AdKnowledge: CPMs Continued Decline in 1999

AdKnowledge Inc. Monday released findings that the cost of 1,000 ad impressions continued to soften last year while the number of sites seeking advertising increased dramatically.

The Palo Alto, CA, company, which helps marketers carry out and measure the results of Web advertising campaigns, found in its 1999 Online Advertising Report that average CPMs declined 4 percent last year to $33.75 in the fourth quarter. The number of sites seeking advertising mushroomed 135 percent last year, the company said.

AdKnowledge did not mention any information on click-through rates, however. The firm’s technology can measure what percentage of banner impressions get clicks, but AdKnowledge did not include those numbers among its major findings in the report, which it touted as a compilation of 1999 online advertising statistics. Overall, click-through rates are well below 1 percent and have slid in recent years.

“We’ve really found that [click-through rates] are quite misleading and they don’t have much of a meaning in the real world,” said Michele Schott, AdKnowledge director of marketing communications. “If you really want to optimize online advertising, you have to look beyond the click-through.”

Schott pointed to an earlier AdKnowledge study that found little correlation between click-throughs and conversions. She said banners with the highest click-through rates also generate the most favorable conversion rates only 14 percent of the time. A conversion can mean a sale or a user registration, depending on an advertiser’s goals.

Since the first quarter of 1997, average CPM rates have slipped a total of 14 percent, AdKnowledge said. But the rate of decline was slightly slower in 1999 than in 1998. Since the first quarter of 1997, the number of sites seeking advertising has increased 306 percent.

Among its other conclusions, AdKnowledge discovered that rich media – banners with transactional capability, sound or video streaming – gained wider acceptance last year. The number of sites that will take audio ads grew 40 percent, while those accepting video ads swelled 52 percent.

Sponsorship ad formats smaller than the typical 468-by-60 pixel-sized ads gained popularity in 1999, according to AdKnowledge. Sites accepting ads measuring 88-by-31 pixels grew 116 percent, and those accepting 120-by-60 ads increased 77 percent.

AdKnowledge pulled statistics from more than 3,000 sites for its 1999 report.

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