The Facebook Factor: Declining CPMs

Social networks have flooded the market with inventory, pushing down ad rates based on CPM, according to one Microsoft executive.

Dean Carignan, Microsoft’s director of ad business strategy in the entertainment and device division, made that disclosure during a panel discussion today at the McGraw-Hill Media Summit in New York City.

“In most environments, the ads showing up have no context. People talking to people [isn’t] relevant to one product category,” he said.

After the panel discussion, “Advertising Next: Social Networks, User Generated Video….”, I approached Carignan and asked him to elaborate.

He said the pricing decline doesn’t apply to specific verticals, such as automotive, financial services, and news.

However, he acknowledged that social networks (Facebook included) have increased online inventory by about 15 percent this year.

He and other mentioned growing interest in “cul de sacs” on social networks focus on special interests such as consumer electronics or travel.

It wasn’t lost on anyone in the crowd that Microsoft made a $240 million equity stake in social network Facebook late last year.

When asked about Facebook, he offered a quick: “No comment.”