Online Ad Prices
I read this article in Advertising Age about Social Networks Sink Online-Ad Pricing, it’s a good read. Advertising Age quoted some statistics from May 2009 to May 2010 from Comscore, here is the quote from Advertising Age:
“A recent analysis by ComScore shows social networks, primarily Facebook and MySpace, have over the last year drawn an average CPM of only 56 cents, compared to the $2.43 average for the internet at large.”
What Does This Mean?
You can draw your own conclusions about what this does or does not mean. Essentially markets are supply and demand and the better a market can gauge the value of a product or service, the faster a stable price will be achieved. Of course there are many factors, including supply and demand as well as effectiveness. Just because social sites drive inventory does not mean they drive hefty revenue. And it is amazing how easy it is to effect supply and demand. Imagine if Facebook has three ads per page and removes one, all the sudden inventory drops by 33% and individual ad CTRs and responses may increase (purely hypothetical). The same is true if they decide to increase advertising units on a page.
Why Should You Care?
The reason I wrote this is not to get into the intricacies of pricing and all the variables but to simply point out that you can purchase some cheap online advertising and test it for yourself, it may or may not work for you. Whenever you find a niche that is relatively cheap it is worth testing and then exploiting before it’s gone.