Here's a bit of news coming out of a company I have never heard of called SQAD (apparently pronounced squad, considering that cable advertising has been outside my wheelhouse I am not surprised, but they are on my radar now. The crux of their report is that in-stream video ads online are more expensive than cable television prime time ads. By how much? Quite a bit they say.
SQAD has been around for some time, according to their website, and specialize in "media cost forecasting."
SQARE receives actual buys from agencies and media buying companies for spot TV and radio as well as Hispanic Spot TV buys. Data for these media are filtered through SQARE to eliminate special programming that inappropriately alters the current and future CPPs (i.e., Thanksgiving Day Parade, Super Bowl, etc.). The proprietary SQARE model processes data that is based on actual buys for the current quarter. Using this information plus historical data from 16 rolling quarters, SQARE builds estimates for the future. Using the current quarter’s actual estimates, projections for subsequent quarters are directionally based on movement seen in the current quarter. With nearly $13 billion* of spot media buys for TV, Radio and Hispanic Spot TV, SQAD creates forecasting algorithms, which allow users to budget and plan up to four quarters into the future.
Alright, so they have track media buy costs for 16 rolling quarters, or four years, and are looking at the trends. Using their databases, they came up with a 2013 average CPM for online, in-stream video ads of $23.03. That seems on the high side in my opinion and they say it is 38% higher than the average 18-49 CPM for prime time cable TV. Meanwhile, network TV was almost double that of online in-stream video ads at $44.11.
The high network TV CPM seems right to me and that might be why it seemed that the online in-stream was too high at first glance. So here's how it all breaks down.
The table shows data for 2012 and 2013 for all but in-stream video ads so we don't know how that one changed year-to-year (they only started tracking in January 2013, no wonder I have not heard of them). Cable TV prime time rose slightly and display ad CPMs are on the decline. We can probably imagine that in-stream online video ad CPMS rose just like network TV prime time CPM rates did.
"In many cases, online premium video inventory is still somewhat limited, so it's not that surprising that rates are high right now," said Neil Klar, CEO of SQAD. "Broadcast TV networks command premium CPMs because of their reach and programming, and they have leveraged those commodities to obtain upper tier in-stream video CPMs."
The highest rated TV show for the week of March 23rd was The Voice which pulled 5.1M viewers. NCIS pulled 17M when taking into account live and SD (same day, time shifted). That's a reach of 4-13% in the 18-49 demographic. SQAD states that network TV websites (NBCU, CBS, ABC) had a combined average CPM of $30 which then results in a higher overall in-stream CPM. Weird, where is FOX? What about the CW? More importantly...
How much is Hulu's CPM then? $23-30 perhaps? Remember my hypothetical piece back in December on that exact thing where I said, "Hulu is, hypothetically, averaging around $27.50 CPM for ad placements against its content." For you naysayers, I also said, "If there's a 10% margin of error, Hulu's ad CPM could be as low as $24.75."