Online Advertising Economics

Scott Karp writes:

Weve all heard that page views are dying. Jeremy Liew of Lightspeed pointed out a few weeks ago the problem with scaling an online advertising business based on revenue per thousand page views, an analysis which has now been picked up by the Dan Mitchell at the NYT. Jeremys analysis is correct, on one level, but it also exposes a deep flaw in the way online media is currently valued and sold to advertisers.

According to Jeremy, untargeted, run-of-site page views are worth about $1 per thousand. Its RPM because its taking into account ALL forms of advertising on the page, including display ads sold on a cost per thousand impressions basis, pay-per-click ads, and pay-per-action ads. $1 per thousand sounds about right, but its also deeply disturbing.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.