What Happens To CPM’s When The Economy Turns Down?

Here’s the start of the conversation:

Nerd 1: “Man – those Facebook ads really suck.  They are completely irrelevant.  And – well – embarrassing (e.g. almost porn.)”  I can’t imagine that they ever get clicked on (except the porn.)”

Nerd 2: “Yeah, but it doesn’t matter.  It’s all CPM based so all that matters right now are page views.” 

Nerd 3: (also co-founder of a generation one search engine): “Yeah – that worked really well the last time around – until the economy went south.  Then – CPM rates became asymptotic with zero.”

It went on for a while (along with additional sushi and saki consumption.)  It was interesting.  And important.  And chilling for anyone relying on CPM-based ads only.  Maybe it’ll be different this time.  But that’s what “they” said the last time.  Don’t forget to be sitting in a chair when the music stops playing.

  • Jim

    Many of those “embarrassing” ads look like CPA or CPA arbitrage ads. And if they are there they are probably working at some level and they are probably already paying a tiny CPM.

  • Kyle S

    If no one clicks on the ads, CPM will indeed trend toward zero – otherwise, what is the value prop for the advertiser?

    As I’ve said (and seen others say) elsewhere, I frequently see CPM ads for Classmates.com. Who on earth would click such an ad from within facebook? A very good reason to be bearish, IMHO.