The Rubicon Project Delivers Industry Trends

Since it was founded a little over a year ago, the Rubicon Project has made some big strides in our industry. As an ad-serving tool designed to deliver and optimize publisher ads on ad networks, the company has made a mission of ensuring that as many ad impressions as possible are paid for (it estimates direct Web sales teams only sell 20 to 30 percent of their total inventory).

In the process, Rubicon has worked with almost 400 ad networks to optimize unsold ad space and to match the right networks with the right advertisers. But it does so in a roundabout kind of fashion — at least from the media buyer’s perspective. The company doesn’t work directly with advertisers. But that doesn’t mean it doesn’t have anything to directly offer us.

Rubicon’s wealth of experience in monitoring available inventory and ad placements is routinely translated into quarterly market reports that offer a fascinating peek into industry trends. Its latest offering — the Q3 edition of its “2008 Online Advertising Market Report” series — is no exception. Here’s a sample of what the company uncovered based on its delivery of 28 billion impressions to 240 million unique Internet users across almost 270 ad networks in Q3.

Top Performers

Ever wonder which vertical currently leads the pack when it comes to successfully boosting its CPMs (define)? That honor goes to news and reference sites, which outperformed other verticals with a 36 percent CPM increase (compared with its Q2 CPM rates). Also coming out on top were the technology and TV and film channels, which saw CPM increases of 35 percent and 27 percent, respectively. Food and drink sites, meanwhile, had the highest prices during Q3 overall. And on the network side, behavioral networks were able to garner the highest CPMs.

Pricing Woes

Social networking sites saw CPMs turn down slightly, as did related channels like young adult (with an 8 percent decrease), music (14 percent), and entertainment (17 percent). But while average CPMs served across many sites and networks dropped by 11 percent from the second quarter, with some falling as much as 20 percent, other channels saw a 40 percent increase.

There are several ways media buyers can interpret this information to decode the state of the market and inform their planning and purchasing decisions. The strong performance by news and reference sites, for example, indicates an ongoing loyalty among advertisers and agencies to these trusted properties. Compare this with social networking sites, which many still deem risky when it comes to content. In determining which property to align one’s valued brand with, news sites have a notable edge over social sites with their unpredictable user-generated content.

Meanwhile, predictions about downturns in U.S. ad spending and an impending 2009 recession is certain to affect publishers and networks. Recently, ZenithOptimedia reduced its U.S. ad growth forecast for 2008 from 3.4 percent to 1.6 percent and lowered its 2009 estimates from 2.6 percent to just 0.7 percent. A Barclays Capital Internet analyst recently lowered his U.S. online-ad-spending estimate, as did a JP Morgan analyst of his U.S. display market forecast, research firm eMarketer, and others. With uncertainty looming, buyers will have to stay abreast of resulting industry changes that could alter the media environment we’ve grown so accustomed to maneuvering in.

Rubicon has a few final trends to share that media buyers should find most interesting. According to Frank Addante, founder and CEO of the Rubicon Project, vertical networks are on track to have higher effective CPMs but are destined for lower fill rates. Behavioral networks will continue to grow because of their ability to reach such a large audience. And European and Asian markets are on the rise, based on Rubicon’s predication that 40 percent of all U.S.-based site traffic comes from international visitors.

Thanks to Rubicon for delivering more than just optimized ad impressions.

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