In the third quarter of this year, Facebook captured almost a quarter of Internet advertising views, according to The Washington Post.
That translates to 297 billion ad impressions. While that stat is impressive, the one that jumps out more immediately is the amount of money that translates to. Back the The Post:
The effective CPM (cost per thousand impressions) for Facebook’s U.S. display ads is roughly $1, compared with the $3 CPM for display ads on Yahoo’s family of Web sites
Yowzers. That means running DC Crank Tank would net me no more than a $5 bill on a good month if I had paid advertising, regardless of whether or not I was getting paid $3 or $1 per 1,000 views. With numbers this low, it’s all the same.
Wait…it gets worse. I recently worked at a fairly well-known publication in the DMV area, whose website generally clocked few hundred thousand page views a month. I thought this was a fairly impressive statistic. But if that publication was charging similar ad rates to Facebook and Yahoo, it is painfully clear that the online ad revenue at that job wasn’t even paying for my salary, let alone the other Web journalists.
Launching an online newspaper is one of the cheapest ways to start a company and become your own boss. But how do you sustain it? If you were the editor and handled all the business functions, you would need to hire a reporter to help you. The most pitiful going rate for reporters in the D.C. area starts at about $30,000, in this case likely with no benefits. To support a salary like that ($2,500 a month) at $3 per 1,000 impressions, you would need over 800,000 monthly viewers. And to pay yourself (the editor and salesman) any sort of salary, you would need to at least double that.
That’s scary. There are surely dozens of other shady and scrappy ways that online publications around here make money, but online ads are still the primary revenue driver. And the economics of those ads mean there are a lot of people working very hard for limited eyeballs and minimal payoff.