SOURCE: PubMatic

May 13, 2008 08:25 ET

Online Advertising Impacted by U.S. Economic Slowdown

PubMatic Ad Network Pricing Index Shows 23 Percent Drop in Ad Rates

PALO ALTO, CA--(Marketwire - May 13, 2008) - PubMatic (www.pubmatic.com), the world's first service that automates and optimizes ad inventory decision-making for Web publishers, today released its second monthly PubMatic AdPrice Index (www.adpriceindex.com), an industry-wide measure of online ad network pricing for publishers. The index indicates that the economic slowdown in the U.S. is beginning to impact the online advertising industry, with overall monetization dropping by 23 percent. The PubMatic AdPrice Index is based on data from over 3,000 publishers and billions of ad impressions.

The PubMatic AdPrice Index revealed surprising weakness in monetization for the vast majority of Web sites. Large Web sites fared the worst while small Web sites managed to maintain their monetization rates. eCPMs for large Web sites (more than 100 million page views per month) dropped dramatically by 52 percent from 38 cents in March to 18 cents April. Medium Web sites (1 million to 100 million page views per month) were nearly flat, with monetization dropping from 34 cents in March to 33 cents in April. Small Web sites managed to improve their monetization, increasing from $1.17 in March to $1.29 in April.

Prepared by independent statisticians and industry experts Dr. Albert Madansky and Dr. Michele Madansky, the PubMatic AdPrice Index's key findings include:

--  On average, Web site monetization dropped by 23 percent from 49 cents
    in March to 38 cents in April. *Pricing data reflects net publisher
    monetization via ad networks and excludes ad networks' share of ad spends
    as well as inventory sold directly by publishers to ad agencies or
    advertisers.
--  Among the verticals, Social Networking led the plunge with
    monetization dropping 47 percent, from 37 cents in March to 19 cents in
    April, below January lows of 22 cents. Entertainment monetization dropped
    17 percent from 40 cents in March to 33 cents in April.  Gaming and Sports
    were down marginally (4 percent and 5 percent, respectively). Technology
    remained relatively flat at 83 cents in April vs. 82 cents in March, but is
    still off January highs of 92 cents.
--  In April 2008, 77 percent of small Web sites garnered net publisher
    eCPMs from ad networks of under $1.00, compared with 95 percent of medium
    Web sites and 100 percent of large web sites.
    

To combat the drop in monetization, many publishers are adopting best practices to maintain or grow their Web site revenues. These best practices include:

--  Network diversification: Working with multiple ad networks (as opposed
    to one or two) to find the right mix of optimum advertising campaigns.
--  Monetizing international traffic: Working with foreign-based ad
    networks to better monetize international site visitors.  While
    international traffic is often a minority of a publisher's traffic volume,
    this traffic can be highly lucrative because of the weak U.S. dollar and
    the growth environment outside of the US.
--  Segmentation strategy: Segmenting a Web site into various categories
    (finance, travel, lifestyle) and using different ad tags for each category.
    Most ad networks are better able to target relevant campaigns to a Web
    site's inventory as a result.
    

The data released today is the second in a series of monthly releases of the PubMatic AdPrice Index. Showing for the first time ever net publisher monetization on inventory sold to ad networks, the PubMatic AdPrice Index provides transparency for the ad industry so that publishers, ad networks and advertisers can keep up with changes in traffic monetization and better plan for the future of their businesses.

For the complete May 2008 edition of the PubMatic AdPrice Index, please visit www.adpriceindex.com.

PubMatic co-founder and general manager Rajeev Goel on May's PubMatic AdPrice Index update. Overall, advertisers paid publishers less per impression compared to the previous month, but many enterprising publishers saw increases during this time. Here's how they did it: http://blip.tv/file/901285/

About the PubMatic AdPrice Index / Methodology

--  The PubMatic AdPrice Index represents net publisher monetization via ad
    networks and excludes ad networks' share of ad spends as well as
    inventory sold directly by publishers to ad agencies or advertisers.
--  The PubMatic AdPrice Index is comprised of over 3,000 Web sites,
    approximately 85 percent of which are based in the US.  The PubMatic
    AdPrice Index is prepared by leading independent statisticians and
    industry experts:
    --  Albert Madansky, Ph.D. is the H.G.B. Alexander Professor Emeritus
        of Business Administration at the University of Chicago Graduate
        School of Business, and was the recipient of the 2005 American
        Statistical Association Founders Award
    --  Michele Madansky, Ph.D. is a media and market research consultant
        and former VP of Global Market Research for Yahoo!

About PubMatic

PubMatic is the world's first service that increases Web publishers' revenue by automating and optimizing ad serving decisions. PubMatic significantly increases ad sales revenue for more than 3,000 publishers by optimizing ad serving decisions across hundreds of ad networks and by using sophisticated algorithms to optimize the layout of text and display ads. PubMatic is a service of advertising company Komli and is venture backed by Draper Fisher Jurvetson, Nexus India Capital, and Helion Ventures. Find out more at www.pubmatic.com.