In the third quarter of this year, the average price of a display ad has dropped almost 50% from the last quarter of 2007. In Q4 2007, the average price of a display ad was $0.50 compared with Q3 2008’s average of $0.27. Prices have been dropping since Q1 2008 when the average price was down to $0.37 and Q2’s price was $0.34.

“It’s not surprising that it’s been trending down, but what is surprising is the size of the drop,” said Rajeev Goel, president and co-founder of PubMatic in a recent announcement. “What we don’t know yet is whether the trend is due to increasing capacity on the supply side, or to the fact that the economic malaise is beginning to find its way into the online ad industry.” Websites of all sizes and across all verticals have been affected, with all but one category showing a downward trend in display ad prices. The only category that didn’t show a drop was technology, which stayed flat over the last few quarters at around $0.50.

The lowest priced category remains social networking at $0.21 followed closely by sports at $0.25. The biggest drop in ad prices was experienced by entertainment verticals with a fall of 42% from Q1 2008 to $0.33.

The PubMatic AdPrice Index is a quarterly survey comprised of over 5,000 websites, approximately 85% of which are based in the US.

Source: BizReport.com

Tags: advertising, online ad industry, pay per click prices, pubmatic