AOL (TWX) Randy Falco: Ad CPMs Dropping

AOL CEO Randy Falco confirmed yesterday that online ad CPMs are dropping, a trend that caused many of the leading publishers to post disappointing results in Q2. (Tacoda CEO Dave Morgan wrote about this here)  As explained yesterday, the goal of AOL’s new network strategy is to reverse this trend–by aggregating enough volume that the network becomes a must-buy for advertisers.  The theory that industry-leading volume will boost prices is sound, but with CPMs falling, AOL will be swimming against the tide.   

MediaPost:  ONE OF THE GREATEST CHALLENGES facing AOL’s bottom line is the pressure being placed on once robust CPMs, said Randy Falco, the company’s chairman and CEO, at Merrill Lynch’s Media & Entertainment Conference on Monday. “There’s no question there’s pressure on CPMs,” said Falco. “We’re taking every measure to reverse that trend.” The overarching trend driving this pressure, he said, is audience fragmentation online, which is why broad-reaching ad networks have become so popular of late.

Regarding CPMs that AOL could command in the future, Falco said: “Over the longer term you will see the value of this inventory actually increase over time.”

See Also: How Many People Will AOL Need to Fire? Thanks to SAI reader “Dean Wormer” for the MediaPost link.