The cost of digital display advertising has fallen by more than a third over the past year due to an influx of cheap inventory into the market from publishers and social-networking sites.
Media buyers estimate that the average rate card CPM (cost per thousand) for branding campaigns across premium sites has dropped from upwards of £60 a year ago to around £20 as brands slash their display budgets in favour of search and affiliate marketing.
CPMs for response-driven campaigns bought through ad networks have fallen much more sharply, down from £3 this time last year to an all-time low of around 20p, Revolution can reveal.
Industry experts estimate that the average CPM for banner campaigns has fallen by approximately 25 per cent to £1.50. Meanwhile, rich-media formats such as pre- and post-roll ads are proving more resilient, with CPMs dipping by an estimated 10 per cent to £20.
The plummeting price of digital display ads represents a significant opportunity for brands looking to run low-cost campaigns. A new report from Forrester urges advertisers to take advantage of this low-cost inventory, coupled with improvements in targeting from ad servers and publishers to boost the efficiency of their digital marketing activity.
"The explosion of social media has ensured that there's plenty of low-price display inventory available," said Nate Elliott, author of Forrester's European Online Advertising Forecast. "We encourage advertisers to look for good-value display ad opportunities."
Conversely, the continued growth of paid search has driven click prices even higher. The IPA (Institute of Practitioners and Advertising) claims that brands are now paying Google more for less, with PPC (pay-per-click) rates increasing by nearly a third (31.6 per cent) and average click-through rates decreasing from 28.9 per cent to 20.9 per cent between April 2007 and December 2008.
Despite this, Forrester claims that digital display will bear the brunt of the recession, with ad spend growing by just 4 per cent this year as it struggles to compete with more accountable forms of digital marketing and cheaper TV ads.
However, the continued boom in video and rich-media formats will help digital display outgrow paid search within three years, further cementing the web's credentials as a brand-building medium, according to Forrester.
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