Tracking Data Boosts CPMs on Ad Exchanges

Online ad exchanges command higher rates when they have access to data about other Web sites that consumers have visited, per a Digital Advertising Alliance study.

"The results of our econometric analysis corroborate and extend an emerging body of empirical work documenting the value of information sharing in online advertising," authors Howard Beales of George Washington University and Jeff Eisenach of Navigant Economics write in a study commissioned by the trade group Digital Advertising Alliance. "Our estimates indicate that advertisers place significantly greater value on users for whom more information is available."

For the study, the researchers examined 3 million transactions conducted by two companies that run ad exchanges. One of the companies had cookie data for 89% of the impressions, with an average cookie lifespan of seven weeks. The other company had cookie data for 96% of ads served, but the average life of the cookie was just eight days. The study took place during a one-week period in August.

Overall, ad exchanges were able to command between three times and seven times higher cost-per-thousand impression (CPM) rates when serving ads to users with tracking cookies than without them, according to the study. Companies paid the highest CPMs to reach people with older cookies, the researchers reported.

The average CPM for all ads examined -- those served with and without cookies -- was 29 cents for the company with the shorter-lived cookies, and 47 cents for the company with cookies an average of seven weeks old.

The study only examined rates for ads sold by exchanges; it didn't look at how those rates compare to ones for ads sold directly by publishers.

Lou Mastria, managing director of the DAA, says the organization commissioned the study as part of an effort to quantify the impact of consumer data on the online ad industry. He says it shows that publishers can command more ad revenue when they have data about the types of products consumers want to purchase.

"Understanding whether someone's in market for a car, or in market for a vacation -- those are the things that are going to be important toward monetizing content," he says.

(Source: Online Media Daily, 02/10/14)