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Online Advertising Prices Dropping, Bloggers May Be Affected

November 17th, 2008

ad-price-decline.jpgIt seems that the economic recession that began about a year ago in many parts of the world is beginning to affect the online advertising market. According to the latest statistics released by PubMatic in its third quarter report for 2008, prices for display ads have been trending downward since the beginning of this year, dropping 27% overall from last quarter. Measured on an eCPM basis, which is the price per thousand page views, the social networking category scored the lowest at 21 cents while business and finance was the highest at 86 cents. Both categories were down 22 percent from last quarter. Technology was the only category that did not decrease; its ad prices remained steady at 55 cents per thousand impressions.

Meanwhile, there is evidence that pay-per-click prices, which can more directly affect bloggers who depend on the revenue of AdSense or similar alternatives, are also dropping in some instances. Paul Edmondson, CEO of ad management platform YieldBuild.com, mentioned in this Wired.com article that his overall data showed a relatively sharp drop of 9 percent in PPC ad rates within a short period during October. He reports that prices have since recovered somewhat, but not back to their previous levels. Interestingly, I have noticed a similar drop in my AdSense revenues for this month. My earnings are off slightly compared to the two previous months, although I cannot yet conclude that it is due to an overall economic recession. The primary reason for the decline is lower CTR due to increased traffic to pages that do not convert as well for AdSense clicks.

So what does all of this mean? Well, for one thing it might be a good time to diversify into monetization methods that do not depend heavily on the AdSense model. Bum marketing, for example, is a relatively recession-proof method for making money, especially if you pick the right keywords and niches. One of the really nice things about recessions is that many people will become more desperate to either make more money or save money, which means that promotions of affiliate products that target these desires are more likely to experience success.

Another possibility for long-term income growth is to take advantage of the effect that lower advertising revenues may have on the values of certain websites. If the decline in ad prices continues into 2009, we could see a corresponding decline in the values and sale prices of smaller websites that are mostly dependent on selling advertising. Cash-strapped website owners, frustrated by stagnation or decline of their earnings, may opt to sell their sites for relatively low prices in order to generate funds for necessary expenses. This creates an opportunity for people like me who can take over these sites, publish a few more articles on them, apply SEO skills, acquire a few fresh backlinks, and profit from the increased revenue generated when the boom times return.

One Response to “Online Advertising Prices Dropping, Bloggers May Be Affected”

  1. comment number 1 by: Søkemotoroptimalisering

    many may take this and try to turn it around and make things work in their favor, where other will give in.

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