Display Ads Pricing down by 27%

Recession/Economic downturn is seeing a sharp decline in display ad pricing – and as per Pubmatic’s AdPrice Index, the overall advertising budget has been slashed by 27% – Entertainment sector seems to be one of the most prominent one – pricing has dropped 42% since the last qtr.

  • 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 21 cents and 25 cents, respectively
  • Small sites (less than a million PV per month) continue to command better pricing for eCPMs – now at $0.61 on average for Q3 – but these price levels have declined quarter-to-quarter
  • Overall, Entertainment dropped 42% from 57 cents in Q1 08 to 33 cents in Q3 08
  • The value of ad inventory for Small sized websites was more than triple the value of large sized websites in Q3 08, with values of 61 cents and 18 cents, respectively [source]

    • eCPM Drop

  • Business and Finance sites are down 22% from Q2 08, dropping from $1.10 to 86 cents (eCPM rate)
  • Gaming sites are down 26% from Q2 08, dropping from 65 cents to 48 cents
  • News sites are down 36% from Q2 08, dropping from 56 cents to 36 cents
  • Sports sites are down 14% from Q2 08,dropping from 29 cents to 25 cents.

    • Pubmatic monthly survey covers 5,000 sites (85% based in US), but the Indian story is no different.

    What’s happening in Indian market?

    ZenithOptimedia, a media buying agency has reduced its forecast for adspend growth to 4.3 per cent in 2008 (down from the 6.6 % growth forecast it had published in  June earlier)..

    • The display ad slowdown has started and big advertisers like IBM have slashed the budget almost by 40%.
    • Travel sites (i.e. OTAs), one of the most active sector in display advertising spend have slashed the budget bigtime and many of the newly launched ad networks are facing the heat – they are offering packages (even CPC) at a damn cheap price to advertisers.

    These are testing times for content sites/portals and the downturn will (hopefully) witness evolution in the business model (maybe death of freemium)?

    What’s your take on these numbers?

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