This completely contradicts my experience. (in total roughly 1M uniques / day on all the sites that I'm involved with).
The larger the site the lower the CPM in my case, and that is significantly lower. Bulk traffic seems to get lower CPMs than niche sites, the smaller sites make as much as $5 and the larger ones are way down, some all the way down to $0.12.
I should stress that I'm talking about selling ads privately.
$2 CPM per ad at 6 ad spots = $12 CPM for the website. You will very rarely earn $12 CPM from Google.
FreelanceSwitch.com sells 125*125 ad spots at $900 (raised from $800 recently). And gets 500,000 page views. (Pretty close to $2 CPM).
SearchEngineJournal.com sells ad spots for $1000. And gets 300,000 page views ($3.3 CPM).
If you're selling ads privately - and show your analytics to your advertisers - they won't say that reduce my CPM rate as your traffic has increased. And if they do - you can just put up an ad-rotator so that their ads are only shown to as many people as they can afford.
And if you show your analytics that has a trend of increasing traffic - you will start finding better quality of advertisers too - people who will not mind paying a higher CPM.
So yes - as your traffic grows and you attract enough advertisers to sell all your ad inventory - you can increase your prices slowly and steadily. The trick is to reach a stage where you can sell all your ads privately.
Its supply and demand after that. (Supply of ad spots remains the same. Demand keeps on growing as your website grows in popularity.)
Large sites with bulk qualified traffic e.g. auto or real estate classifieds can do 200m PIs a month and still make $5-$10 CPMs. To do so you'll either have to rep your own site or use a good agency, and be quite targeted e.g. Escalade ad for X5 search results.
The larger the site the lower the CPM in my case, and that is significantly lower. Bulk traffic seems to get lower CPMs than niche sites, the smaller sites make as much as $5 and the larger ones are way down, some all the way down to $0.12.
What sites do you see this opposite effect on ?