Online ads are priced right

There’s a good interview with the [CEO of an online ad firm at Silicon Alley Insider](http://www.alleyinsider.com/2008/2/24_7_real_media_ceo_david_moore) that raises a very good point about **Internet advertising rates**:

Moore: The fact of the matter is the Internet has been either dramatically underpriced or offline media is dramatically overpriced. Right now a reader of the Wall Street Journal might be worth a dollar, but for someone reading the online Journal you get a nickel. That’s 20 to 1 offline versus online pricing. You need 20 online readers to replace one offline reader. So when you talk about pricing overall I think the web is dramatically underpriced already.

(Via O’Reilly Radar.)

While I think most of us in the Internet publishing business would like to think ads are **underpriced**, my gut says **no**.

* Unlike print, very few folks go online specifically for advertising
* Those that do, go to a business’ Web site *directly*, or to a [free](http://www.craigslist.org/) [listing](http://www.kijiji.com/) [site](http://www.zillow.com/).
* Studies show that users are in a “seek” mode most of the time online, so they’re likely looking for the content that’s near the ads
* Eyetracking studies confirm that users very rarely look at the ads once they’ve found the content their looking for

Long term, the Internet is going to prove [disruptive](http://en.wikipedia.org/wiki/Disruptive_technology) to the traditional display advertising model — users can get to advertisers’ information directly without the middleman of a content provider.

What does this mean for content publishers on the Internet? What business model(s) will emerge to [reign supreme](http://money.cnn.com/2006/03/29/commentary/mediabiz/ironchef.jpg)?

I. Wish. I. Knew.

About Chris

Python developer, Agile practitioner trying desperately not to be a pointy haired boss.
This entry was posted in Business, Technology. Bookmark the permalink.

2 Responses to Online ads are priced right

  1. Steve Sassi says:

    Hey Chris,

    What would be a fair price? Daily Kos gets a million unique visitors a day, here’s their weekly rates, the second number is ‘impressions'(hits?)I guess in that week:

    DailyKos http://www.dailykos.com
    (1 ad running)Premium $15,000 9,190,440
    (no ads running)Second Slot $6,250 9,175,922
    (3 ads running)Standard $4,500 9,124,064

    This is more than Politico which also prints weekly and offers a multimedia ad approach!
    more info about the “liberal ad network” http://web.blogads.com/advertise/liberal_blog_advertising_network

    Drudge Report gets 10 million vistors a day. I don’t know their rates but I’m sure its a lot more.

    Do you think this is overpriced? Or is this average for the Political Blogs (which I’m hooked on for this Primary race). How about your rates? Do they approach this? If so, I’m starting a blog today.

  2. Chris says:

    Steve,

    I certainly am not knowledgeable enough to name a fair price (and it depends on the site, the site’s demographics and audience, targeting model, etc.).

    Would you agree that while advertisers are pouring more money into online display advertising right now, the model itself may have some shaky foundations given user behavior and the disinter-mediating nature of the Web?

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