• The Bid

Publishers are mitigating losses

How publishers are trying to manage ad prices and mitigate losses?

One reason for programmatic to be so attractive to advertisers is its method of auctioning ad spaces by publishers. They could get high-quality inventory at competitive prices through real-time bidding. With the Covid-19 crisis, inventory prices have come down drastically, and publishers are holding on to their ad spaces for long term business stability instead of selling them at reduces prices which could be difficult to increase again.

Since most people are spending time at home due to lockdowns in various countries, digital consumption has increased around the world meaning more traffic to publisher sites. On the downside, the prevailing economic slowdowns due to prevailing situations also mean reduced ad spends. As a result, programmatic ad CPM which works auction basis has come down by 10-20%. Publishers instead of using this as an immediate short term opportunity to sell their ad space are holding their inventories for the prices to return to the normal level.

What publishers are exactly trying to achieve by this?

Well, what they are essentially trying to do is protect their inventory from selling at such low prices that it will be difficult for them to sell them at normal prices at a later time. According to STAQ, the average display ad CPM has fallen from $1.34 in March to $0.91 on May 3.

The reason for removing inventories instead of selling them at reduced prices is not just for protecting their competitive prices; it is also for stopping bad quality ads appearing in their spaces. Low prices mean ad space going to low-quality advertisers which makes it difficult for the publishers to attract big advertisers. However, one question faced by publishers is how much inventory they can afford to remove in the times of already reduced demand and still stay relevant.

Source: Digiday