Online Ad Prices Fall For Third Consecutive Month

The average price of online advertising inventory dipped slightly between May and June, marking the third consecutive month that online ad prices have fallen. While June's decline was modest -- just a penny per ad -- the downward trend signals that the online medium may be suffering from the same economic malaise as the overall media economy.

The findings, which come from PubMatic, which began reporting an online AdPrice Index three months ago, reflect the average net price more than 3,500 Web sites generated from online ad networks.

While PubMatic doesn't have year-ago data yet to determine whether the declines are due to seasonal price fluctuations, Rajeev Goel, cofounder and general manager of PubMatic, believes the results are at least partly due to weakening economic demand.

"Online advertising is in a holding pattern like many sectors of the US economy," he said. "I think what we're really seeing is that the economy is in a wait-and-see mode. A lot of economists are saying we're probably heading into a recession. It will probably be a light recession, but everyone is in a wait-and-see mode and that is affecting ad prices."

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The latest data from PubMatic's AdPrice Index shows that overall online ad pricing made a less than 1% change, moving from $0.37 to $0.36, but there were a few surprises.

Small Web sites (those with less than 1 million page views per month) in June dropped a significant $0.32 from May, landing at an average CPM of $0.81, down from $1.13. Medium Web sites (those with 1 million to 100 million page views per month), however, made a moderate $0.13 jump from $0.33 in May to $0.46 in June. Large Web sites (those with 100 million-plus page views per moth) also rose, but only slightly, moving from May's $0.21 to June's $0.23.

The PubMatic data also finds only one vertical category out of five showed any improvement in CPMs. Entertainment sites climbed to $0.40 in June from May's $0.29.

The biggest drop in the verticals, by far, were news sites, which went from $1.10 in May to less than half of that -- $0.48 -- in June.

Gaming, which was at $1.00 from the month of May went down in June to $0.80. Social networks, the lowest performing category already, went down another $0.05, going from $0.32 in May to $0.27 in June. The technology vertical had little movement, but it was still down; in May its average CPM was $0.65 compared to June's $0.63.

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