PubMatic: Remnant Ad Prices Are Half What They Were A Year Ago

Fourth quarter data is starting to trickle in on how bad the online advertising downturn is turning out to be. The latest data comes from Pubmatic, an online ad optimization service used by more than 5,000 sites large and small. PubMatic’s fourth quarter AdPrice Index, which I have obtained, shows the average rates paid to these sites for remnant display ad inventory (i.e., inventory they couldn’t sell themselves at a higher price).

In the fourth quarter of 2008, the average price for remnant ads across all sites was $0.26 per thousand impressions (CPM), down 48 percent from the fourth quarter of 2007 and a penny down from the third quarter. Normally, there is a huge jump between the third and fourth quarters because of the holiday season, so this is not a good sign.

Pubmatic breaks down its numbers between small (less than one million pageviews a month), medium (1 million to 100 million pageviews), and large sites (more than 100 million pageviews). The effective CPMs was $0.17 for large sites, $0.30 for medium sites, and $0.61 for small sites, all flat or down a penny from the third quarter.

The vertical categories that saw the highest ad rates for remnant inventory were Business and Finance ($0.83, down 61 percent year-over-year), Technology ($0.59 down 41 percent), and Gaming ($0.51, the one category that was up from a year ago, 31 percent). Sports sites were commanding $0.40 eCPMs (down 8.7 percent from a year ago, entertainment sites were getting $0.38 eCPMs (down 40 percent), news sites were getting $0.34 eCPMs (down 36 percent), music sites were collecting $0.30 eCPMs (down 61.5 percent), and scraping the bottom of the barrel were social networks with $0.20 eCPMs (down 54 percent).

Something tells me this year we are not going to need 300 different ad networks sloshing around the same ads everywhere and taking 30 to 40 percent for their efforts.