Online ads: It’s called a flight to quality

There’s much sturm und drang about online advertising, and whether it’s in a big hole or a *really* big hole. Judging by the graphic of a giant smoking crater he used for his post, Peter Kafka at All Things D apparently falls into the latter camp, and he also quotes Nick “The Dark Lord” Denton as saying that anyone who doesn’t expect ad rates to fall 40 per cent is an idiot (although, to his credit, Peter does note that Denton is always saying things like that). But one of the reports that everyone is using for fodder, which comes from the Rubicon Project, isn’t that bleak at all.

If anything, in fact, the Rubicon report indicates that online advertising is still growing relatively strongly despite the turmoil in credit markets and the slump in stock prices, and could even benefit as advertisers look for more quantifiable results for their spending, which online ads provide. The report also says that while overall ad rates tracked by the network dropped 11 per cent in the quarter:

“performance varied by network type and channel. Several channels experienced greater than 25 per cent lift in CPMs from Q2, while others dropped by almost 20 per cent.”

To me, that sounds a lot like a flight to quality, which is hardly surprising. Until recently, I think a lot of companies were basically throwing money wherever they could online, regardless of the quality of the ad network or the sites involved, and regardless of whether using banners or pop-ups made any sense or not. Perhaps now they are being a bit more choosy when it comes to spending their money online. Rubicon also notes that in the “news and reference sites” category, ad rates outperformed just about any other market, with CPMs up by 36 per cent.

Before everyone starts berating me for taking Rubicon’s word for it, I realize the company is an “ad-network optimization” service, and therefore has a vested interest in showing that online ads are growing. But at the same time, the data it is using come from more than 270 ad networks and about 30 billion impressions, which at least gives them some claim to valid information on what rates are actually doing. And J.P. Morgan says it sees online ads continuing to grow as well, just not as quickly.

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