Microsoft’s Head Of Sales Blames Social Media site for Low Online Ad Prices

Keith Lorizio head of Microsoft’s US sales has said that Facebook and other social networks are driving down the price of online ads, particularly on a Cost Per 1000 impressions basis.

Social networks generally have high user usage and therefore a much larger number of page views to regular sites. These social media sites have much lower ad rates on a cost per thousand impressions (CPM) basis than the rest Internet at large.

ComScore reports that on average Facebook and MySpace only get a $0.56 CPM.

The rest of the internet is getting somewhere around $2.43 CPM.

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.”

This is interesting as it could be argued the traffic provided by social networking sites is not as ‘quality’ as other sites, eg news paper sites, shopping sites etc.

The Google / MySpace agreement is up next month and people have speculated that the traffic product by MySpace has low user click through and even lower sale conversion.

It can be argued, but whatever was we look at it – social networking are becoming an affordable online advertising option for many.

Now that Facebook has almost tipped 500 million users a lot of this traffic is high quality, and of course with Facebook’s advanced advertising platform you can only market your ads to certain people based on gender, age, location, and many more criteria.

Here is a graph showing the movement of CPM ad prices:

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Category: Advertising, Facebook, MySpace, Social Media