January 25, 2023
Online Video Ads Out-Price TV Spots
- by Wayne Friedman , April 21, 2014
For 2013, the
average online video ad was about double the price of a national TV commercial -- and in some cases even more than that for targeted online video.Ed Papazian, president of Media Dynamics, a consulting/publishing company, estimates that in 2013 an average online video ad -- for all lengths of ads -- was priced at around $20 to $23 for the cost per thousand viewers (CPM).
By way of comparison for all national TV dayparts, for a 30-second commercial, the price is about $9 to $10. But Papazian says the top price for any video advertising comes with “targeted video” on the Internet -- at an average CPM of $32.75 -- adding that “untargeted online tonnage buys generate much lower CPMs of about $9, which makes them roughly comparable to TV's all-daypart/all-platform norm.”
He notes: “While the evidence so far indicates that targeted online video ads outperform their non-targeted TV counterparts in ad recall and impact metrics, it remains to be seen whether the current CPM disparities will remain in force.”
In looking at traditional TV video CPMs, Media Dynamics says broadcast network prime time is the highest -- at $19.00. Late-night broadcast programming is at $17.50; syndicated prime-access programming is at $17.00; and cable prime-time programming at $9.85.
Early-fringe syndicated programming averages $9.25; broadcast early evening news is at $9.00; and cable programming early fringe comes in at $7.55. Network daytime is at $6.50; with syndicated daytime programming at $5.50; and cable daytime programming at $3.30.
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So...all impressions are equal, so all cpm's should be equal because all consumer behavior with each medium is equal. Ok, I got it.
Seems like the lead was slightly buried “While the evidence so far indicates that targeted online video ads outperform their non-targeted TV counterparts in ad recall and impact metrics, it remains to be seen whether the current CPM disparities will remain in force.” Right and it also remains to be seen if chickens can fly.
We need to be clear about the class of video ads we're talking about. Do they allow click-throughs or direct response to a CTA or not? If yes, then CPM isn't the right metric to compare against, its CPC. I did some recent tests and found that on high CPM keywords on Google, YouTube's TruView units are about half the cost of traditional search ads. http://blog.shakr.com/2014/04/16/why-video-ads-scare-google-and-are-great-for-small-businesses/
When are we going to learn that we can't tout digital precision and accountability on the one hand and then sound like we have absolutely no idea what we're talking about on the other. Speaking of which, my "String-chaser of the Day" award goes to WPP's Xaxis for its new technology that syncs TV commercials and smart phones so that consumers can now avoid the same ad twice at the same time! Is it any wonder that "former" is the term most often used to describe CMOs?
Yes, it is true that not all video ads are the same. It's nice to see "targeted video" as a category. However, the emerging category of "engagement video" draws even higher CPMs.
I would have expected a little more thought to have gone into this headline for such an important topic. The headline is completely biased and misleading. It makes it seem as though TV is a clear cut better buy over online video, when the truth is that it depends on many different factors that are specific to each individual brand. You touched on this in your article with the mention if targeting, but the vast majority of people had already stopped reading.
@Justin: Those "many different factors" you cite have the digerati chasing their own long tails in so many small circles, it's no wonder they're dizzy! And FWIW, no amount of digital fine tuning will produce the effective scalable reach that comprises the only non-discretionary line item in most big-brand media budgets. Quite the opposite, in fact, because all of these wild digital machinations play right into the TV guys' hands as the reach devil we know.
@Justin: Let's do a little math...$21.50 avg CPM for un-targeted ROS digital video with 35% ad fraud takes the CPM up to $33. Adding in brand safety/content issues, could easily bump this by 25%, for a $44 effective CPM. ROS TV is $9.50. Putting aside TV's reach advantage, digital video would need to provide approx. 5X ROI (on TBD brand measures) over TV to justify the pricing. I haven't seen any credible research to support that multiple.
I'm biased in favor of online video ... however ...
I expect video delivery measurements to eventually change significantly. The Adap exchange currently segments views into 5 different categories. (1) some ad portion viewed (2) 25% of ad spot viewed (3) 50% viewed (4) 75% (5) 100% viewed.
As the marketplace matures, we may see more emphasis on completed ad views, which may be a good thing. A web user is less apt to turn his attention elsewhere for 15 - 30 seconds, than is a TV viewer, who knows to expect 3 minutes or more of ads at a time.
Interesting that there is no response from author. I agree, the headline is misleading.
@ Erin- Math isn't a one way street. It works for both TV & Online. I could ask you what the effective CPM for TV is when taking into account how many people are changing the channel during commercials, leaving the room during commercials, DVR'ing and fast forwarding through commercials, using their tablet's during commercials, muting the TV during commercials. I would be interested in seeing studies on waste for TV....... especially if conducted by a digitally focused research firm (to add a little extra umph to the actual numbers). Suffice to say there is waste in both media channels, and this is not the point you should be arguing.
That said, the real issue with the study/article referenced is that it is comparing apples to oranges. You cannot lump all online video ad lengths and measure them against :30 TV ads ONLY. There is something called "long form video" in digital where videos can run for minutes on end. These long form videos obviously cost much more and will skew the results on this study. This is just one example of many instances that make this study inaccurate and not worth even arguing over.
Whether we like it or not, most media planners and advertisers look at CPMs as a starting point when evaluating media options. Nobody----certainly not us-----thinks that's where it ends. Far from it. But you have to start somewhere.
It's fine to say that evaluating CPMs, across media is like comparing apples and oranges. Of course there are differences in ad exposure and impact between media. In our newsletter, "Media Matters", and our other publications, we go to great lengths to explore these nuances in an impartial manner. Even in this report, we pointed out that non-targeted online video ads come in at about the same CPM as the average TV all-daypart buy, which, to be brutally frank, is not at all targeted -----despite what many TV advertisers believe.
As for as the point regarding commercial lengths, we compared TV "30s" to online video ads, in general, including various lengths. Actually, this favored online as its video ads tend to be shorter. Had we combined "15"s and "30s" for national TV at a mix of about 35%/65%, respectively, TV's CPMs would have been significantly reduced.
Author, author! If you write an article, you should be part of the following conversation (comments).
Isn't that what the Internet is all about--communication and a more democratic/interactive platform?
I will bet that if Wayne Friedman continues his silence after he steps down off his soapbox, he will lose his audience as they find other sites that welcome the reader in the story and its permutations.