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Online ad prices consistently declined in 2008, falling 21% since Q2 and 27% since Q1, with small sites and some verticals most affected by the faltering economy, according to the PubMatic AdPrice Index for Q3 2008.

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The AdIndex, a quarterly measure of online ad network pricing, shows that publishers of all sizes are feeling the pinch of a nationwide economic slowdown. Small sites continue to command better pricing for eCPMs – now at $0.61 on average for Q3 – but these price levels have declined quarter-to-quarter. eCPMs for large sites held steady in Q3, but at a lower pricing base of $0.18.

Key findings:

  • The value of ad inventory for small-sized websites was more than triple the value of large-sized websites in Q3, with values of $0.61 and $0.18, respectively.
  • 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 and reliance on ad networks to monetize unsold premium inventory.
  • The political cycle and holiday season will likely affect ad prices in the short term.
  • The steady growth in online advertising continues to drive the creation of new ad networks and 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 campaign.

“Even though declining budgets are a concern [for marketers], the measurability of the internet shouldn’t be discounted,” said Rajeev Goel, president and co-founder of PubMatic. “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.”

Throughout the year, display advertising pricing has also trended downward across verticals. Specific vertical-market findings:

  • All categories moved down from last quarter, with the exception of technology, which stayed flat.
  • Social networks is still the lowest priced category with sports a close second, coming in at $0.21 and $0.25, respectively.

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  • The social networks vertical continues to experience weak eCPMs, driving the segment to continue exploring new and non-traditional marketing methods to leverage billions of pageviews.
  • Technology sites have remained constant throughout the past few quarters with $0.50 eCPMs.
  • The business & finance vertical remained relatively healthy with $0.86 eCPMs, bucking the trend for the rest of the industry.
  • eCPMs for gaming are down 34% from Q1 2008, but there may be improvement as the holiday season draws near, when gaming companies increase marketing efforts to drive sales.

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  • Entertainment had the most significant drop of all the verticals, dropping 42% from $0.57 in Q1 to $0.33 in Q3.

About the survey: The PubMatic AdPrice Index is a monthly survey of more than than 5,000 websites, approximately 85% based in the US. It is prepared by independent statisticians and industry experts Albert Madansky, Ph.D. and Michele Madansky, Ph.D. The data is the first in a series of quarterly releases of the PubMatic AdPrice Index. Pricing data reflects net publisher monetization via ad networks and excludes ad networks’ share of ad spends as well as inventory sold directly by publishers to ad agencies or advertisers.

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