Ad Network Display Prices Continue to Fall

  |  October 15, 2008   |  Comments

Average prices for display ads dipped below $0.30 in Q3, according to PubMatic.

Prices for display ads sold through networks have dropped for the second quarter in a row, dipping below $0.30 on average, according to PubMatic.

New data from the company's AdPrice index suggest effective CPMs from July through September were $0.27 -- down 21 percent sequentially and 27 percent compared with this year's first quarter.

Web sites of all sizes and nearly all verticals saw their ad network rates shrink. Among verticals, news sites led the decline, shrinking 36 percent sequentially to $0.36. Other big price declines affected entertainment sites, down 27 percent to $0.33; gaming sites, down 26 percent to $0.48; business and finance, down 22 percent to $0.86; and social networks, down 22 percent to $0.21.

Social networks last quarter commanded the lowest eCPMs among content types ($0.21). The highest was technology ($0.57), the only reported category in which ad prices did not change from Q2 to Q3. However the tech vertical has fallen 25 percent since Q1, a steeper decline than many other categories have felt.

Small Web sites continue to boast much higher ad network rates than large ones. Sites with under one million page views per month drew eCPMs of $0.61, nearly three times that of sites with 100 million-plus views, where the average price was $0.18. However, small sites experienced the steepest price drop, tanking 29 percent from the previous quarter, compared with a 5 percent ($0.01) drop for the largest sites.

Numerous factors have conspired to lower display ad prices in recent months. They include the glut of social network ad inventory, the rise of vertical ad networks, and doubts about the branding effectiveness of traditional IAB standard ad formats.

It's also possible that PubMatic has improved the accuracy of its price data as it has added sites, and that its earlier price estimates were lower than industry averages. The firm currently measures 5,000 Web sites, up from 2,000 in Q1.

Rajeev Goel, president and co-founder of PubMatic, said the network optimization firm employs outside statisticians who have developed a sampling methodology that provides a "steady base of data within each industry." But he would not deny the possibility that the earlier index was less representative of industry-wide ad prices than the current one.

A bigger issue, Goel believes, is the report's reliance on sequential rather than year-over-year comparisons of quarterly price data. That's a necessary evil, and a short-lived one, since the index only began compiling ad rate information in Q4 2007.

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Zachary Rodgers

Until March 2012, Zach Rodgers was managing editor of ClickZ's award-winning coverage of news and trends in digital marketing. He reported on the rise of web companies, data markets, ad technologies, and government Internet policy, among other subjects. 

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