Digital AdEx set to rise 7.41%, but CPMs expected to remain under pressure

The digital advertising market is set to expand 7.41% next year, according to the dentsu-e4m Digital Advertising Report 2026. However, beneath that headline growth is a more fundamental shift. Industry observers suggest that even as digital AdEx increases, CPM rates could fall by nearly 15% year-on-year, extending a correction that has already transformed publisher economics over the past three years.

“Given the scale of inventory growth we are witnessing and the migration toward CPC and CPA models, a 15% year-on-year decline in CPM would not be surprising. Pricing pressure is tangible because supply has expanded far faster than advertiser budgets,” said an industry expert from the digital sales division of a mainstream publisher.

For open web publishers, the paradox is evident. Expenditure is rising, yet impression values are declining. The issue is not merely weakening demand. It reflects a structural glut of inventory and a clear brand shift toward performance-driven outcomes.

Chandan Kumar, CRO at News24, points directly to supply expansion and advertiser priorities. “Inventory is abundant. Over time, countless apps have emerged. Earlier the focus was branding. Now branding must deliver ROI. That shift has driven the trend,” he says.

In his assessment, the digital ecosystem has scaled more rapidly than budgets. Social media platforms, quick commerce apps, ecommerce marketplaces and a surge of new publishers have layered additional inventory into the market. Meanwhile, brands have pivoted from awareness-led campaigns to return-focused mandates. As a result, impression pricing has naturally softened.

Kumar also emphasises shifting user behaviour. News consumption is increasingly mobile, push notifications rival homepage visits, and short video formats have reshaped engagement. Traditional display is no longer the only access point to audiences. “User migration drives business. If you have acquired users, you can move them across products,” he explains, noting how publishers are expanding into app monetisation, podcasts, events and short video formats to counter display volatility.

The math of oversupply

While Kumar frames the challenge through inventory growth, an industry expert overseeing digital sales at a mainstream broadcast channel outlines the commercial strain more directly. “With excess inventory and finite budgets, brands cannot stretch indefinitely. Each brand works within a defined marketing allocation. Inventory, however, has multiplied. Hence the pressure to reduce CPM.”

They observe that over the past three years, average CPM rates have declined by no less than 25-30 percent. The anticipated 15% year-on-year drop therefore signals an ongoing recalibration rather than an isolated downturn.

The expert highlights another disruptive force. Ecommerce and retail platforms have evolved into powerful advertising ecosystems. Marketplaces once centred on transactions now generate ad revenues rivaling major publishers. Brands favour these environments for their intent-led targeting capabilities.

Simultaneously, buying frameworks have shifted. “Brands are transitioning from pure CPM to more outcome-oriented models like CPC and CPA,” the expert explains. Cost per click, cost per acquisition and cost per app install increasingly outweigh impression-based buys. Programmatic exchanges enable lower-priced inventory purchases compared to direct deals, intensifying pressure on overall CPM benchmarks.

They add that advertisers now prioritise reach measured through unique users rather than sheer impression volume. Highly targeted inventory may command a 15-20 percent premium, but undifferentiated scale struggles to sustain value.

Attention versus allocation

The strain becomes clearer when aligned with audience metrics. Consumer time spent across the open web remains considerable. Yet advertising allocation is concentrating within walled gardens and retail media networks.

Vijay Shenoy, Deputy Vice President at LS Digital, situates the discussion within evolving consumption trends. Open web CPM, he explains, is governed by supply-demand mechanics. “If data shows declining CPMs, that itself signals tightening margins. Negotiations with agencies and advertisers have become tougher, and demand has softened recently.”

He contends that marketers increasingly chase engagement depth over mere presence. Media consumption is heavily mobile and video-centric. Budgets that were once more evenly distributed now gravitate toward platforms perceived to drive stronger impressions, viewability and conversions.

Retail media has become a major beneficiary. Ecommerce platforms have transformed from pure transaction hubs into content-rich ecosystems integrating creators, live commerce and short-form video. Increased user time has strengthened their advertising influence.

Shenoy also points to the rising role of influencer marketing. Previously viewed largely as an awareness channel, it is now positioned as a full-funnel lever. Though not always fully reflected in conventional AdEx calculations, influencer allocations are diverting funds that might once have flowed into display.

The AI horizon

Beyond retail and social ecosystems, AI-driven discovery is beginning to reshape traffic patterns. As conversational interfaces and AI summaries deliver consolidated responses, the traditional click-through journey across multiple open web pages is compressing. Shenoy indicates that AI-based advertising may soon merit a dedicated AdEx category.

Nevertheless, he remains confident about the dominance of major platforms. Walled gardens are expected to protect their revenue engines, as advertising remains central to their models. Retail media and influencer networks will likely trail closely in share of spend. The open web will persist, albeit with a reduced proportion.

A growth story with redistribution

The projected 7.41% digital AdEx increase next year therefore conceals a redistribution dynamic. Additional funds will enter the ecosystem, but disproportionately toward performance-driven, data-intensive and closed platforms. The 15% CPM contraction is not a temporary pricing dip. It reflects a market realigning around measurable results.

For publishers, adaptation is underway. Diversification, short-form innovation, deeper audience engagement and premium targeted inventory are replacing reliance on scale impressions.

The industry’s expansion narrative remains intact. Yet the framework has evolved. In a marketplace where inventory continues to swell and budgets remain capped, pricing leverage belongs to platforms demonstrating tangible outcomes. Walled gardens are poised to dominate, retail media will cement its advances, and AI will subtly influence allocation strategies. The open web, meanwhile, confronts a defining inflection point.