Thursday, October 16, 2008

Online CPMs fell 46% since January

The average online advertising rate plunged by almost half in the first nine months of the year, according to an industry survey.

Demonstrating that even interactive advertising is not immune to the deterioration of the economy, PubMatic, a company which helps publishers optimize their revenues, reports that the average rate for 1,000 ad impressions (also known as CPM for "cost per thousand") fell to 27 cents in the third quarter from 50 cents in the fourth quarter of 2007. That’s a decline of 46% in the space of nine months.

PubMatic says its survey is based on the prices realized by the 4,000 publishers it assists in getting the most revenue for their available ad inventory. The company has been publishing this survey since the first of the year and, in the absence of any other similar ongoing report, the data gives a sense of the direction of the market.

In this case, the direction this year has been most assuredly down. After climbing in the first three months of the year, ad rates fell sharply in April, flattened from May through June and then plunged again in August, according to the survey.

7 Comments:

Blogger tom said...

I have an outdoors blog with google ads that verifies this trend.

8:43 AM  
Anonymous Dave D. said...

...I read you article, I read PubMatics report, neither define " CPM ". I just gotta know; what's a CPM ?

10:30 AM  
Blogger tom said...

CPM: Cost per 1,000 ad impressions.

If a cpm were $1, you'd pay a publisher 1 for 1,000 ad impressions.

Mind you these are for banner ads, which pay the least; text-based ads linked to search engine returns pay much better.

12:56 PM  
Blogger Tom said...

CPM = "cost per thousand" - it's a term more from TV/ radio/ online than from print media. It's the cost of reaching a fixed number of viewers of the advertising.

2:55 PM  
Anonymous Dave D. said...

...Thankyou.

8:17 PM  
Blogger Ed said...

More interesting are the reasons for the crash - it's tempting to simply blame lack of advertiser demand in an economic downturn, but I think that's only one piece of the equation. As more and more users come online with high speed internet, they "consume" more and more pageviews. Supply of pageviews is exploding (see Facebook and MySpace's stats as an example). This trend is only accelerating, especially as advertiser tools from both Google (Doubleclick) and Yahoo! (AMT) make it trivial for anyone to slap display ads on their site.

Low CPMs (at least for non-niche topics) are here to stay, even when the economy eventually comes back. Move to CPA (cost per action) now if you haven't already.

4:11 AM  
Anonymous jacob said...

I don't disagree that there's broad and deep downward pressure on display advertising rates, but the index--which, frankly, appears rather noisy for market segments--appears to paint a more varied picture. Rates at news sites are unchanged from Q1 to Q3(though Q2 rates were 55 percent higher, and there appear not to be any data for Q4 07). And rates at medium sites that receive between one and 100 million page views monthly were all over the place but ultimately down 20 percent (This may be because Pubmatic's data is limited in these areas, and hence prone to greater sampling error, though I have no idea). Moreover, because the index is weighted heavily towards 'large' sites, which receive 100 million pageviews or more a month, the steep decline reflects ad rates there more than anything else. Yes things are bad, but if the report is accurate, some areas have weathered the decline a bit better.

8:54 PM  

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