Digital AdEx to grow 7.41%, but CPMs likely to face pressure

The digital advertising market is preparing for 7.41% growth next year, as per the dentsu–e4m Digital Advertising Report 2026. Yet, beneath that headline expansion lies a more disruptive shift. Industry experts estimate that while digital AdEx will rise, CPM rates are expected to decline by around 15% year-on-year, deepening a correction that has already reshaped publisher economics over the past three years.

“Given the kind of inventory expansion we are seeing and the shift towards CPC and CPA models, I would not be surprised if CPMs decline by around 15% year-on-year. The pressure on pricing is real because supply has grown disproportionately compared to advertiser budgets,” said an industry expert associated with the digital sales team of a mainstream publisher.

For open web publishers, the contradiction is stark. Spending is rising, but the value of impressions is falling. The story is not about shrinking demand alone. It is about a structural oversupply of inventory and a decisive pivot by brands toward measurable outcomes.

Chandan Kumar, CRO at News24, places the spotlight squarely on supply dynamics and advertiser intent. “There is a lot of inventory. Over the period of time, there are so many apps. Earlier people used to do branding. Now with branding, they need ROI. That is why it has started to trend,” he says.

In his view, the digital ecosystem has multiplied faster than budgets. Social platforms, quick commerce apps, ecommerce marketplaces and a wave of new publishers have added layers of ad inventory. Meanwhile, brands have moved from pure awareness to return-driven mandates. The unit price of impressions has inevitably softened.

Kumar also underlines how user behaviour has evolved. News consumption is increasingly on the go, notifications compete with homepage visits, and short video formats have altered engagement patterns. Traditional display inventory is no longer the sole gateway to audiences. “Shifting of business is the king of users. If you have acquired users, you can shift them to your different products,” he says, outlining how publishers are diversifying into app monetisation, podcasts, events and short format video products to offset banner volatility.

The math of oversupply

With Kumar framing the problem through inventory expansion, an industry expert handling digital sales for a mainstream broadcasting channel, articulates the commercial pressure more bluntly. “When there is an oversupply of inventory and limited budgets, brands do not have unlimited budgets. Every brand has a marketing budget attached to it. But the inventory has increased. That is why there is a pressure to reduce CPM.”

They note that in the last three years, average CPM rates have not dropped less than 25-30 percent. The projected 15% year on year decline therefore reflects a continuation of a broader reset rather than a one-off dip.

The expert points to another layer of disruption. Ecommerce and retail platforms have become formidable advertising businesses in their own right. Marketplaces that once focused solely on product sales now generate advertising revenues that rival or exceed large publishers. Brands are drawn to these environments because they offer intent based targeting.

At the same time, buying models have evolved. “Brands are moving from the CPM model to a little focused approach. CPC and CPA,” the expert says. Cost per click, cost per acquisition and cost per app download are increasingly preferred over impression-based buys. Programmatic marketplaces allow inventory to be bought at significantly lower rates than direct deals, intensifying downward pressure on average CPMs.

They add that advertisers now demand reach defined by unique users rather than sheer volume of impressions. Targeted inventory can command a 15-20 percent premium, but broad undifferentiated impressions struggle to hold value.

Attention versus allocation

The tension becomes sharper when viewed against audience data. Consumer time spent across the open web remains significant. Yet revenue allocation is consolidating within walled gardens and retail media networks.

Vijay Shenoy, Deputy Vice President at LS Digital, situates the debate within changing media consumption. CPM on the open web, he explains, is fundamentally driven by demand and supply. “If you have seen any data indicating that the CPMs are reducing, it is a clear indicator. Margins have become thinner in terms of negotiations with agency partners and advertisers, and demand has also slumped in the recent past.”

He argues that marketers are following engagement intensity rather than just audience presence. Media is increasingly mobile heavy and video led. Where earlier budgets might have been distributed more evenly between open web and other formats, today they gravitate toward environments perceived to drive higher impressions, viewability and conversion.

Retail media has emerged as a key beneficiary. Ecommerce platforms have evolved from transactional interfaces into content rich destinations integrating creators, live commerce and short video. Time spent on these platforms has increased, and with it their advertising clout.

Shenoy also highlights the growing weight of influencer marketing. Once seen primarily as an awareness tool, it is now pitched as a full funnel solution. Although not always fully captured in traditional AdEx reporting, influencer budgets are absorbing funds that might earlier have been channelled into display.

The AI horizon

Beyond retail and social platforms, AI driven discovery is beginning to alter traffic flows. As conversational interfaces and AI overviews deliver consolidated answers, the traditional journey of clicking through multiple open web links is shortening. Shenoy suggests that AI led advertising may soon warrant its own line item in AdEx tracking.

Even so, he remains bullish on the dominance of major platforms. The walled gardens are likely to safeguard their revenue engines, given that advertising remains central to their monetisation models. Retail media and influencer ecosystems will follow closely in share of spend. Open web will continue, but with a shrinking slice of the pie.

A growth story with redistribution

The projected 7.41% rise in digital AdEx next year therefore masks a redistribution of value. More money will enter the system, but it will flow toward performance driven, data rich and closed ecosystems. The 15% drop in CPM is not merely a pricing anomaly. It is evidence of a marketplace recalibrating around measurable impact.

For publishers, the response is already underway. Diversification, short format innovation, deeper user engagement and premium targeted offerings are replacing reliance on bulk impressions.

The industry’s growth narrative remains intact. But the rules have shifted. In an environment where supply keeps expanding and budgets remain finite, pricing power rests with platforms that can prove outcomes. Walled gardens are set to lead, retail media will consolidate its gains, and AI will quietly enter the allocation mix. The open web, meanwhile, faces its most decisive test yet.