Last week, Ad Exchanger highlighted a blog-post by Efficient Frontier (EF) on display CPMs.  The quick summary is that in Q1, “CPMs were trending down in March in comparison to February while impressions were doubling.”  More from Chris Jacobs of EF here.

As any self-respecting pricing geek would do, I immediately compared EF’s results to our own experience at Brand.net, even though we offer a decidedly different product.  I also looked up the websites of past purveyors of industry pricing reports here , here and here – alas, no updates for 2011.

So before a “prices are falling” wave kicks off, let’s look at our data.  The headline is that we are definitely seeing the impression volume growth, but CPMs are trending flat to upward as well – quite a different story than the 33% drop that EF reports.  Obviously inventory quality and contextual mix matter quite a bit in this analysis.  Here are our numbers (on a mix-adjusted basis indexed against Q1 2010):

At a high-level, the pricing numbers largely reflect seasonality – Q4 is the peak demand quarter of the year, while in Q1 demand is smaller.  In parallel, with increased industry demand, pricing for quality, above the fold media with strong contextual relevance is actually trending up.

That’s history.  More importantly, here are our forecasts for the next year (indexed against Q1 2011):

These forecasts are, obviously, at a very high-level.  Users of Brand.net’s MFP on Demand can see the forecasts at whatever level of granularity is required to support their media planning efforts.

With all of this data as a backdrop, there are two main points I want to get across.

First, understanding more about what did happen is only interesting.  Understanding more about what will happen is actually useful.  Let’s say for the sake of argument a certain CPM index did decline 33% Y/Y.  Should I buy now because they are so low?  Should I wait because the declines will continue?  Do the declines mean that my return has gone up proportionately?  What should my planning rate for this year’s budget be?  Better forecasting and planning leads to better outcomes.

Secondly, we should push beyond the data to information and insight.  The urge to compare is hard to resist, but let us compare and analyze.  Let’s understand the nuances of the data that’s presented to better comprehend what it’s really saying about the world and how that affects our businesses.  Here are a few thoughts:

Understand the perspective of the analyst

• Is the underlying data representative of my business or his?
• Is the data insightful re: pricing or does it capture something else (e.g. mix shift)?

Make sure marketplace data/insights apply to your situation.  Pricing is all about details. Understand them.

• Inventory mix – are these the same sites/channels that I need? Am I getting long-tail sites with questionable brand-safety?
• Seasonality – has seasonality been factored into the prices?
• Guaranteed vs Non-guaranteed – do I risk the operational hassle of under-delivery and volatility by buying cheap?
• Targeting – are the users I am reaching in my target? How can I be sure?
• Ad Formats – Standard Flash vs Expandable? In-stream vs In-banner streaming?
• Placement – is the ad above-the-fold? What percent of the time?
• Effectiveness – Am I driving the results that really matter for this campaign?  Am I measuring these results?

I understand that this level of forethought and analysis is time-consuming.  I don’t expect everyone to do it either.  But, at the minimum, we should all remember that these factors are at play as we digest these reports.  Caveat emptor!