• by Rajeev Goel , May 14, 2008

Despite earlier speculation that the online ad space may be spared the effects of a downturn, the fallout from the soft economy appears to have reached the online advertising industry, dragging down monetization rates across many segments.

According to the May edition of the PubMatic AdPrice Index, publisher monetization across the board has dropped by 23% during the past month. The reason? The growth in online advertising is slackening, causing ad network payouts to fall.

The index shows that eCPMs for large Web sites (more than 100 million page views per month) dropped 52%, from 38 cents in March to 18 cents in April. Medium Web sites (1 million to 100 million page views per month) were nearly flat, with monetization dropping from 34 cents in March to 33 cents in April. Small Web sites managed to weather the storm, increasing monetization from $1.17 in March to $1.29 in April.

While somewhat unexpected, this news should not frighten enterprising publishers. There are a number of strategies that publishers of any size can take to shore up online advertising revenues. For example:

• Network diversification: Don't just rely on one or two ad networks. Using several networks will allow you to find a mix of optimum advertising campaigns.

• Monetizing international traffic: Focus on monetizing international traffic with foreign-based ad networks. While it is often a minority of a publisher's traffic volume, international traffic, insulated from the weak dollar and supported by growth environments outside of the U.S., can prove highly lucrative.

• Monetize every impression: Make sure that you have a guaranteed-to-deliver ad network in the mix. These networks may not pay the highest eCPMs, but they will always show an ad in available spots. Examples include Google AdSense and CPX Interactive.

• Call your ad network representative: Have a conversation with your representative, tell him or her more about your site and your audience. When there's a juicy new campaign, you're higher on the list to have that campaign targeted to you.

• Create a media kit for your Web site: Describe your site to potential advertisers, including your audience demographics, geographic locations, frequency of site visits, etc. Although this strategy may not lead to direct sales immediately, it adds credibility and makes your site look and feel more professional.

• Re-examine your ad server options: Find out from your friends what they're paying, then renegotiate your contract. Many publishers have been paying the same rate for years, but the cost of ad serving has decreased over time. Another possibility: check out some of the many free options available today.

Clearly, online advertising is not recession-proof. However, it's still possible to protect your revenue, even as monetization rates fall. Make these changes now and you'll be well positioned for whatever the future brings - more sluggishness in the economy or a pickup in spending.