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.   

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.

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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