A large majority of 2009 digital media spending was focused on impression-based buys, according to a recent study from digital marketing agency Razorfish.
Nothing Beats a Good Impression
“Razorfish Outlook Report 2010” indicates that two impression-based forms of digital advertising: cost-per-thousand (CPM, 48%) and cost-per-click (CPC, 36%) accounted for the majority of its digital media clients’ ad spend in 2009. Spending in the performance-based categories of time-based digital ads (10%) and cost-per-acquisition/cost-per-lead (CPA/CPL) ads (6%) represented a much smaller percentage of total yearly spend.
Looking forward, Razorfish expects consistency in where digital marketers allocate their ad spend dollars. Significant swings are not expected.
Video CPM Pulls in Premium Dollars
When examining the average and median cost of impression-based digital advertising, Razorfish found that video CPM ads tend to cost far more than traditional CPM or CPC ads. In 2009, video CPM ads had an average cost of $20 and median cost of slightly less than $15.
In comparison, traditional CPM ads had an average cost of about $8 and media cost of slightly more than $5. CPC ads had an average cost of about $3 and median cost of about $2.
CPM, CPC Prices Show Variation
Razorfish notes than prices for specific digital ad campaigns can vary greatly according to client goals and strategies. For example, on a per-unit basis, ad networks and homepage
take-overs on major portals and sites may both have very low CPM costs, but the approaches and goals of each are very different.
In addition, as recently as 2007, average CPC prices on the major search engines ranged from $0.56 to $0.88. As the landscape has become more competitive and brands have become more targeted in their keyword buying, CPC prices are continuing to rise significantly.
Razorfish predicts that publishers will try to create more premium inventory, as well as pull back non-guaranteed inventory from ad networks as they build their own exchanges. With more dollars going into digital, publishers will try to take more control over their inventory, and in a revived economy, Razorfish expects digital media prices to rise this year.
Digital Marketers Spend More, Retain Tactics
Digital marketers are spending more but keeping tactics the same in the face of exploding public new media usage, according to other Razorfish study findings. Razorfish recorded an average 4% media spend increase per client in 2009. This followed an average 13% drop per client in 2008 and roughly 35% average increase per client in 2007. Razorfish predicts continued increases in digital investments, particularly as broadcast budgets shift to digital.
In general, Razorfish clients did not change their tactics in 2009. Seventy percent of them kept their mix the same. Interestingly, of those that did shift tactics, 40% moved to a heavier focus in direct response (12% of total clients), while 60% shifted to more brand-focused marketing (18% of total clients). Razorfish expects to see a greater mix of strategies as brands see the value in both branding and doing direct response in digital.