Online video ads drawing higher rates than cable as demand rises

A tight market and high demand for premium online video is driving up the cost of in-stream video advertising, a new report says.

New York-based SQAD, which tracks TV, radio and digital costs in the U.S., said that while TV broadcast network advertising remains the most expensive per thousand viewers, digital in-stream CPM has moved past the costs for cable TV ads.

“In many cases, online premium video inventory is still somewhat limited, so it’s not that surprising that rates are high right now,” said Neil Klar, CEO of SQAD.

“Broadcast TV networks command premium CPMs because of their reach and programming, and they have leveraged those commodities to obtain upper tier in-stream video CPMs,” he said.

SQAD reported average CPMs for an in-stream online video advertisement in 2013 were $23.03, or 38% higher than the average A18-49 CPM for Cable TV.

Network TV remained most expensive with an average CPM of $44.11, up 5% over a year ago.

Cable TV primetime A18-49 CPMs also rose 5% to $15.63 in 2013 from $14.90 in 2012.

In 2013, the combined average CPM for NBC Universal, CBS Television, and ABC Television was about $30, about $7 more than the $23 all category, in-stream average.

The average display CPM in 2013 was relatively flat year-over-year, showing a slight dip of 10 cents from 2012, and representing a decrease of less than 1%, SQAD reported.

Stay tuned.

Jim O’Neill is Editor of Videomind and Principal Analyst at Brightcove. You can follow him on Twitter @JimONeillMedia and on LinkedIn