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With vast amounts of inventory available, increased competition and dropping response rates, many publishers are seeing their display advertising CPM rates falling.

The challenge is to offer advertisers increased flexibility and new formats in order to protect margins.

Long gone is the heyday of being able to charge £20 CPM for broad run of site display advertising.

Such was the shortage of inventory, leading ISPs and portals could charge advertisers a premium to reach consumers.

With internet usage rates increasing rapidly, broadband penetration hitting 60% of the total UK population and the arrival of social networking, there are huge volumes of inventory now available.

While spend in online advertising continues to increase at a rapid rate, with budgets being switched from TV, press and outdoor, the number of users is also increasing, with current supply outstripping demand.

Sites such as MySpace and Facebook have become so popular with users viewing hundreds of pages each time they visit.

For example, in September 2007 Facebook had over 14.7bn page views, each having the potential to contain a display advert.

With this huge volume of inventory, millions of impressions are going unsold every month and CPM rates have inevitably fallen, hitting margins.

In recent months I have been purchasing media from some of the leading sites for as little as £0.50 CPM.

While increasing traffic will have a short term effect of counteracting this loss for publishers, long term this is not sustainable.

Publishers need to diversify their offering with increased flexibility and choice, allowing higher rates to be charged.

Rich Media has played a major part of this. Publishers that allow expandable, overlay, video and interactive ads can typically charge a premium over standard formats.

In-stream video is also starting to gain popularity, where a short video advert is displayed as a pre-roll or overlay of the main video feature.

Some sites are also looking to offer custom solutions for big advertisers.

Page take-overs, podcast sponsorship, advertorial content and mobile are all way to build exclusive packages and charge a premium.

Publishers need to offer diversify in order to protect their margins and ensure the model of display advertising remains sustainable.

Matthew Finch - view blog

Matthew Finch

Published 5 February, 2008 by Matthew Finch

25 more posts from this author

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Henry West

Most of the custom solutions mentioned are really annoying. I never understand why advertisers pay for them when they just piss people off.

over 8 years ago

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Mike Butcher

This is basically a joke, right? Is there really any point in continuing with the ridiculous CPM model anyway. The problem is only going to get work. What we have here is hyperinflation, with no way out. And page-takeovers?! That will really get the users clicking. Clicking away.

over 8 years ago

Matthew Finch

Matthew Finch, Head of Sales & Commercial at Warner Leisure Hotels

Wow, certainly sparked some heated responses! I certainly agree that some ads are annoying and publishers need to be careful not to loose visitors. My point was not about bombarding users or distrupting their journey, but the need to offer more innovatation.

The ad-funded model is well adopted on the internet. The alternative is subscription access to websites and content. Maybe sites will start offering both options, as Yahoo have done with Yahoo Mail.

The question really is whether you rather have free access to sites with ads around the page, or pay a monthly fee with no ads? Comments always welcome.

over 8 years ago

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Sam Michel

Falling CPMs have less to do with the amount of advertising spend, but the enormous volume of low-quality (from an advertiser's perspective) traffic that's being generated by the social networks.

The 'advertising-will-fund-all' model won't apply in its current format and increasing the interruption through page-take-overs and heaven knows what else isn't going to help.

It's about context, relevancy, timing and targeting. Branding campaigns aren't going away, but advertisers will find it hard to justify paying for traffic that doesn't recall/convert.

over 8 years ago

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Paul H

this is all very well for "broad" advertising, but there are still niche players that can bring a highly targetted audience that are still making $50+ on CPM. LinkedIn being one of them.
I would be very interested if anyone wants to validate that !!

;o)

almost 8 years ago

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Kevin Mayer

Hello sir/madam!
My name is Kevin Mayer.
I am writing you from Euro-ad advertising agency based in Switzerland.
providing a big amount of advertising services to our
clients. Currently we have several clients and our company
is interested in buying traffic from your site for advertising purposes.
Our nowaday particular interest goes in buying Flash
banners. Our main target
market is North America, WEstern Europe (UK, France, Germany,
Scandinavian countries, etc.).We would like to arrange testing campaign with you and if our clients are satisfied, we might be interested in buying large amounts of traffic from you. So for now I need to know some important information:
CPM rates
Traffic volumes
Ability for geo-targeting.

I look forward to hearing from you as soon as possible.
Best regards!

Name: Kevin Mayer

E-mail: kevin@euro-ad.net

Url: http://euro-ad.net/

Phone: + 41-22-5883920

Fax: +41-43-4569485

Adress: St. Jakobs-Strasse 397
CH-4052 Basel,
Switzerland

over 7 years ago

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