Facebook Killing Online Advertising?

Facebook Advertising Screenshot

OK, so the title might be over-stating the case just a fraction, but the value of the good old-fashioned display advert is certainly suffering.

A recent comScore study claims that while Facebook and MySpace represent 20% of total US display advertising volume, they only represent 5% of total value. In total, the social networks are depressing average CPMs (cost per thousand impressions).

Social networks are averaging just $0.56 CPM compared to $2.43 average. Take Facebook and friends out of the equation and the CPM rises to $2.99.

There's a double-whammy here: firstly, an enormous amount of inventory available and rock bottom prices, coinciding with concerns about what content will run alongside an advert. Would you want your brand running popping up on the Raoul Moat fan page?

Whilst this makes the life of a media seller more tricky, the raft of technology that's entering the advertising world with advertising exchanges, data exchanges, demand-side buying platforms and all manner of optimisation tools will play an increasing role in maintaining income for publishers.

For the social networks still representing only a fraction of the display advertising market, the big money lies in audience engagement (is that the engaging smell of Old Spice?) and as our friends in the TV world have known for a while, moving pictures are a handy well to sell stuff.

Hat tip: ExchangeWire for the comScore story.