Fourth quarter data is starting to trickle in on how bad the online advertising downturn is turning out to be. The latest data comes from Pubmatic, an online ad optimization service used by more than 5,000 sites large and small. PubMatic’s fourth quarter AdPrice Index, which I have obtained, shows the average rates paid to these sites for remnant display ad inventory (i.e., inventory they couldn’t sell themselves at a higher price).
In the fourth quarter of 2008, the average price for remnant ads across all sites was $0.26 per thousand impressions (CPM), down 48 percent from the fourth quarter of 2007 and a penny down from the third quarter. Normally, there is a huge jump between the third and fourth quarters because of the holiday season, so this is not a good sign.
Pubmatic breaks down its numbers between small (less than one million pageviews a month), medium (1 million to 100 million pageviews), and large sites (more than 100 million pageviews). The effective CPMs was $0.17 for large sites, $0.30 for medium sites, and $0.61 for small sites, all flat or down a penny from the third quarter.
The vertical categories that saw the highest ad rates for remnant inventory were Business and Finance ($0.83, down 61 percent year-over-year), Technology ($0.59 down 41 percent), and Gaming ($0.51, the one category that was up from a year ago, 31 percent). Sports sites were commanding $0.40 eCPMs (down 8.7 percent from a year ago, entertainment sites were getting $0.38 eCPMs (down 40 percent), news sites were getting $0.34 eCPMs (down 36 percent), music sites were collecting $0.30 eCPMs (down 61.5 percent), and scraping the bottom of the barrel were social networks with $0.20 eCPMs (down 54 percent).
Something tells me this year we are not going to need 300 different ad networks sloshing around the same ads everywhere and taking 30 to 40 percent for their efforts.
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yup. when yahoo and microsoft start giving adsense a run for its money… well… ‘nuf said.
The other thing which is highlighted by this article is that ad networks AREN’T necessarily the best way to monetize traffic. Widgets, job boards, video ads are all nice ways to make a buck.
There’s a new service launched which helps website publishers find the most fitting ad or widget network for their site:
http://www.revenuesolved.com
It asks a few questions then recommends ad networks or other ways to make a $. No need to be an expert.
By using a network which is matched to your audience you’re more likely to get higher CPMs and more revenue.
I run an agency for almost 100 websites and have lots of data.
All I can say is that numbers are not nearly as bad as Pubmatic shows.
I guess Pubmatic are either doing a lousy job in optimizing revenues for publishers or they have a crappy network of sites. Don’t forget they are basically a network themselves - Komli focused on INDIAN traffic - Need I say more??
Question.. where can I go and pay 59¢ CPM to run ads on technology sites? Seriously, I’d like to check it out.
Try RightMedia.
Although not on a CPM basis at this time, you may want to check out http://beta.technoratimedia.com, which has a number of Technology Sites. If you have any questions, please feel free to send me an email.
You can also try AdFlex service “http://www.pubmatic.com/adflex/” provide by PubMatic has approx 5000 web sites with number of verticals.
http://www.pubmatic.com/adflex/
So if a social network gets
50,000,000 page views per month, that only generates US$10,000 per month???
50,000,000/1,000 * .2 = 10,000???
That would not even pay for one engineer! How can social networks stay in business???
general VC ignorance
I guess it was a good idea for me to turn down an offer to join a “me-too” social networking company in Hong Kong.
This is a terrible business model!
1. That’s not much traffic for a social network site
2. You’d typically have more than one ad on a page
3. These are only ad rates for remnant inventory (ie: ad networks, adsense, etc), not inventory companies sell themselves - or premium ad networks like Glam
Another bad sign is the huge rise in co-op ads on TV, especially the cable networks like CNBC. When the networks have to run ads for a piece of the sales revenue instead of fees, you know they’re unable to sell space/time to the regular crowd. If I see one more tv-spot for “government gold-clad coins”, I’m going to puke.
hey, look on the bright side. at least we wont see any startups with banners as a business plan.
looking forward to summer and post summer startup coverage.
I saw this coming without the report. This is probably reflecting much earlier times in the advertising market. I am sure many if not all social networks are feeling a serious pinch on revenue. Profits? Ha! Social networks will be lucky to make it to 2010 if things stay the same.
How comparable are these time periods/groups? If Pubmatic has either gained or lost a substantial number of customers that could distort the data substantially.
I guess they could turn themselves into nonprofit charitable organisations … since it looks like if these numbers are true, 95% of them will never make enough money to even cover the costs of a single engineer.
This just shows that pubmatic ads little value to managing remnant inventory. Monetizing your website is not a simple as plugging in some code and praying. There is real (world) work to be done, especially if you want to add value to you reader, advertisers and bottom line.
Conclusion: The publishers that use pubmatic have increasingly shitty inventory.
I just blogged about this because I’ve been seeing decreasing revenue from ALL providers, but this is definitely a concern for a claim like this which actual figures:
“How comparable are these time periods/groups? If Pubmatic has either gained or lost a substantial number of customers that could distort the data substantially”
Makes you wonder. The only thing I’m sure of is I’m not the only one experiencing a big slump in making money from online ads.
Sammy
http://www.fka200.com
Jonas is right. Erick is making broad market statements deduced from a provider that doesn’t really work that well. Does anyone here use Pubmatic? I do - they shuffle all traffic to one network, regardless of the number I have relationships with. In addition, they only have built-in relationships with a few ad networks - and not always the best. If I “bring my own” ad network to them, I have to update the pricing daily - manually. And, the yield I get from Pubmatic is not as good as other alternatives (e.g. AdSense). I use Rubicon, Right Media, Pubmatic and have relationships with dozens of ad networks. The data I see from Pubmatic is more reflective of the usefulness (or lack thereof) of their tool - not neccessarily the ad market in general. Not to say we aren’t in an “stagnant online display ad market” but just not ready to accept Pubmatics numbers at face-value.
my site deals with changing prices at the time. true that some inventory is obviously better than others, but it isn’t just about the inventory, it is about the pricing that comes from the ad networks, which comes from the advertisers. and face it, the real conclusion is that we are in a recession.
i’d love to hear from a publisher that is doing better today than they were two years ago
Prices must go up, no one can work like that. Vogue print CPM rate is $100 and then you get stuck at page 214. Web CPM in prime sites are much lower as much as $8 CPM in YouTube and we see the ridiculous prices presented here of $0.26 CPM.
Why do I pay Google AdWords $5 CPC for a word like fashion or camera and get 0.01 CPM with AdSense? Ha Why?
sorry man, you pay a $5 CPC on google because they are smarter than you and have a virtual monopoly on the search advertising market.
The best part is that they spit your ad into syndication and pay a publisher $0.25 per click then keep the rest. It doesn’t matter because you are still converting enough to keep it ROI positive and everyone wins.
Pubmatic points to an accurate trend in the space. Smaller nichier sites will be forced to prove their worth via ROI because discretionary ‘brand’ and ‘tail’ dollars have dried up or are at least, much harder to come by.
The larger sites were already driving ROI based on shear volume.
It is a brave new world.
In Latin America eCPM are even lower than 0,26
Remnant inventory starts at 0,01 USD
This data is entirely consistent with my experience with a small site - the December pop we were used to seeing was non existent last year. A site that was paying for hosting, beer and pizza is now only paying for hosting.
I want my beer and pizza back.
These statistics are limited to Pubmatic’s publishers so I feel really sorry for anyone using Pubmatic…
There are definitely some bargains out there for advertisers looking for vertically targeted CPM inventory. Go to an ad network, buy a combo of geo and content targeting, and then add on a CPC-based retargeting solution like LeadBack or retargeting.com.