Report: Online Advertising Going Down, Down, Down
ADOTAS – Online advertising is taking a big hit thanks to the ailing economy, according to new research from PubMatic. The Quarterly PubMatic AdPrice Index for Q3 of 2008 found that online ad prices declined overall this past year by 27%.
All publishers appear to be affected. 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, PubMatic reports. eCPMs for large sites held steady in Q3, but at a lower pricing base of $0.18. The average display ad garnered $0.27 in Q3, a drop of $0.05 compared to Q2 and a drop of $0.23 compared to Q4 of last year.
“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. We’ve observed this effect for the past four quarters and it is reflected in the pricing for all U.S. publishers,” said Rajeev Goel, president and co-founder of PubMatic. “Even though declining budgets is a concern, 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 to methods and tactics that allow them to better measure ROI.”
Other findings from PubMatic AdPrice Index for Q3 2008:
- 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 low value on large sites is creating pressure on their direct sales channel, which remains the primary way of monetization
- The political climate could affect ad prices in the short term and the same can be said for the holidays
- 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
PubMatic provides more than 5,000 Web publishers real-time ad optimization, works with hundreds of ad networks and has created thousands of new publisher/ad network relationships. PubMatic is a service of Komli and is venture backed by Draper Fisher Jurvetson, Nexus India Capital, and Helion Ventures.
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