Online Ad Price Decline Drives Need for Accountability and Measurability

by Jack Loechner, Oct 21, 2008, 8:15 AM

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Online Ad Price Decline Drives Need for Accountability and Measurability

According to the PubMatic AdPrice Index for Q3 2008, online ad prices declined overall this past year by 27%. Small sites continue to command better pricing for eCPMs, now at $0.61 on average in Q3, but these price levels have been declining quarter-to-quarter in 2008. eCPMs for large sites held steady in Q3, but at a lower pricing base of $0.18.

Data from PubMatic AdPrice Index for Q3 2008 show that:

• The online ad price decline from Q2 to Q3 in 2008 was 21%; throughout the year, display advertising pricing has generally trended downwards across website sizes and verticals
• The Business & Finance vertical remained relatively healthy with $0.86 eCPMs, bucking the trend for the rest of the industry
• eCPMs for Gaming are down 34% from Q1 2008, but there may be improvement as the holiday season draws near, where gaming companies increase marketing efforts to drive sales
• The Social Networks vertical continues to experience weak $0.20 eCPMs, driving the segment to continue exploring new and non-traditional marketing methods to leverage billions of pageviews
• Technology sites have remained constant throughout the past few quarters with $0.50 eCPMs
• Entertainment had the most significant drop of all the verticals, dropping 42% from Q1 to Q3

Rajeev Goel, president and co-founder of PubMatic, said "Online advertising is one of the key indicators in the U.S. economy, as marketing spend is typically one of the early cuts when realigning corporate expenses... the measurability of the Internet shouldn't be discounted. This overall downward trend in the economy may be a call to marketers to segment more of their budgets... that allow them to better measure ROI."

Key takeaways from the current study:

• Smaller sites are affected more closely by the economy, which causes dramatic pricing fluctuations
• The comparatively higher rates for small sites are caused by a lack of sales force resources, where they rely primarily on ad networks to monetize unsold premium inventory, which is normally sold through a direct sales force
• The political cycle and holiday season could affect ad prices in the short term
• The steady growth in online advertising continues to drive the creation of new ad networks; the change in the economy may favor ad networks that do a better job of measuring value and who can manage their costs according to the fluctuations of ad campaigns

To read the complete release, visit here. Or, The Q3 2008 AdPrice Index is available as a white paper here.

 

 

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