Down with the CPM
The WSJ is reporting on “news” that brands are spending less ad dollars on TV, especially streaming, and shifting elsewhere, especially digital and retail media (“How Television Advertising Lost Its Relevance”).
According to the WSJ, big brands finally realized that “traditional” streaming TV isn’t going to get the job done.The UGC revolution and consumer habits have elevated social media to new heights; but that isn’t going to get the job done either. Why?
CPMs are just too high!
Programmatic buying of the “open internet” was supposed to be the great equalizer; but all the ad tech made it cost prohibitive with layer upon layer of markup on the CPM.
Streaming TV then adopted the programmatic CPM pricing model en masse, which wasn’t surprising given the great margins - but ultimately made it cost prohibitive as well.
Global tech players like Temu and Amazon are buying up inventory on social media like Meta Ads in mega deals at lower CPMs that aren’t accessible to the larger market. Younger consumers watching less TV - incl streaming TV - made things even more challenging.
Retail media presented as the answer is a mirage because it’s comprised of sponsored listings on ecommerce websites that capture existing demand of consumers almost ready to buy.
While retail media can offer the ability to find new demand via programmatic it’s subject to the issues above as well as AI algorithms driving more competition in ad auctions which is ultimately driving up CPMs and CPCs.
The hungriest, most talented advertisers are compensating for these system constraints by offsetting or bypassing the high CPMs.
Those who offset high CPMs utilize tactics such as:
Conversion rate optimization testing onsite with landing pages and targeted experiments
Conversion rate optimization testing offsite in CRM (email, SMS, in-app) messaging journeys and blasts
Finding pockets in the mega ad ecosystem where their customer personas are available and responsive disproportionately to the rest of the market
Those who bypass high CPMs utilize tactics such as:
Alternative media less commonly consumed
Alternative marketing methods outside of traditional media
At the end of the day, advertising is one large auction for the brokers of the most valuable commodity that exists today - attention.
It’s one large complex marketplace where the winners find the deal. The tools to navigate are vast, technical, and frankly overwhelming.
As the complexities only increase with the factors above including AI, there will be some new platforms that emerge with more favorable CPMs; but, the most important compass is having the hungriest, most talented team to navigate these bumpy waters.
