Weak CPM Growth May Force Web Publishers to Re-examine Pricing Model

According to internet research firm comScore, 11% of the world's population (785 million) now uses the internet. However, while annual user growth is about 9%, and time spent online is growing at a slightly higher 10% clip, total page views are increasing at a far more modest 6% annually, a figure that may have serious implications for internet publishers. Legacy pricing models typically charge advertisers for every 1,000 page views or impressions [CPM] their ads receive. According to JMP Securities research analyst William Morrison, the sharp growth discrepancy between time-spent and page views growth figures is due to two factors: the explosion of internet video, which has increased the average time spent on a page; and publishers' adoption of new technologies such as RSS feeds, AJAX and widgets that enable users to access more content without clicking through to a new page. Ultimately, he says, content providers will be forced to innovate, or risk losing their audiences to those who do. Analysts and investors will eventually move towards giving more weight to time spent per site, as opposed to the ubiquitous page-views, but in the meantime, Morrison says, "If the decline in page views due to technological innovation persists, as we expect, most publishers are going to be forced to change their pricing and sales models. We have significant concerns about the disruption that this type of a change could have on the broader online display ad market over the next few years."

Commentary: Web Usability Expert: Users Ignore Ads -- Other Than Google's • Rising Ad Blocker Use Poses Risk to Web Content/Ad Stocks
Stocks/ETFs to watch: GOOG, YHOO, TWX, CNET, TSCM, MSFT

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