Online advertising trends show that only savvy and well-focused small web publishers are making the best out of an overall decline in ad pricing due to a significant slowdown in the US economy. Before what is already impacting large and medium-sized web sites can affect your site too, it is good to look at the specific data emerging from these statistics while looking at the possible strategic ways out.

PubMatic, a unique online service that automates and optimizes ad inventory decision-making for Web publishers, just released its second monthly PubMatic AdPrice Index, an industry-wide measure of online ad network pricing for publishers.

The index shows clearly the impact of the raising economic slowdown in the U.S. on the online advertising industry, with, - check this out - overall monetization dropping by a chunky 23 percent.

The PubMatic AdPrice Index reveals surprising weakness in monetization for the vast majority of Web sites. Interestingly large Web sites fared the worst while small Web sites managed to maintain their monetization rates.

eCPMs for large Web sites (more than 100 million page views per month) dropped dramatically by 52 percent from 38 cents in March to 18 cents April.

Medium Web sites (1 million to 100 million page views per month) were nearly flat, with monetization dropping from 34 cents in March to 33 cents in April.

Small Web sites managed to improve their monetization, increasing from $1.18 in March to $1.29 in April.

What is critical for any serious web publisher at this point, is to look more objectively at the traffic and monetization stats of the last 2-3 months, and where the trend is not a clearly positive one, to seriously consider all or some of the three strategic solutions suggested in this report.

The information collected and used in the PubMatic AdPrice Index is based on data from over 3,000 publishers and billions of ad impressions.

Here more details:

PubMatic Co-founder and General Manager Rajeev Goel explains the PubMatic AdPrice Index

PubMatic AdPrice Index

Key Findings

• On average, Web site monetization dropped by 23 percent from 49 cents in March to 38 cents in April. Pricing data reflects net publisher monetization via ad networks and excludes ad networks' share of ad spends as well as inventory sold directly by publishers to ad agencies or advertisers.





• eCPMs dropped significantly in most categories and verticals. However, small Web sites, consistent with earlier findings, continued to outperform medium and large Web sites.





• In April, average eCPMs dropped 52 percent for large Web sites (to $0.18) and 2 percent for medium sites (to $0.33). Conversely, small niche Web sites saw a 10 percent increase (to $1.29).





• Social networking sites lead the plunge among verticals, with monetization dropping 47 percent, from $0.37 in March to $0.19 in April, below January lows of $0.22.





• Entertainment site monetization dropped 17 percent from $0.40 in March to $0.33 in April. Gaming and Sports sites were down marginally (4 percent and 5 percent, respectively). Technology remained relatively flat at $0.83 in April vs. $0.82 in March, but is still off January highs of $0.92.





• 77 percent of small Web sites garnered net publisher eCPMs from ad networks of under $1.00, compared with 95 percent of medium Web sites and 100 percent of Large web sites.

  
  
  

• Across all Web sites, the range of eCPMs was $0.002 to $18.45.

To combat the drop in monetization, many publishers are adopting best practices to maintain or grow their Web site revenues. These best practices include:

1) Network diversification

Working with multiple ad networks (as opposed to one or two) to find the right mix of optimum advertising campaigns.

2) Monetizing international traffic

Working with foreign-based ad networks to better monetize international site visitors. While international traffic is often a minority of a publisher's traffic volume, this traffic can be highly lucrative because of the weak U.S. dollar and the growth environment outside of the US.

3) Segmentation strategy

Segmenting a Web site into various categories (finance, travel, lifestyle) and using different ad tags for each category. Most ad networks are better able to target relevant campaigns to a Web site's inventory as a result.

Reference

Methodology

• The PubMatic AdPrice Index is a broad-based measure of ad network pricing information based on anonymous data from over 3,000 publishers who work with PubMatic for ad network and ad layout optimization services. Approximately 85% of these publishers are based in the US.

• The pricing data reflects the pricing of text and banner inventory sold to ad networks only, and does not include inventory sold directly to advertisers

• The pricing data reflects net publisher monetization, not gross advertising spend or the money paid by the advertiser to an ad network

Segment Definitions

• Small Web site segment: Less than 1 million page views per month.

• Medium Web site segment: Between 1 million and 100 million page views per month.

• Large Web site segment: Over 100 million page views per month.

• Aggregate Index: Data for All Web sites is computed using a weighting of 65% large Web sites, 20% medium Web sites, and 15% small Web sites based on an estimate of overall traffic in the online publishing market.

Note: The pricing data reflects net publisher monetization via ad networks and excludes ad networks' share of ad spends as well as inventory sold directly by publishers to ad agencies or advertisers.

The PubMatic AdPrice Index has been prepared by:

Albert Madansky, Ph.D., H.G.B. Alexander Professor Emeritus of Business Administration at the University of Chicago Graduate School of Business, and recipient of the 2005 American Statistical Association Founders Award

Michele Madansky, Ph.D., media and market research consultant, former VP of Global Market Research for Yahoo!

You can also subscribe to the monthly updates of the PubMatic AdPrice Index by going to www.adpriceindex.com and registering your email address.