Expect to Pay More for Ads Next Year

Media planners are going to have to get used to paying more for media.  There are three changes that dictate the difference between what you used to pay for inventory, and what you will pay going forward.

First is the attempt to clean up supply chains.The industry drove prices through the floor, but then buyers began to get what they paid for — fraud and low results.  About three years ago, marketers began to realize that they were paying for ads that were never seen. This caused a huge push for viewability as a standard, and the employment of third-party certification companies to attest to a percentage of viewability for each publisher’s site. Publishers hurriedly re-designed their sites, and hired these third parties, but of course they had to pass the costs on to marketers. Then some time in the past year, a few trenchant journalistic exposes of fraudulent traffic began to awaken marketers and exchanges to how many “publications” were visited almost entirely by bots and other fraudulent traffic. A flight to quality began.

Then came the shift to mobile. When mobile first came on the scene, mobile ads were practically given away.  Very few marketers predicted how quickly consumers would shift from watching video on the desktop to doing almost everything, including shopping, on the phone. Now that the United States has a 98% smart phone penetration rate, mobile ads have become very valuable. They are the only place to reach people with disposable income.

Last, but certainly not least, came the ad blockers. Ad blockers were in many ways  a response to the first two forces. As marketers paid less for ads, they ran more of them, especially if so many weren’t visible or were fraudulent. Publishers, desperate to make money, quit complaining about the reader experience. But readers did not. They soon tired of slow-loading pages that ate into their data plans and made pages impossible to read quickly on a phone. The7 felt inundated by ads, so they responded the only way they could — by turning ads of altogether.

Publishers again responded by re-designing their sites, this time removing inventory and cleaning up the reader or visitor experience with terms like “ad light.” Mobile campaigns also began to come with frequency caps, and the idea of reach is beginning to give way to more precise targeting.

All this limits supply in a way marketers haven’t had to contend with before. And now, Facebook has also begun to limit the number of ads in feeds, replacing content from brands and major publishers with content from friends.

You know what happens when supply diminishes and demand stays the same or goes up; prices begin to rise. So after many years of being spoiled by rates that they could negotiate down through the floor, advertisers are going to have to take out their checkbooks.

It looks like we are going to have a Q3 and Q4 of fewer, more expensive ads, and just in the nick of time.