| CPM Prices Falling Precipitously |
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Advertising Age, Monday, January 26, 2009, 12:15 PM
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Several factors are at work driving down CPM prices, Advertising Age reports. For starters, the economy is tanking, and advertisers are cutting back on their brand campaigns, which includes display ad spending. Then there's the expanding glut of online inventory that's putting further stress on prices and making it even harder to monetize content.
According to unnamed sources on both the buying and selling sides, cost-per-thousand ad impressions for online publishers are about 20% this year, and whereas publishers used to unload 60% of their inventory, some now sell only 30%. And the low end of the market has gotten cheaper: according to an August study from the IAB and Bain Capital, the average CPMs on ad networks ranged from 60 cents to $1.10, prices that are only 6% to 11% what publishers could get from selling inventory directly. And CPMs for ad-network-sold ads are dropping, some by as much as 50% year-over-year, says a recent study from Pubmatic, which tracks pricing among long tail ad networks.
These price drops also affect the cost of higher-end ad impressions, the report says: as remnant inventory gets cheaper, there's less of a reason for to uphold rate card prices when a client demands a discount. As IAB CEO Randall Rothenberg laments, media agencies tend to buy the web like TV, using reach and frequency modeling to get volume. This is fine, he says, but these advertisers aren't paying for it the same way. "They say they want mass reach, scale, reach and frequency, but they want to pay for it as they pay for (direct response) -- only if a sale is made," he said.
Read the whole story at Advertising Age.
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