According to the article, "One industry executive estimated that pricing on standard banner display ads has fallen 30% to 40% over the past several years, while an ad buyer said the prices on ads sold through automated platforms have dropped by as much as 70% over the past five years."
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| There is a clear and steady increase in online ad sales, but the market is so crowded the revenues for each individual is falling |
70 percent is a massive drop and this speaks volumes about the future of online journalism. News providers will need to find ways of generating revenue aside from the ads if they want to continue to operate.
Jim VandeHei, the president and CEO of Politico and Capital New York suggests in the article that, "most investors seeking big returns would be better off betting their money on other sectors, like health care or energy, unless they are 'passionate about journalism.'"
For journalism to survive, it will have to evolve past the old model of relying on ads to pay for content. What the new model will look like remains to be seen, but the examples of Vice and Buzzfeed, both of which are mentioned in the article show that it can be done.
The type of advertising that this article is mainly talking about is programmatic buying which acts like the stock exchange for digital advertising. While programmatic advertising is a much cheaper option for advertisers it does not guarantee exposure. Programmatic ads only appear when there is available inventory and the RTB exchange rate drops to what the advertiser is willing to pay. When advertisers buy through an ad network (like Google AdSense) they have no guarantee about which sites their ads will appear on and very little say in the matter. These ads are the last to appear on the main news sites who serve their direct sold ads first. Programmatic buying also only applies to basic ad units (300x250 and 728x90 are the most common) and do not support rich media options. When advertisers purchase advertising directly through a website they pay a much higher rate and get better advertising options.
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