Three Publisher Focused Takeaways from Forrester’s Five Year Digital Media Buying Forecast

US Interactive Display Media Forecast Forrester Research

Earlier this week, Forrester Research released a forecast of digital media spend over the next five years. Good news: Forrester expects digital advertising spend to grow 17% annually between now and 2017. The Op-Ed combed through the report to find out which channels the added spend would go through and what is expected to contribute to the growth. Here, we give you our three publisher focused takeaways from the forecast:

CPMs to Grow With Help From Viewable Impressions Forrester expects the average online ad CPM to hit $4.68 in 2017 as compared to its current level of $2.66.  That growth, according to Forrester, will be bolstered by the adoption of viewable impressions. “We’re definitely taking the stance that the viewable impression standard is going to happen,” Forrester Analyst Joanna O’Connell told AdAge. The estimate makes sense. When advertisers can be sure that the inventory they’re buying is real, they’ll be willing to spend more money. The increase in CPM will help lead the digital advertising industry to $28 billion in revenue by 2017. This year, that number is expected to reach $12.7 billion, according to Forrester.

Targeting: Shiny But Perhaps Overrated The Forrester report also noted that, despite the proliferation of ad tech companies, buyers remain generally unconvinced that paying extra for targeting is worth it. Highlighting this skepticism, TechCrunch called out a quote in the report from Sam Bloom, Interactive GM at Camelot Communications. “The truth is,” said Bloom, “a lot of targeting options aren’t worth the money [today], and most of the ad formats are not interesting to consumers. Performance isn’t where it should be as a result.” Perhaps that means buyers have read the comScore report which finds that the media plan accounts for only 13 percent of an ad’s effectiveness. Good creative, on the other hand, has four times the effectiveness.

RTB CPM to Rise Don’t expect RTB inventory to stay cheap forever. Forrester predicts that RTB inventory prices will rise as marketers learn more about the medium and begin to trust it. It comes down to simple math: more bids = higher sale prices. Who knows, this might even lead to an increase in premium inventory listed on exchanges as publishers realize they can sell their good stuff and not feel like they are getting ripped off. According to Forrester, exchange CPMs should go up to $6.64 in 2017 from the $3.17 they are at today.

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Staff Reporter

Alex Kantrowitz covers the business side of digital advertising for The Op-Ed. His work has previously been featured in Forbes, Fortune, The New York Times' Local Blog and The Ithaca Journal. He also wrote a series of articles from Istanbul for the Cornell Daily Sun. Connect with Alex on Twitter, Facebook, Google+, and Tumblr.