Online ad pricing and advertising trends for 2009 showed an encouraging recovery from the economic downturn that hit publishers in 2008. Throughout 2009 ad pricing had been steadily growing till reaching the top in December 2009, where ad prices were even higher than pre-recession. Photo credit: Pablo631 The PubMatic Ad Price Index 2009 states a 111% increase from the last quarter of 2008 to the last months of 2009. But which causes led to this strong recovery?

• Real-time bidding: Publishers using real-time bidding were able to value the specific combination of context and audience for a given ad impression and bid appropriately. This is in contrast to typical media and audience acquisition methods, in which a single price is set for a broad array of ad impressions.
• Audience targeting: Publishers generated increased eCPMs and ROI from audience data that allowed publishers to understand their audience and how to package it for advertisers.
• Demand side platforms: Publishers using demand side platforms enabled advertisers to aggregate media from many sources and to target audiences customized to the specifications provided by advertisers rather than the segmentation proffered by publishers, networks and data providers.
• Ad networks: Publishers using ad networks managed to differentiate their core offerings by leveraging better audience targeting capabilities.
• International markets: Publishers that were able to leverage local ad sales teams could monetize also the traffic coming from Europe, which accounts typically for the 20%-40% of the total traffic that online publishers receive.

Though this data specifically refer to PubMatic publishers, these ad price recovery drivers can indeed help you a great deal to focus on those online advertising strategies you want to deploy to maximize your ad revenues in 2010. Here all the details:

Ad Price Index: 2009 Year In Review

by PubMatic

Ad Pricing Recovers In 2009

The recession hit online publishers the hardest in 2008 with ad prices falling to new lows, but 2009 proved to be a rebound year where ad pricing increased significantly and steadily. Each quarter since the beginning of the year saw big gains in premium publisher ad pricing, ending with a surge that raised December 2009 prices even higher than pre-recession prices. Sequential changes in ad pricing:

• Q1 2009 - Q2 2009: 57% increase
• Q2 2009 - Q3 2009: 31% increase
• Q3 2009 - Q4 2009: 42% increase

Year on year changes in ad pricing:

• Q4 2008 - Q4 2009: 111% increase

Drivers of Ad Pricing Recovery

There were likely many contributing factors to the ad pricing rebound of 2009, starting with the slow overall economic recovery in the United States. However, rapid innovation of targeting technology from publisher vendors and better monetization strategies from PubMatic publishers helped to unlock the greater value of publishers' ad space. Contributors include:

1. Real-Time Bidding Campaigns

PubMatic launched the first sell side real-time bidding platform in January 2009. While RTB-purchased impressions are a relatively small segment of overall online ad revenue, PubMatic data shows that publishers can achieve a more than 60% increase in eCPM when comparing RTB campaigns to non-RTB campaigns, and some publishers are achieving more than a 100% eCPM increase. Real-time bidding was originally conceived as a method to allow advertisers and agencies to more granularly value and purchase ad impressions for a particular campaign. With RTB, the advertiser can uniquely value the specific combination of context and audience for a given ad impression and bid appropriately. This is in contrast to typical media and audience acquisition methods, in which a single price is set for a broad array of ad impressions. With advertisers willing to pay a much higher price to reach specific users, the value of ad space goes up and there is a potential for publishers to earn a much higher eCPM.

2. Audience Data

Creating a clear strategy to better utilize audience data for increased ad revenue was a hot topic in 2009, and for the early adopters the results have been significant. Nearly every campaign that PubMatic helps to facilitate on behalf of publishers has audience data layered into it. As more advertisers were persuaded to put more money online during the recession, they wanted to know that they had a safe environment to reach their target audience. In 2009, many of PubMatic's publishers leveraged new capabilities to better understand who their audience is and how to package it for advertisers. As media is increasingly sold based on the audience behind the media, publishers are generating increased eCPMs from the superior targeting and advertiser ROI that results.

3. Demand Side Platforms

Demand side platforms, known as DSPs, gained significant traction in 2009 in terms of both scale and improved technologies. DSPs enable advertisers to aggregate media from many sources and to target audiences customized to advertisers' specifications, rather than the segmentation proffered by publishers, networks and data providers. PubMatic is partnered with all of the major DSPs, and has seen that the improved campaign performance that they provide to advertisers has also translated into higher publisher eCPMs. DSPs are expected to continue flourish in 2010. PubMatic estimates that DSPs will manage 3-5% of online display advertising spend in the US in 2010, up from less than 1% in 2009. DSPs will continue to be a force for improved publisher eCPMs in 2010.

4. Ad Networks

While some industry analysts predicted the demise of many ad networks, those predictions have not yet been realized. In fact, many ad networks experienced better than expected growth by working to differentiate their core offerings with better targeting capabilities. In 2009, the number of ad networks that PubMatic had relationships was double what is was in 2008, and pricing from ad networks saw similarly significant increases.

5. International Monetization

Premium US publishers typically have 20-40% of their traffic coming from Europe, and monetizing an international audience is best done leveraging local ad sales teams. Last year, PubMatic expanded into Europe having publisher and ad network representation on the ground in London, Hamburg, Paris, and Amsterdam. The result has been increased ad pricing for international traffic, a goal that publishers commonly have difficultly with.

Conclusion

2009 turned out to be a much better year for online ad pricing than many expected, but many challenges still exist. Gaining greater revenue control, improving protection from unwanted ads, and resolving latency problems will be issues that publishers will still face, but with better technology to help them. It is impossible to predict what will happen with online ad pricing in 2010, but the year is off to a promising start and new opportunities will be available to help publishers unlock the true value of their audience, including the broader adoption of real-time bidding, increased abilities to better monetize audiences, and extending ad network optimization to publishers’ mobile platforms.

Originally written by PubMatic, and first published on October 8th, 2009 as "Ad Price Index: 2009 Year In Review".

About PubMatic PubMatic is a global ad revenue optimization company that provides online publishers with a service solution to manage and monetize non-Guaranteed ad inventory. PubMatic's real-time ad price prediction technology ensures that online publishers get the most money from their advertising space by deciding in real-time which ad network or exchange can best monetize each impression. There are currently over 6,000 large and medium publishers working with PubMatic. PubMatic is venture backed by Draper Fisher Jurvetson, Nexus India Capital, and Helion Ventures.

Photo credits: Ad Pricing Recovers In 2009 - Palto Drivers of Ad Pricing Recovery - Chris Lamphear Real-Time Bidding Campaigns - Marc Pinter Audience Data - Federated Media Demand Side Platforms - Chris Lamphear Ad Networks - Food Blog Alliance International Monetization - 0tvalo