Online Ads See Major Price Drops…What Does That Mean?

With the economy in such a wonderful state of mind these days (wink), it seems their might be some bad news for digital advertisers. According to a PubMatic report released this week, the price advertisers are willing to pay for ad space online is down 27 percent this year.

PubMatic tracked the sale of display ads through ad networks on Websites in more than 20 different topic areas, and saw that ads on social networks fetched the smallest price per thousand eyeballs – 21 cents. This is down 22 percent from the second quarter. Ads on sports sites were the next lowest at 25 cents, followed by ads prices on entertainment sites, which saw the steepest drop, to 33 cents.

Ads on business sites, as well as finance sites saw some high prices, at close to 86 cents, but that seemed down 22 percent from the second quarter. Web sites about technology were the only category that didn’t see ad prices fall – they remained at a static 57 cents per thousand eye balls.

Although the above seems not so promising, ads on small webs sites, those websites that get fewer than 1 million page views per month, sold on ad networks for three times as much space on big sites with more than 100 million page views per month. And get this, the average advertiser paid 61 cents for every thousand pairs of eyeballs that viewed their ads, as compared to 18 cents on large sites.

This focus is because of one my favorite aspects of smaller websites, niche content. Niche Content works brilliantly because advertisers can reach a much more targeted audience. When you don’t go through an ad network, you KNOW who will be viewing your ads, and are much more likely to yield a stronger ROI.

But, GigaOM brought up a great point this week as well, analyzing whether people even bother to look at display ads any longer.

What are your thoughts?