rafer:

davidporter:

From SAI:

Microsoft’s head of U.S. sales Keith Lorizio tells Ad Age that Facebook and other social networks are driving down the price of online ads.

Social networks, with their massive inventory of page views, have much lower ad rates on a cost per thousand impressions (CPM) basis than the Internet at large. ComScore reports that Facebook and MySpace only get a $0.56 CPM on average, while the Internet at large gets $2.43.

Lorizio says, “Social networks are going to be a challenge for everybody, as the sheer dominance of the impressions they’re making flood the marketplace with inventory… And it’s especially a challenge for every publisher, as they drive down CPMs.”

I don’t buy it.  As I commented on last month, there ought to be a roughly fixed amount of consumer attention, all else equal.  Lower CPMs for Facebook or other social networks suggest that advertisers aren’t shifting enough $ to where people are now spending their time.  

Or they are simply assigning less value to advertising in general, which could be the case if CPMs are declining equally across categories.

The 2 factors I can think of wrt lower CPMs on social networks vs the internet at large are (1) reluctance of advertisers to place spots next to less “quality” content (although that would seem to have been a greater problem with Myspace), or (2) relatively shorter average time spent on a given webpage of a social network.

Rafer sez:
@davidporter Having run Lookery v1, a big Facebook remnant net, I do buy his argument. Social nets are more enjoyable and less commercially dense than their predecessors. We’re getting a greater hit to satisfy our info jones at HuffPo rather than highly commercial vertical content sites. That makes us less saleable as an audience than we were a few years ago. We’re just as targetable (if not more) but buyers’ standards are going up — finally.  

Really, the ad buyers are now getting enough info to get ripped off less online. No sales person is going to admit that, nor is he going to like doing more work for less money.