Digital media buyers will eventually switch to the ‘viewable impression’ standard, only paying for online ads which are visible on screen, according to a new report from research group Forrester. The report said the new ‘viewable impressions’ standard is likely to drive up CPM rates publishers receive while reducing total inventory.
For a lot of publishers this will mean fewer impressions, which could offset some of the CPM gains. Indeed Forrester’s estimate assumes a 17% compound annual growth rate in overall online ad revenue, down from the 20% it predicted last year.
“We’re definitely taking the stance that the viewable impression standard is going to happen,” said Joanna O’Connell, Forrester analyst and co-author of the report.
The Forrester report went on to predict that online display advertising spend will grow at a rate of 17% between 2012 and 2017.
The US-based research firm says the industry will reach $12.7 billion this year, growing to $28 billion by 2017.
Global digital media buying and online display advertising spend is set to grow in the US from an annual $12.7 billion to $28 billion between 2012 and 2017, while Europe will grow slightly more slowly at a 13% CAGR, from €4.8 billion in 2012 to €7.7 billion Euros in 2016.
The growth across both sides of the Atlantic has been determined by several factors including the rise of programmatic buying technologies and new rich media and video options.
Average cost-per-thousand (CPM) rates will double in the next five years to $6.64, Forrester says. It expects video promos to make up 23 percent of all online display ad spending this year while lifting to 33 percent by 2017.
During 2012, advertisers are paying most for often for rich-media promotions ($5.2 billion), followed by text-based display ($3.5 billion), video ads ($2.9 billion) and then static promos ($1.1 billion), according to Forrester.
Digital advertising’s growth looks to be at the expense of traditional channels. Forrester said that total display advertising—including “offline” display—will decline 13 percent in the next five years.
US display market
In terms of what kind of ads are selling best in display, in the US static images, which were worth more than video two years ago, are now declining fast, at a rate of nearly 45%.
But text-based display ads are actually growing at a faster pace than rich media ads (both over 16%).
According to Forrester, video spend will overtake that of text ads by 2014.
European display market
In Europe, the online display market is not only smaller but it is seeing slower growth compared to the U.S. Europe online display ad spend for 2012 will come in at €4.8 billion ($6.2 billion), and grow at a rate of 13% to be €7.7 billion by 2016.
Forrester says that the slower growth is due to the market maturing faster in Europe.
Static images are also declining, but text ads are continuing to show strong spend compared to newer ad formats: text ads and video-based ads are closer to being level in Europe than in the US.
As in the US, rich media ads continue to be the most popular format, and together rich media and video will account for 76% of all online display ad spend by 2016, up from 59% in 2011.
Read the Forrester report in full here (registration required).