Online ads are getting cheaper

[advaita]

I just found this over at valleywag - "Prices in the online advertising's world bargain bin are cratering. PubMatic, a consultancy which helps website owners shop for the highest-paying ads, says that average rates for its largest publishers have dropped from $0.38 per thousand pageviews to $0.18. "

http://valleywag.com/390104/why-online-ads-are-getting-ever-cheaper

The law of supply and demand according to VW - too many suppliers

 

[digitalfog]

I just found this over at valleywag - "Prices in the online advertising's world bargain bin are cratering. PubMatic, a consultancy which helps website owners shop for the highest-paying ads, says that average rates for its largest publishers have dropped from $0.38 per thousand pageviews to $0.18. "

http://valleywag.com/390104/why-online-ads-are-getting-ever-cheaper

The law of supply and demand according to VW - too many suppliers

Glad(?) to see that this scenario which I had been predicting for the past year has come true. In light of all the pundits who have been telling everyone that ad revenue would go up do to bigger budgets, higher quality, more transparency, (add your own here)..., I've always maintained that it all boils down to what you learned in Economics 1A: The laws of Supply and Demand.

Let's face it, there are SO many people putting up sites nowadays. And...there is no end in sight.

However, if you are a boutique shop with a niche marketplace and have the capability to sell ads direct - well then - that market is rockin!

 

[Seabass]

If 10 advertisers get double the traffic this coming next month then they did this month and conversions are the same then all 10 advertisers, in theory, would keep their bids the same, not drop the bid price. More traffic is not a problem IF it converts at the same rate.

The problem with that theory of supply and demand is that folks could put up 100 billion more sites, but traffic is finite and quantifiable and more sites do not mean there will be more traffic necessarily. If they don't have the eyeballs they might as well not exist.

If the prices have come down then it is b/c either a bunch of non-converting traffic has been added to the mix, or a bunch of new traffic sources have been added but advertisers have not adjusted prices up yet based on the conversions, or bad conversions in a bad economy may have driven prices down, or advertisers are just moving away from impression based advertising in a bad economy and more to PPC text ads thus resulting in a collapse of display advertising prices.

They also don't define "advertising". Display, text ads, all combined? What exactly has crashed?
.

 

[tyson55]

The article is right on the money. Exactly a year ago I had seen PPC ads paying between 10-15cents. Now they are down to 3 cents which is roughly 1/3 to a 1/5 of what it was year ago. The cumulative effect of a hundred thousands blogs created every day is now upon the publishers. The situation is akin to crabs in a well where none of them can get due to their nature. I think advertisers might shrink their ad-sense programs if they dont see it performing. Ad-sense content match has been diluted thousands of times due to rampant proliferation of sites. IMO after ad-words, direct search via type-in traffic including typo sites seems to provide the best value to the advertiser.

 

[dnk]

Rates for small websites have increased from $1.15 to $1.29

 

[netmeg]

My EPC for my developed sites is over twice what it was last year, for what it's worth.

 

[weblord]

they're making it like that because there are a few advertisers out there, might be the summer vacation.

 

[Smiler]

Yup summer is rolling in and more people will be spending money on vacation and other luxuries. Summer is always nice.

 

[domainpark]

They also don't define "advertising". Display, text ads, all combined? What exactly has crashed?
.

I agree with seabass

That article seems to only have details on a cost per impression. Not the pay per click industry??

Not to say that the overall pay per click has not declined in recent times.

This article seems to not cover that aspect of online advertising.

In fact I spoke to someone today who has a 6 figure budget and he is paying upwords of $4-5 a click with google and yahoo consistant

 

[R9V.com]

yeah - because the ROI for advertisers wasn't worth it - so many pulled out of online advertising - in my case, advertising on car forums with their prices is just out of hand...

 

[rafaelrls]

If 10 advertisers get double the traffic this coming next month then they did this month and conversions are the same then all 10 advertisers, in theory, would keep their bids the same, not drop the bid price. More traffic is not a problem IF it converts at the same rate.

The problem with that theory of supply and demand is that folks could put up 100 billion more sites, but traffic is finite and quantifiable and more sites do not mean there will be more traffic necessarily. If they don't have the eyeballs they might as well not exist.

If the prices have come down then it is b/c either a bunch of non-converting traffic has been added to the mix, or a bunch of new traffic sources have been added but advertisers have not adjusted prices up yet based on the conversions, or bad conversions in a bad economy may have driven prices down, or advertisers are just moving away from impression based advertising in a bad economy and more to PPC text ads thus resulting in a collapse of display advertising prices.

They also don't define "advertising". Display, text ads, all combined? What exactly has crashed?
.

Very good insight!