Mediapost has reported that online display advertising rates have hit the lowest point this year in the US with the average display ad page generating just 27 cents CPM in Q3 of 2008. This is no great surprise if you follow the trends in the market or work in this arena, but the article’s commenter seems a little less certain of the cause;
“It’s not surprising that it’s been trending down, but what is surprising is the size of the drop,” says Rajeev Goel, president and co-founder of PubMatic. “What we don’t know yet is whether the trend is due to increasing capacity on the supply side, or to the fact that the economic malaise is beginning to find its way into the online ad industry.”
Well, Im pretty sure I can tell you what has caused it. Firstly advertisers are tightening their belts, no risks are being taken in such an uncertain time. And secondly, they are channelling their ad spend into channels with a better return, like paid search and natural search engine optimisation. A recession is no time for elaborate brand awareness campaigns, it si a time for keeping things tight, keeping profitability solid and riding the storm. There is a time and a place for online display advertising but unfortunately for publishers, now isn’t it.
The net affect of this is with less advertisers booking space, and those that do driving a hard bargain, publishers are forced to take what they can get, and sell of the remnant inventory cheap. There will still be exceptions to the rule, but not too many, and most advertisers will be driving a hard bargain for anything they do buy. Good news for the media buyers (if your clients still have a budget that is!) but not so good for the publishers.