value of viewable, brand-safe, fraud-free media. They are demanding increased transparency and quality in their digital media buys. This minimum standard of media quality creates a cap on supply. With this combination of increasing demand and a limited supply of viewable, brand-safe, fraud-free media, an increase in cost is expected.
The focus on media quality will also exacerbate supply challenges, capping the availability of high-quality digital impressions and potentially leading to CPM increases in the market.
As evidence lets take a look at the current market for media quality in Australia. The recent release of the ANZ Media Quality Report H2 2017 by IAS provided some evidence of the changing digital landscape. Its findings suggest improvements in viewability and media transparency will put the most strain on supply.
Viewability Driving CPM Increase
In their analysis, the authors of the report said they would expect that the focus on media quality will exacerbate supply challenges. In turn that will cap the availability of high quality digital impressions, with the potential to drive a CPM increase in the market.
While nobody likes higher prices, at least it is happening for the right reason.
Creating a balance between supply and demand is important for creating a stable marketplace and for ensuring CPMs represent the true value of digital inventory.
Yet the digital media marketplace has always struggled to reach equilibrium on this front, with one of the main reasons being the markets inability to distinguish good quality digital media from bad quality digital media.
The result was that a non-viewable impression was priced at the same rate as viewable impression when clearly the true value should be different for those two impressions. Undetected bot traffic also attracted the same price as human traffic while advertisers clearly care about impressions served to person much more than they cared for impressions served to bots!
The inability to distinguish between high and poor quality impressions and price accordingly inevitably created a financial incentive to produce low-value inventory in the form of poor quality digital media.
The reason for this is simple. Creating non-viewable inventory is far easier than creating viewable inventory, something which frankly often proves too tempting for less reputable publishers.
That’s because viewable inventory requires an investment by publishers often involving site-wide redesigns and a careful balancing act between viewability and user experience.
For bad agents creating more inventory via buying bot traffic is far easier and cheaper than actually getting more real people to visit a website, again because content creation comes with higher costs.
When poor quality inventory attracted the same price as high-quality inventory, economics tends to lead to one outcome.
Happily, times are changing. Measurement is now well established and ubiquitous.
As a result, it is much easier to distinguish good quality media from bad. That, in turn, creates an economic incentive for brands to optimise towards the better quality media, and maximise the likelihood that people, not bots, will see the advertisement!
The consequence of this trend however, is that quality inventory becomes a more finite resource. Its supply is capped, so when more dollars chase the limited supply due to optimisation, prices will rise leading to CPM inflation.
It is still early days, but already we are hearing stories about viewable inventory attracting a 50-100% premium over non-viewable inventory in exchange buys. The premium for video is even higher.
Those premiums quickly become bargains when compared to the other end of the spectrum. The report also revealed that overall brand risk was increasing, which is placing even more emphasis on finding quality inventory.
Managing Brand Risk
The authors of the study revealed that between the first and second halves of 2017, the overall desktop brand risk in Australia increased by 14.4 per cent from 7.2 per cent to 8.2 per cent. The increase was noted both for publisher direct and programmatic buys.
A big driver was an increase in violent content on sites which tipped a significant amount of additional inventory into the moderately violent category.
In fact, the proportion of publisher direct desktop display risk within the violence category increased by almost 40 per cent from 36.1 per cent of total risk in H1 2017 to 55.9 per cent in H2 2017.
However, the increase in brand risk is not unexpected. The influx of premium publishers coverage around violent incidents, which is classified as moderate risk, has increased overall brand risk.
Given the current news cycle, brand risk will remain a factor and it’s important brands remain vigilant. But the right partnerships can help mitigate that risk.
The right direction
All of this is good news for great publishers who have made the investment in quality digital media channels. For too long publishers have lost money to poor quality inventory pools. Now, however, with the market starting to trade on viewable, brand safe and fraud-free impressions it’s the publishers with the best content that will succeed.
That is because great content delivers more users to a site and increases their dwell time.
Ultimately the market is heading in the right direction and the effort put into viewability by the industry is beginning to bear fruit. It is now easier than ever to distinguish good content from the rest. Agencies value quality and now they need to look to pay for it.
James Diamond is the Managing Director Australia and New Zealand at Integral Ad Science, which is a corporate member of the Which-50 Digital Intelligence Unit. Members provide their insights and analysis for the benefit of our readers. Membership fees apply.