Full Article here: Ads up, games down: The ugly, profitable details about Xbox Live advertising
The Next Web:
Advertisers buy clumps of people who will see their advertisement, and the cost for these ads is measured by whats called the CPM. The acronym means cost per thousand, with the M being the Roman Numeral for 1,000. If a site sells advertising space at a $5 CPM, the advertiser pays $5 for every 1,000 people who see the ad.
Microsoft sells ads on the Xbox 360 Dashboard at a CPM of between $19 to $23, depending on the ad placement and the type of ad. Youll pay an extra 20% for animated or video ads, and if youd like to select specific demographics for those ads, youll pay an extra 15% per targeting criteria, with the maximum bump being 30%.
It gets crazier: The data shared with the Penny Arcade Report shows that Microsoft estimates 16 million impressions for an ad during a holiday, so an ad with a $21.50 CPM would cost you a stunning $344,000 to control that spot for the day. You can also buy half-day increments. Microsoft estimates that ads during a normal weekday in the first part of the year enjoyed 9 million impressions, with 15 million impressions over the weekend. Based on these numbers, Microsoft estimates that it would cost $193,500 to control the entirety of an ad spot for your average Monday with whats called a road block ad. Start layering on the features, however, and that price can begin to rise very quickly.
It would be hard for any company pass up this amount of revenue, and the number of ads being sold is only limited by the amount of ad space Microsoft can fit on your screen; the amount of marketing a design can deliver to the audience may trump both aesthetics and ease of use for gamers. If you notice the dashboard redesign added in more spots for ads than were on the blades so they have more inventory to sell, my source explained.
I contacted Microsoft and asked how much advertising revenue impacted the profitability of the Xbox 360. We dont share this information publicly but we can tell you that, since 2010, the advertising business has grown 142%, I was told.
The Next Web:
That works out to, cue Googles calculator functions, top tier pricing of CPM rates [...]
Millions of ad impressions per day, with larger viewer tallys on the weekends, at double digit CPM rates means that ads on the Live Home screen are bringing in tens of millions of dollars a year. The total amount could be 9 figures yearly.
However, it is the demographics of Xbox users that drive the high CPM rates. The young male population group is notoriously hard to reach, making these specific ad locations worth more than they might otherwise be, if they were viewed by a mostly different subset of the larger citizenry.