More on Social Nets Impact on Ad Pricing

AdAge recently carried a story about the possible effect of social networking on online ad pricing. This analysis showed that the average CPM for an ad on social networks (primarily Facebook and MySpace) was $0.56. Meanwhile, the CPM for online as a whole was $2.43. The question is: what's causing the disparity? One answer is that most of the ads on the social networks are text based. Rich media garner much high rates.

Another answer may be that there's too much overall inventory, a glut of online pageviews just as the advertising market is facing general downward pressures due to the economy. In fact, Facebook is now the leader in ad impressions among all online sites in the US, achieving 16.8% of the impressions this May.