New Index Reveals Surprising Ad Pricing Trends

Publishers of small Web sites earn almost three times the money per ad than the largest sites, the newly created AdPrice Index suggests.

PubMatic, a Palo Alto, CA, company that automates and optimizes ad-serving decisions, developed the index, which is based on data collected from more than 3,000 publishers of all sizes over the past three months.

PubMatic founder and CEO Amar Goel said the AdPrice Index is an industry first that PubMatic is offering for free. “There is now transparent, industry-wide data as an index,” he said. “There has never been an index of data about ad prices…It actually provides data about where online ad prices are trending.”

He said the information will help publishers, ad networks, and advertisers plan and manage their businesses.

The first findings show that publishers of small sites — described as those receiving under a million page views monthly — are paid an average of $1.18 effective cost per thousand impressions (eCPM), nearly triple the 38 cents eCPM paid to sites with more than 100 million monthly pageviews.

“That’s not necessarily the most intuitive thing people would have guessed up front,” Goel said. “Traditionally advertisers have paid more for the large sites because of the brand of a Yahoo or a Microsoft or something like that.” He pointed to an Avenue A/Razorfish report suggesting the agency had increased its spending on vertical sites at the portals’ expense. “This [AdPrice] data would confirm that in spades,” Goel said.

Goel said he was also surprised a bit to see that, while eCPMs for social networking sites are among the lowest by vertical, they increased 69 percent in the three months measured, going from 22 cents in January to 37 cents in March.

“That gets at all the work people are trying to do (in social network monetization) and all the advertiser interest in trying that out,” said Goel.

He said he is confident the AdPrice Index is an accurate representation of the industry, noting it was prepared by two well-respected statisticians: Michele Madansky, a former vice president of global market research for Yahoo, and her father, Albert Madansky, who is an Alexander Professor Emeritus of Business Administration at the University of Chicago Graduate School of Business.

“It’s definitely statistically significant,” Goel said. “We think it is pretty solid.”

In a statement announcing the AdPrice Index, Greg Stuart, former CEO of the Interactive Advertising Bureau and a member of PubMatic’s advisory board, said the data shows “advertisers are relying on the targeted, niche audiences that smaller Web sites represent, leading to a significant variance in net publisher eCPMs from ad networks depending on Web site size.”

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