Display advertising spending grows, but grows slower as inventory gets cheaper
Spending on display advertising — banner ads and other graphical Web come-ons — increased 8.5 percent in the first quarter over last year to $2.92 billion, reports ad-measurement firm TNS. At the same time, the Internet's "reach" — a rough measure of media consumption and, therefore, advertising inventory — has grown 66.6 percent since April 2007, according to ZenithOptimedia. Shall we do an exercise in basic economics, folks?
When only 8.5 percent more money buys 66.6 percent more inventory, you know what's happened to prices. CPMs, the price advertisers pay per thousand pageviews, have plummeted. You can probably thank pageview-creating monster social networks like Facebook and MySpace for that. Either way, it's probably not a great time to open an ad sales shop in New York. Not that we know anybody doing that.