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Advertising rates dropping, Social Networks lowest CPM

PubMatic published its monthly AdPrice Index for July 2008 and it showed ad rates declining in most markets, especially Social Network sites. PubMatic draws its data from 4,000 Web sites that take ad network advertising, 85% of which are based in the U.S.

 

Surprisingly, small web sites can demand significantly higher CPM rates than larger web sites. This may be due to better targeting smaller niche markets that advertisers consider more valuable.   

pub small

Advertising rates vary in each market space too. News sites and gaming sites traditionally have the highest ad rates...Social Networks have the lowest rates. pubmaticmarkets

The average CPM rates across all web sites and market segments is just $.36 per thousand page views.

 

How many page views are required to generate $1M in advertising revenue? Based on this average CPM of $.36 it would take 2,777,777,777 page views, or about 2.8 Billion.

 

Now you know why Steve Ballmer says the advertising business is all about scale. It takes billions of page views to make any money. The more page views and scale you have, the more advertisers want to advertise on your ad network. The more advertisers you have competing...the higher the ad rates.

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Published Tuesday, July 15, 2008 11:57 AM by Don Dodge

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Chris Treadaway said:

"Purchase intent" is almost non-existent in social media, and probably will be for a long time.  That said, a 30 cent CPM is still really cheap especially with all the targeting (age, geo, etc.) that is possible.  In some cases it is worth the investment especially for branding/awareness campaigns.

July 15, 2008 12:15 PM
 

Don Dodge said:

Chris, The promise of Social Networks, in the advertising sense, is all the implicit (behaviors) and explicit actions (clicks) that allow advertisers to better target their ads.

Most Social Networks have not been able to convert all this "attention data" into higher CPMs. Over time I think they will. It is still early, and for now ad rates are cheap...relatively speaking.

July 15, 2008 1:01 PM

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About Don Dodge

I have been in the software business for more than 20 years. I started my software career with Digital Equipment Corp, aka DEC, in the database group. I worked with 5 software start-ups over the next 12 years. Forte Software was the first multiplatform object oriented development environment. AltaVista was the first search engine on the web. Napster was the first P2P file sharing network. Bowstreet was the first web services development environment. Groove Networks was the first secure P2P collaboration platform. Now I am at Microsoft...the biggest start-up in the world... working with VC's and start-ups in the greater Boston area. The goal is to help VC's and start-ups be successful with Microsoft, and together, provide great products for our customers.
Don Dodge
Information Worker Productivity
I have been in the software business for more than 20 years. I started my software career with Digital Equipment Corp, aka DEC, in the database group. I worked with 5 software start-ups over the next 12 years. Forte Software was the first multiplatform object oriented development environment. AltaVista was the first sear...
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