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17/07/2010 by
5159 views

Why Social Networks Ad-Prices Are Dropping?

Social marketing is all about engagement, social interactions and relationships. And here my dear CMO’s: money can’t buy you love. Loyalty and respect must be earned, not bought. But for the brands with dull content and non compelling storytelling, I might have good news: buying attention in social networks gets cheaper.

Since social networks and their endlessly growing reach and eyeballs have dominated every sphere of the web-from engaged audiences to page views and ad impressions. But there’s one area where they still can’t seem to catch up: ad prices.

A recent analysis by ComScore shows social networks, primarilyFacebook and MySpace, have over the last year drawn an average CPM of only 56 cents, compared to the $2.43 average for the internet at large.


Looking more closely, the ComScore data show that the average pricing for online ads exclusive of social-networking sites, namely Facebook and MySpace, would be much higher, about $2.99 for every 1,000 views; social sites dragged down the average online CPM by as much as 18% over the last year.

Some industry executives are concerned that Facebook and its ilk may in fact be reducing the overall pricing of CPMs, or the cost-per-thousand impressions, that are the basis for online ad pricing.

Among the top five US publishers of display advertising, Facebook delivers the largest share of online ad impressions- serving 16.8% of total online ad impressions in the US for the month of May, according to ComScore.

Fox Interactive Media, a property that is primarily made up of MySpace, served 6.3% of total impressions for the same period. To put it another way, in the United States, Facebook and MySpace together are responsible for more than a fifth of all advertising traffic, while at the same time bringing in the lowest rates for those ads.

Facebook’s share of display ad impressions “doesn’t mean Facebook made more money than Yahoo,” said senior eMarketer analyst David Hallerman. “[Facebook’s] volume far exceeds the cost per unit.”

According to eMarketer’s latest projections,Yahoo is on pace to book $3.04 billion in net advertising revenue for 2010, and AOL will bring in about $890 million.

Facebook will see something just shy of AOL’s projected mark, according to Mr. Hallerman. For its part, MySpace is projected to bring in around $360 million this year.

So, while accounting for over 20% of display advertising volume, Facebook and MySpace bring in less than 5% of total display revenue.

Source: Edmund Lee’s full article on Adverting Age.