Web Ad Pricing Rebounds

Written by Steve Donohue

Thursday, July 23. 2009 at 04:30 PM EDT Post a comment

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After a brutal 2008, Web publishers are finally scoring advertising price increases, thanks largely to the success of ad networks that sell packages of ads from multiple sites to media buyers.

Industry ad pricing levels have increased by 35 percent since the beginning of the year, ad revenue optimization firm PubMatic says in a brief released today. Individual sites can attribute much of the success in pricing increases to indirect channels such as ad networks and ad exchanges, with pricing from indirect channels jumping 47 percent since the end of January, the firm says.

"Although ad pricing has not returned to year-ago levels, the industry has gone up consistently every month since January 2009. The worst may be behind us," PubMatic CEO Rajeev Goel says in the brief.

The firm says it based its report on pricing increases on data from more than 6,000 sites. About 85 percent of those are U.S.-based Web publishers.

PubMatic doesn't name the ad networks that are responsible for driving the price increases in its report, but spokesman Anthony Loredo said the ad networks driving innovation are Tribal Fusion, Collective Media, and interCLICK.

According to a report from comScore, AOL's Platform-A is the top U.S. ad network, reaching 190.7 million unique visitors in April. It was followed by Yahoo! Network, Google Ad Network, ValueClick Networks, Specific Media, Fox Audience Network, 24/7 Real Media, Traffic Marketplace, Microsoft Media Networks U.S., and Tribal Fusion.

There are also several ad networks that focus on packaging ads for sites centered around video content, including Tremor Media, BrightRoll, and VideoEgg.

While most top Web publishers have their own dedicated sales teams, PubMatic says an increasing amount of sales are being by a second channel, which includes ad networks, ad exchanges, data exchanges, yield optimizers, media buying platforms, inventory price forecasters, ad creative optimizers, and audience optimizers.

The ad revenue driven by the second channel will hit $15 billion by 2013, representing 34 percent of the display ad revenue generated by publishers, the firm said, citing a report from ThinkEquity.

PubMatic wouldn't detail the CPM [cost per 1,000 impressions] levels that its clients have seen this year.  But in January, PubMatic reported that all vertical Website categories saw significant drops in their ad pricing during the fourth quarter, with the business and finance vertical taking the biggest hit. The category's average CPM dropped from $2.13 in the fourth quarter of 2007 to 83 cents during the fourth quarter of 2008, down 61 percent.