Online CPM rates in the new era (2009)

In 2009 content companies will need to deal with the long-lasting effects of a recession-induced ad slowdown. As well, with the cost of being online limited only to an internet connection, more and more consumers should find their way to the desk instead of the movies and more expensive entertainment venues, thereby increasing the supply of online impressions. Together, these factors are driving down internet ad prices and making it even harder to monetize media.

Cost-per-thousand ad impressions for online publishers are generally off about 20%, according to several people on both the buying and selling side, and sell-through rates are dropping. And where publishers used to unload 60% of their inventory, some are now able to sell only 30%.

But perhaps indicating more trouble ahead is just how cheap the low end of the market has gotten. An August study from the Interactive Advertising Bureau and Bain Capital found the average CPMs on ad networks ranged from 60 cents to $1.10, only 6% to 11% of the prices publishers could command when they sold inventory directly. And the pricing for networks appears to be getting worse not better. CPMs for ad-network-sold ads are dropping, some by 50% year-over-year, according to a recent study of pricing by Pubmatic, which tracks pricing among many Long Tail ad networks.

Those price drops can directly affect the cost of higher-end ad impressions. Consider that the opportunity cost of discounting a CPM is only what you would otherwise be able to sell that for. As the prices for remnant inventory get cheaper, there’s less short-term reason to uphold rate-card prices if a client demands a discount.

Put another way, if you’re a large publicly-traded ad seller with virtually unlimited supply that needs to make its numbers, are you going to walk away when an advertiser dangles a check in front of you but demands a 10% decrease in premium CPMs to get the buy?

No related posts.

2 Responses to “Online CPM rates in the new era (2009)”

Author comments are in a darker gray color for you to easily identify the posts author in the comments

1. pete garbowski says:

   January 16, 2010 at 6:31 pm

   Have any stats on the Average premium CPM?