The programmatic open marketplace is faltering, but publishers see a bright spot in private programmatic deals

Last week, Digiday reported that several publishers’ direct-sold advertising businesses were experiencing a slow start to 2023, with their first quarter ad revenues pacing as much as 10-25% behind forecasts. But the programmatic side of the business isn’t necessarily in a better place. 

While publishers’ sales teams are busy tracking down clients to get them into sales meetings, the programmatic open marketplace is in a tough spot also. Three mid-size to large-size national publishers told Digiday that their RPMs (revenue earned per 1,000 page views) are down between 20-55%, while two other publishers agreed that they’re seeing declines as well in this business, but refused to disclose the exact percentage.

Taking a look at the broader programmatic market, the average monthly CPM (cost per 1,000 impressions) in the open marketplace for Jan. 2020 was $1.45, $0.04 more than the average in Jan. 2021, which was even with the average CPM in Jan. 2022, according to Operative’s STAQ Benchmarking Data. In Jan. 2023, however, the average CPM took a $0.20 tumble to $1.21, per the data.

For publishers’ programmatic businesses, measuring based on RPMs can help paint a clearer picture of how much money they earned per page because while CPMs measure the price of individual ad spots, RPMs account for other variables like number of placements on the page, according to Justin Wohl, CRO of Salon.

Wohl declined to share exact price points for the average RPM his company is earning off of the open programmatic marketplace, however he said that from Jan. 2022 to Jan. 2023, the average RPM was down 55% year over year. Compared to pre-pandemic Jan. 2020, the average RPM in Jan. 2023 is down about 21%, making January 2023 “the worst January [when it comes to] ad [RPMs] since 2020,” he said. Meanwhile, average RPMs in the three consecutive January’s from 2020 to 2021 and from 2021 to 2022 increased about 24% and 43%, respectively.

“We’re definitely feeling, on the programmatic side, the lack of competition, the lack of advertiser presence [and] the lack of pricing pressure,” said Wohl.

Another news publisher, The Guardian U.S., is also taking a hit to its programmatic business, but the publication’s svp of advertising, Luis Romero, said it’s largely due to being placed on block lists — a commonly shared aggravation amongst news outlets. This business is beginning to scale back up, he added, but did not share by how much. That said, Romero’s goal for 2023 is to decrease the publication’s dependence on programmatic revenue from accounting for 50% of the advertising business at the beginning of 2023 to being a minority by the end of this year. 

One digital media executive who spoke on the condition of anonymity said that their company’s indirect programmatic CPMs are down between 30-40% year over year, but as it makes up a very small part of the advertising business, they are not concerned about how this decrease will impact revenue earned in the quarter or even the whole of 2023.

“It’s a weak spot that can be mitigated through the events and talent part of our business,” said the media executive. 

Betting on programmatic direct deals

There is still hope held by several other media execs that programmatic direct deals can make up for the shortfalls on the direct sales and open programmatic ends of the business. While open marketplace programmatic allows for advertisers to purchase display ads on a publishers’ site with little clarity on what content their ads will appear next to, programmatic direct deals that happen in a private marketplace or through a seller (programmatic guaranteed) has more guarantees around things like content adjacencies, impressions and engagements.

Two other publishers who spoke on the condition of anonymity said the number of RFPs for programmatic guaranteed (PG) buys are on the rise as well as the RPMs from those campaigns. 

“Our programmatic RPM is way up. January’s always a fairly quiet month programmatically, but our RPMs are probably up about 30% from where they were in Q3 [2022],” said the second media exec, who compared Q1 2023 to Q3 2022 RPMs because Q4 is often an inflated quarter for programmatic rates and Q3 was the most recently comparable quarter that was also impacted by the economic downturn.

The second media exec also said that the private marketplace has been the primary area for monetizing their programmatic direct business, and while CPMs have remained consistent, stronger ad units and more ad inventory across more pages has led to an increase in revenue earned. What’s more, the exec’s sales team has been “regaining some traction” with programmatic guaranteed deals after they dropped off a bit in the back half of 2022, leading to further revenue growth from programmatic ads. 

Meanwhile, Operative’s STAQ Benchmarking Data showed that the average programmatic guaranteed CPMs increased from $9.39 in Jan. 2021 to $9.91 in Jan. 2022, then again to $10 in Jan. 2023. But during the span between 2022 to 2023, average CPMs rose and fell from a $14.50 high in June. 

The third media exec said that they are receiving the most RFPs this quarter for their programmatic guaranteed business versus RFPs for branded content, indicating that clients and agencies still want human-touched campaigns, but ones that can be executed quickly and facilitated based on set rates, they added.

The open market is not an equal experience

Not all publishers’ open marketplace experiences are created equally because unlike the rest of the publishers profiled for this piece, the third media exec said that their open marketplace revenue is doing “pretty well” despite the circumstances, and is considered to be the business that is “as predictable as we can get.” The executive declined to share revenue figures or year over year comparisons, but they said that the majority of that revenue is earned through Google’s open marketplace.  

For media buyers, the declines in CPMs is something that they want be taking advantage of, according to Seth Hargrave, CEO of Media Two Interactive, however, due to the fact that most of these declining rates are due to delays in budget approvals, there is a chance that their clients are not in the market for programmatic ads right now anyways.

The tides may change by the end of the quarter — and perhaps they did at the end of last month — if those clients release budgets at the end of their planning cycles. But whether those last ditch dollars are enough to repair a quarter’s worth of damage to publishers’ programmatic businesses is up in the air, Hargrave added.

https://digiday.com/?p=487041

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