Online Ad Prices Continue To Fall

The Wall Street Journal:

The Internet advertising market, like all markets, responds to changes in supply and demand.

In the current recession, demand for advertising is likely to decrease. At the same time, supply of online inventory, page views, is continuing to increase.

Social networks and other social media sites in particular are creating masses of new inventory. As a result, the price of online advertising will continue to fall in 2009.

Targeting may mitigate some of this fall. Better targeting is steadily improving the effectiveness of direct response advertising (the equivalent of TV infomercials).

This targeting takes many forms, but all have demonstrated an ability to lift conversion rates over “run of network” advertising.

As targeting technology improves, and as the data that publishers and networks collect about users increases in quantity and quality, we will see a better ability to match the right ad to the right person, and charge more for that ad.

Photo by ilco.

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