The recent ComScore study has opened a can of worms for online advertising, in general, as it details the causes for declining online ad prices. ComScore study says the increasing ad inventory of social networks is the prime reason for nearly 18 percent decline in Online Ad prices (in CPM terms) during last year .
The study is not without any detail stats as it shows that just two big social networks, Facebook and MySpace, alone account for 1/5th of total US ad impressions leaving enough scope for other social networks, micro-blogs per se to uplift the gap. It also pegs CPM prices of social networks at paltry 56 cents compared to an average CPM of $ 2.43 garnered across the web.
Social Networks commands just 5% of online ad revenues despite owning 20% of display advertising inventory – Adage & ComScore (Source).
Social networks has witnessed a stupendous rise ever since the evolution of Facebook-Orkut days. The social phenomena has grappled the world with big social players getting bigger in terms of their reach and regional players also cutting a serious mark with continued innovation practices.
The growing cult of social networks along with micro-blogs like twitter has increased the total ad inventory available for marketeers to utilize for their brand reach. Add along their increasing mobile presence , Social gaming page views and you will get some serious inventory size.
As demand-supply scenario pans out in online advertising, Social networks are seen winning their way to marketeers pocket due to their vast demographics & reach, albeit at lower prices . This according to ComScore is causing serious glut issues with other online advertising channels as they are unable to bridge the inventory-pricing gap created by social networking behemoths.
Till now, Search PPC prices has remained stagnant but may inch lower if the pressure exerted from social networks is not checked ahead of time. Social networks, in recent times has been able to provide greater stickiness in usage behaviour along with their blend proposition to advertisers to combine their social marketing efforts with brand marketing.
This report should thus sound an alarming bell for giant blog publishing networks and search engines commanding premium pricing to look up to the challenge posed by new-age social networks. The key to corner greater online advertising pie lies in adopting new Ad selling parameters and focus greatly on increasing the user experience & stickiness.
Basic economics.When supply is abundant,price(CPM)will be less.So it will be an utopian dream to monetize entire social media pageviews at a higher price.What the social media guys have missed out – creating scarcity ,i.e. selling specific pages only,at a premium. At the same time they are lacking new/innovative ad formats.
So in a way the social media publishers themselves are responsible for this low CPM game.
@Trend..
I understand your view-point but this abundant inventory is pelting catastrophic repercussions for other online publishers due to driving down of online ad prices. This is somewhat the bone of contention for publishers to act upon.