Economic Slowdown Slamming Ad Networks, Desperate Publishers That Use Them

So much for the theory that online ad networks are immune to an economic slowdown: PubMatic, a company that helps online publishers sift through ad network offerings to find the highest-priced ad, said average ad network prices were down 23% from March to April.

But here’s the disturbing part: In March, advertisers on the 300-plus major online ad networks paid an average of $0.49 to reach 1,000 people. In April, that dropped to $0.39. We’re not sure what’s worse: the month-to-month drop or the pittance that ad networks pay publishers for their display ad inventory.

Big sites fared worse than small ones. Ad rates for big sites (more than 100 million page views a month) dropped 52% to $0.18 in April from $0.38 in March (do I hear free?). Medium sites (1 million to 100 million page views a month) were nearly flat with rates dropping a cent to $0.33 from $0.34, while small sites actually improved to $1.29 in April from $1.18 in March.

Ads served on social networks cratered to $0.19 in April from $0.37 in March, which fits with what we’ve heard from News Corp. (NWS) and Google (GOOG) about their problems selling ads on MySpace.

How does PubMatic know all this? It gets data from 3,000 online publishers which use the system (85% in the U.S.) and encompasses data from all the major ad networks.

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