Why high OTT CPMs might be worth it for some brands

Darrick Li, managing director for Canada at Standard Media Index, also explains why social CPMs are continuing to stay so low.

Based on information from Standard Media Index clients, social video has a $6.22 CPM in 2022, less than half of the CPMs for other video platforms.

Darrick Li, managing director for Canada at SMI, tells MiC this is because social offers a lot of opportunities for advertisers to reach their audiences, particularly for certain sectors.

“Naturally it is going to drive a lot of the share of wallet as a result, because the advertisers will continue to drive more and more lower funnel metrics and opportunities on the retail and commerce side of the business. For those sectors, it continues to be a very attractive channel,” he explains.

On the other hand, OTT was the most expensive platform with a $24.88 CPM. “With OTT, you generally mimic the format of linear TV and the price is reflective of that,” explains Li. “Often times, you can have CPMs in OTTs that are even higher than linear because a large audience is shifting toward there.”

This is because the platform provides an environment of long episodes where consumers are really leaning in, focused and putting their attention toward the big screens.

“We know that type of environment has been very effective in reach and awareness type campaigns,” explains Li. He further notes that the 10% decrease in CPM from 2020 was caused by more inventory, giving advertisers more choices and highlighting OTT’s popularity.

Paid spots on linear TV for persons 25 to 55 years old had an eCPM of $15.47, up 6% versus 2021 and 17% versus 2020. “Linear TV has been increasing over the last two years. That’s not  a surprise,” says Li.

The reason for this is because of audience decline. However, sports continues to be a massive avenue for linear TV. “Therefore, advertisers will continue to pay that premium to be in front of this audience resulting in a $22 CPM,” adds Li.

In the future, Li predicts that, because of the influx of ad supply, competitors will try to maintain share of wallet with advertisers and CPMs in digital video will stay where they have been. There may be a bit of a bump from premium video and OTT because players like Netflix and Disney+ will likely command a higher CPM, but none of that will generate a massive shift in spending. All in all, Li expects trends to continue as they have thus far, with a few exceptions.

“With the incoming influx of ad supply on the premium digital video side, I think many of the Canadian suppliers have a real opportunity, especially the media owners that have both linear TV and streaming inventory,” Li says.

Major media companies are in a position where they can balance the scales and use one video platform to offset the other in driving incremental spend and reach, whereas pure-play digital publishers can only offer pricing discounts to shift advertising spend. The time is now, Li says, for all TV and video players to demonstrate their unique offerings as they fight for the advertiser’s share of wallet.

This does put pressure not just on the likes of YouTube and Roku, but on TV broadcasters who sell ads on their own digital video platform, between Rogers’ Tubi, Bell’s Crave and Corus’ Pluto, launching later this year. “And hopefully it drives one main point home – you need the data to determine benchmarks and where the others are pricing their content to win this game,” concludes Li.

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