Programmatic Ad Prices Drop, But Up YoY
US programmatic ad CPMs (cost per thousand impressions) plunged 32.5% in January, a significant seasonal dip. Despite the drop, prices are still up 23.6% compared to last year, highlighting underlying market growth and the need for analysts to contextualize short-term volatility for clients.
The January downturn is a predictable industry pattern known as the "January Slump." Advertisers, having exhausted their "use it or lose it" Q4 budgets, reset for the new fiscal year, leading to a pause in campaign spending and fewer bidders in the ad auction. This advertiser pullback coincides with a post-holiday lull in consumer spending and an increase in ad inventory from new devices received as gifts. This imbalance of high supply and low demand naturally drives down the cost per impression. The underlying year-over-year growth is fueled by expanding channels like Connected TV (CTV) and retail media networks. Projections show the global programmatic market growing from approximately $11 billion in 2024 to a potential $117 billion by 2034. Efficiency within the programmatic supply chain is also improving. A 2024 Association of National Advertisers (ANA) study found that for every $1,000 spent, $439 now reaches consumers, a 7.9% improvement over the previous year. Marketers are actively seeking more control and transparency, leading to a significant shift away from open marketplaces. In a reversal from 2023, 59% of programmatic ad spending in 2024 took place in private marketplaces (PMPs). Spending on low-quality, "Made-for-Advertising" (MFA) websites has been sharply curtailed. Marketers reduced their allocation to MFA publishers from 15% of their spend in 2023 to just 6.2% in 2024. Looking forward, the growth of Connected TV advertising is a key trend, with spending in the channel expected to grow by 30.8% in 2024 as major video platforms expand their ad-supported offerings.
