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Why Online Display Ads Still Matter

Posted by Mort Greenberg on February 13, 2008

Why Online Display Ads Still Matter

FEBRUARY 8, 2008

Less pizazz, but steady income.

Most of the focus on the potential Microsoft-Yahoo! deal has centered on search marketing. But Yahoo! is an attractive target partly because it commands high rates for ads placed on its own site.Nearly one-fifth of 2007 online display ad spending went to Yahoo!, according to an analysis of data from Nielsen Online, JPMorgan and other sources published in February’s OMMA Magazine.

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Yahoo!’s $12.65 CPM was three times greater than Microsoft’s MSN, 50% greater than News Corp.’s Myspace.com, and about four times greater than AOL.

“However, some of Yahoo’s weakness is also reflected in these results, since even with the large number of impressions, the revenue per thousand (RPM) was lower than more targeted Web publishers such as Weather Channel, MSNBC and ESPN,” said David Hallerman, senior analyst at eMarketer.

US Online Display Advertising Metrics for Leading* Online Publishers, December 2006-November 2007

Even so, Yahoo!’s CPMs were nearly three times the US average last year.

US Online Display Advertising Metrics, 2006-2011

Google has glamour. Paid search ads do not, but they still bring in the bucks.

Despite the ongoing dominance of paid search, and the rise of rich media and video ads in online ad spending, display ads will still account for about one-fifth of all online ad spending in 2011 according to eMarketer.

US Online Advertising Spending, by Format, 2006-2011 (% of total online ad spending and billions)

A fifth of online ad spending is significant. Yahoo! doesn’t account for all of that fifth, but its display ad premium is part of what has Microsoft’s attention.

The eMarketer Internet Ad Spending report will be published in March 2008. Click here to be notified when it is released.

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