Programmatic Ad Spend Grows
According to eMarketer’s estimations, a shift away from traditional means of buying display ads is fueling the growth of programmatic ad spend.
CPMs Are On The Rise
While the aforementioned shift away from traditional means of buying display ads is fueling the growth of programmatic, eMarketer posits that CPMs will also a play a role.
The rise in CPM cost doesn’t necessarily mean that Facebook prices are going up across the board. Instead, it shows that advertisers are wising up to the effectiveness of targeting specific audiences with high lifetime value (LTV). Advertisers who spend more to target very particular groups of high-value customers through custom and lookalike audiences know those cohorts will result in greater return on ad spend.
The introduction of custom audiences drove Facebook’s success. Custom audiences, and then lookalike audiences, are the most effective in direct response, hands down.
─Benjamin Tregoe, Senior Vice President, Business Development, Nanigans
One way advertisers can work around the rising cost of CPM is to drive ad spend towards a particular action. With optimized cost per impression (oCPM), advertisers can bid towards certain tasks that are vital to their conversion funnel, such as website form completion. This way, advertisers can ensure that they’re only paying to serve ads to people who actually convert and drive value for their business.
The Real Price Of Advertising
Another trend eMarketer notes in the report is the breakdown of how much advertisers are truly paying for ads. According to one study, on average only 40% of money spent programmatically through agencies was actually spent on publishers’ media. A staggering 60% was spent on value-added services and middleman fees, including agency trading desks, demand-side platforms, exchanges and agencies of record. In fact, eMarketer says that for a $1 CPM, 65 cents might be spent on media and services, with the remainder absorbed by fees.
How can you keep the majority of your ad spend where it belongs – invested in media buys? In-house advertising cuts out middleman fees in addition to providing the pricing transparency that advertising agencies usually conceal from clients. The combination of an in-house advertising team backed by powerful automation software can give your company the power to truly understand and control the cost of your ad campaigns.
Ready to take control of your digital advertising? Get practical insight and tips on how to set an in-house team up for performance marketing success.
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