The display advertising economy is in trouble, and digital publishers are feeling it. Whether it’s the rise of ad blockers, emerging news-delivery platforms, commoditized ad inventory or diminishing CPMs, there are plenty of challenges facing the industry.
Our new report, Digital Publishing: Increasing Advertiser Value Through Data and Identity, found that display ad revenue is either stagnant or shrinking for 40% of digital publishers.
Q: Which of the following best describes the current trends in your display advertising revenue?
The report is based on a survey of client-side marketers, managers and executives working within publishers that have an online presence.
In this post I’m going to cover some of the key findings that came out of the report, particularly around the worrying state of the display economy.
And to hear a more in-depth summary of the findings sign up for our free webinar in partnership with Signal on Thursday 8 October at 12pm EDT / 5pm GMT.
Digital display ad spend still on the rise
Interestingly, despite the evidence of falling display ad revenues, spending on this channel continues to increase. In the US alone publishers currently spend $25bn annually on display ads, and this figure is growing roughly 20% year-on-year.
Yet clearly these numbers contradict the headline stat whereby almost half of respondents believe there is no corresponding growth in digital ad revenue for publishers.
There are three factors that could be driving down ad prices and offsetting the wider growth in spend.
- An abundance of inventory: a 2013 estimate from ComScore places the number at 54% with a more recent finding from Google in the same range.
- The spread of programmatic: solved the media buying puzzle but eroded the value associated with specific, premium ad placements and context.
- The competitive environment: a small number of publishing giants are able to combine vast scale with technical capability, leading to a concentration of attention and dollars that limits the access of medium sized publishers to those growing media budgets.
Insufficient scale the biggest challenge for growth
Insufficient scale is a common problem in digital marketing, and it relates to most of the points raised by respondents when asked about the biggest challenges they face in terms of growing their display ad programs.
Q: What are the key challenges to growing your display ad programs? (Top two selected challenges shown)
There’s an inherent tension between the ability to target and the need for large audiences. As a result, independent publishers are looking for ways to pool resources to achieve not only large scale but also the targeting accuracy that comes from their first-party data.
Publishers shifting towards automated exchanges
When asked how they sell advertising, 65% of respondents say they sell through ad networks while 64% say they use an in-person salesforce.
Publishers rely on a variety of methods to move their products, but the shift toward automated exchanges shows no sign of slowing. Each publisher will eventually find their unique equilibrium with many keeping a small sales force dedicated to custom projects
For the moment, those moving toward exchanges and other third-party sales solutions (33%) outnumber those increasing their sales teams (9%) by more than three to one.
To read the full report, download Digital Publishing: Increasing Advertiser Value Through Data and Identity today.