Drop in Social Media eCPMs and Forecasts

Just read two separate data points regarding social networking advertising, and the struggle for advertisers to figure out how to make it work -- resulting of course in a hindrance on average eCPM rates earned by social media companies.

First I read that eMarketer has lowered their estimates for US social networking ad spend in 2008, from $1.6B to $1.4B. They claim the economy is partly to blame for this decrease, as companies cut experimental ad dollars first. As important, they claim that social networking sites are still trying to figure out what works. Net net, it's the same reason -- the ROI isn't there yet for advertisers.

Next, I read PubMatic's AdPrice Index for May which is real data (not a forecast). They found that eCPMs earned within the social networking category of sites dropped 47% , from $.37 in March to $.19 in April. Average eCPM for large Web sites (>100M pageviews/month) dropped from $.38 to $.18, and 95% of all Web sites with >1M page views per month earned less than $1 eCPM. (Keep in mind that PubMatic's data set is only remnant inventory, not direct sales.)

I've been talking a lot lately with social media companies, and they are indeed having a tough time monetizing their page views. Ironically it's such a rich source of information in terms of describing an audience and their affinities, yet it's so undervalued by advertisers. What they need are tools to help them harness that information and segment their audience into concise targeting parameters.