Why CTV CPMs Are Slumping – And What the Ecosystem Must Do About It
Despite the explosive growth of Connected TV (CTV) consumption and inventory, CPMs are stagnating – or even declining. Agency leaders are saying candidly that CPMs have dropped anywhere from 10-30% since last year. That goes for the open web and private marketplaces (PMPs) alike.
This may seem paradoxical. Deloitte tells us the average US household subscribes to four SVOD services. Shouldn’t more premium screen time, higher viewer engagement, and rising brand demand all add up to higher prices?
Don’t jump to the conclusion that inventory supply is outpacing demand. The real causes of CTV stagnation and decline today are related to low signal fidelity, walled garden dominance, and a shortage of innovation. Businesses across the CTV landscape can find relief, if they know how to adapt and restore value and advertiser confidence.
The Real Causes of Falling CPMs
Today’s CTV CPMs are the result of a legacy of pricing without precision, carried over from linear TV methods. As in linear, the creative in CTV is of high quality, and the viewing experience encourages engagement. But there’s a difference between the quality of creative and the quality of impressions – which varies widely across the CTV landscape. Sellers used to be able to offer buyers bundles of inventory under a uniform CPM, regardless of impression quality. But this model is collapsing now that buyers are demanding accountability.
Furthermore, signal fragmentation weakens buyers’ incentive to pay more. Available signals often lack standardization, and the inputs for players in the CTV ecosystem supply chain are often inconsistent or incomplete. No entity is really incentivized, or even empowered, to improve the status quo. This draws large advertisers to walled gardens and their own precision data, creating a splintered landscape where data is commodified. Meanwhile, the growth in the CTV ad market is greatest outside of the walled gardens.
There are also technical and commercial hurdles that advertisers need to overcome in CTV. It’s expensive to build a true precision-targeting engine in this space, and falling CPMs only lessen the ROI for innovation. Moreover, many transactions still occur via programmatic guaranteed (PG) or private marketplace (PMP) deals – sidelining the potential of open exchange optimization.
Publishers’ Opportunity to Add Value to CTV Inventory
There’s a great opportunity for publishers and streaming platforms to provide advertisers with more precise signals by managing their own content metadata. Adding genres and content ratings to metadata creates an ideal opportunity for aligning tone and brand suitability, at precise moments. Adding title, series, episode, season, and producer ID data enables franchise-level targeting: Think of the ability to buy on kids’ content, but to exclude horror. Clarifying livestream status incentivizes advertisers by enabling moment-based targeting.
Advertisers’ Opportunity – and the Role of Collaboration
Advertisers would be wise to ask partners for rich metadata signals while the industry takes steps to enhance bidstream signal quality. But today, this requires tech solutions that normalize and harmonize fragmented data. This not only enhances targeting, but uncovers segments of inventory that were previously undervalued on account of lower bid density. But advertisers need to move quickly on these low-cost opportunities. Standardization is coming, and these rates won’t last.
There’s another prime opportunity in free ad-supported streaming TV (FAST) channels, which are growing in adoption. Nielsen research revealed the number of FAST channels has grown 42% since mid-2023 alone. If signal standards improve, FAST inventory is sure to become central to precision targeting on high-value audience segments.
The CTV market needs to adopt a new model for the benefit of all stakeholders in the ecosystem – publishers, advertisers, and tech vendors. Advertisers and publishers should seek partnership from DSP vendors that bring deep SSP integrations to the table, to enable access and enrichment of bidstream data. Advertisers and their agencies, on their own or with their tech vendors, need to cultivate direct partnership with publishers to access higher-fidelity signals that can improve targeting and yield. And advertisers need to continue pushing their partners to demonstrate their impact on the ad buy and their value in the tech marketplace.
As DSPs, supply owners, and their data partners collaborate more closely, they’re unlocking performance measurement at scale, by combining ACR data, panel insights, and probabilistic models. The result: more relevant impressions, higher advertiser confidence, and rising CPMs.
The CTV Takeoff Is Just Beginning
The CTV transformation didn’t begin yesterday – but it feels like we’re still in the airport, heading to our gate. The journey ahead involves massive acceleration, driven by better signals, smarter measurement, and performance-optimized buying.
The winners will be those who control access, utilize it effectively, and have the buying intelligence to turn fragmented signals into precision outcomes. Is your business ready? Let’s board.
[Editor's note: This is a contributed article from Adlook. Streaming Media accepts vendor bylines based solely on their value to our readers.]
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