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Connected TV is the new black – CPMs selling for exorbitant sums

Traversing the connected TV advertising sector remains unfamiliar territory for many, yet surely pros of the technology greatly outweigh any cons to the extent that any company not getting into the game hard and fast is out of touch, right? That was the general consensus here until figures landed in our inbox this week claiming buyers are paying as much as an astronomical $28 per thousand impressions (CPM) for the connected TV advertising privilege.

For a little context, this time last year the average CPM across the Google Display Network sat at $2.80 – from an analysis of over 760 million ad impressions and nearly 3 million clicks. Even with this particular measure up by $1 year on year, connected TV advertising is making the ad duopoly (Google and Facebook) come across distinctly untrendy in comparison.

According to research from eMarketer, which every year receives anonymous pricing details from buy and sell-side sources, CPMs for in-stream ads on connected TV sets range from between $19.84 and $28.33 during Q4 2017 to Q4 2018. Now this annual outlook is on our radar, we’ll be eagerly awaiting the research each year (shame it’s not quarterly) from now on – tracking the market’s progress until it reaches something approaching affordable.

Given how connected TV usage in the US is embraced by approximately 57.2% of the population today, rising from 51.7% in 2017, according to eMarketer research, connected TV CPMs could be set to balloon further rather than reaching a plateau anytime soon.

Significantly though, the report expects connected TV CPMs to decline as supply levels rise over time, although eMarketer didn’t publish a forecast to complement the findings.

Clearly then the inexorable rise of connected TV viewing – providing brands with a platform for reaping the benefits of personalization and measurement through IP-delivered video on the home’s primary screen – is a market reserved exclusively for the high rollers of the industry. This is for now, anyway, although the study cited programmatic ad technology vendor Amobee, which has apparently observed CPMs gradually declining as more ad inventory comes through.

The research also warns that the data does not account for every advertiser type, nor does it factor in various campaign objectives or publisher categories.

Let’s throw in some viewing data from Nielsen for good measure, showing eyeballs spending an average of 40 minutes a day on connected TV devices in Q1 2018, rising by 5 minutes from the previous quarter.

Of course, the rise of connected TVs and therefore a two-way pipeline has given operators and broadcasters the opportunity to dive much deeper into addressable advertising by targeting audiences not just by household but even by the size of a screen, for example.

Connected TV advertising is also moving towards digital media standards which will help boost programmatic buying against the associated inventory, with a trend towards trading on a CPM basis. To this extent, connected TV advertising is edging towards digital and away from the traditional linear TV model which focused more on audiences with limited scope for targeting even at a neighborhood or broader demographic basis. This, however, brings it within the realm of some of the risks associated with digital, such as ad fraud and brand contamination.

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