A Ray of Hope for Online Advertising
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It's no secret that the economic downturn has been unkind to Web firms that make their bread and butter from selling ads. For several successive quarters, Google (NASDAQ: GOOG), Yahoo (NASDAQ: YHOO) and untold others have been feeling the pain.
But a new study released today by PubMatic, an ad-tech firm catering to large publishers, could be welcome news, pointing to a dramatic spike in the pricing of online inventory and hopefully suggesting that "the worst may be behind us."
"Although ad pricing has not returned to year-ago levels, the industry has gone up consistently every month since January 2009," PubMatic CEO Rajeev Goel said in a statement. "There is more hope that fall online ad spending may reach near-normal levels."
The steady monthly sequential increases in pricing amount to a cumulative pricing lift of 35 percent of publishers' online inventory since the beginning of the year.
PubMatic's 12-month line graph charting the pricing of publishers' display inventory looks like a crooked smile, with a steady downtick from June 2008 through the end of the year, bottoming out in January before heading into an upswing through the first half of 2009.
By PubMatic's index, which tallies prices from more than 6,000 mostly U.S. publishers, showed monthly pricing increases in 2009 ranging from 3 percent to 15 percent, with the sharpest rise coming from May to June.
Of course, PubMatic's pricing news doesn't mean Web firms are out of the woods yet. Last month, Nielsen reported that total U.S. ad spending in the first quarter 2009 had fallen 12 percent from a year earlier.
Online remained somewhat insulated, falling just 3.4 percent, Nielsen said. Like PubMatic's pricing index, Nielsen's study only looked at display ads sold on a cost-per-thousand impressions, or CPM, basis.
The Interactive Advertising Bureau, the primary trade group representing online marketers, reported a slightly steeper sequential decline of 5 percent for the first quarter, looking at all segments.
However, another recent study has suggested that search marketing, which has generally held up better than the less-measurable display segment, could be headed for a rebound of its own.
Aggregate online ad spending hasn't seen a real year-to-year drop since 2001, when the industry was in tatters following the dot-com bust. Nevertheless, some analysts have looked for 2009 to post a sequential decline after the final numbers are tallied, a temporary setback after years of robust growth as marketers have shifted their budgets to the Web.
PubMatic is planning to flesh out its findings with a more comprehensive study to be released at the firm's Ad Revenue conference in New York in October.