PubMatic recently released its second monthly PubMatic AdPrice Index (view the website). The index indicates that the economic slowdown in the U.S. is beginning to impact the online advertising industry, with overall monetization dropping by 23 percent. The PubMatic AdPrice Index is based on data from over 3,000 publishers and billions of ad impressions.

The PubMatic AdPrice Index revealed surprising weakness in monetization for the vast majority of Web sites. Large Web sites fared the worst while small Web sites managed to maintain their monetization rates. eCPMs for large Web sites (more than 100 million page views per month) dropped dramatically by 52 percent from 38 cents in March to 18 cents April. Medium Web sites (1 million to 100 million page views per month) were nearly flat, with monetization dropping from 34 cents in March to 33 cents in April. Small Web sites managed to improve their monetization, increasing from $1.18 in March to $1.29 in April.

Here are some of the findings:

• On average, Web site monetization dropped by 23 percent from 49 cents in March to 38 cents in April. *Pricing data reflects net publisher monetization via ad networks and excludes ad networks’ share of ad spends as well as inventory sold directly by publishers to ad agencies or advertisers.
• Among the verticals, Social Networking led the plunge with monetization dropping 47 percent, from 37 cents in March to 19 cents in April, below January lows of 22 cents. Entertainment monetization dropped 17 percent from 40 cents in March to 33 cents in April. Gaming and Sports were down marginally (4 percent and 5 percent, respectively). Technology remained relatively flat at 83 cents in April vs. 82 cents in March, but is still off January highs of 92 cents.
• In April 2008, 77 percent of small Web sites garnered net publisher eCPMs from ad networks of under $1.00, compared with 95 percent of medium Web sites and 100 percent of large web sites.

To combat the drop in monetization, many publishers are adopting best practices to maintain or grow their Web site revenues. These best practices include:

• Network diversification: Working with multiple ad networks (as opposed to one or two) to find the right mix of optimum advertising campaigns.
• Monetizing international traffic: Working with foreign-based ad networks to better monetize international site visitors. While international traffic is often a minority of a publisher’s traffic volume, this traffic can be highly lucrative because of the weak U.S. dollar and the growth environment outside of the US.
• Segmentation strategy: Segmenting a Web site into various categories (finance, travel, lifestyle) and using different ad tags for each category. Most ad networks are better able to target relevant campaigns to a Web site’s inventory as a result.