After experiencing a fruitful festive season around November and December, publishers have to deal with January revenue drop. In this month, publishers across the globe experience a straight revenue drop. Not only media publishers but video publishers (YouTubers) and eCommerce also experience the same. This makes January revenue drop (or January Slump), a common seasonality effect in ad tech.
Reasons Behind the January Slump
While it could be difficult to pinpoint the exact reasons behind the January slump, here are the three major factors affecting ad revenue around this month:
1. Traffic Decline and Low Impressions
Towards the end of the holiday season—with Thanksgiving, Christmas, and New Year in a row—users’ browsing, online shopping, and gift purchasing behaviors get back to normal. This sudden change in browsing behavior results in a noticeable decrease in traffic. Consequently, the decrease in website traffic also takes a toll on the impression count.
Simply put, the advent of January puts an end to the festive season, thereby reducing the purchasing interest of users. If you have experienced the same, your Google Analytics account should show you the details of traffic changes.
2. Fall in Fill Rate
Generally, publishers are recommended to increase their floor prices in order to improve earnings during holiday seasons. However, towards the end of holidays, publishers should also keep in mind to readjust the floor price of their ad inventory. If floor prices are mishandled, it leads to a decrease in ad fill rate as inventory price might not seem justified to buyers.
This happens mainly because of the decrease in demand for ad inventory, as users are less engaged and, accordingly, buyers prefer to go easy on their advertising budgets (we’ll discuss this later in this post).
3. Decrease in CPM
Even if publishers slash down their floor prices after the holiday season, the ad revenue doesn’t necessarily show an upward trend. This is because of the CPM drop in January that happens during this seasonal effect.
A drop in the CPM rate cancels out most of the efforts made by publishers. No matter the improvements that are made to the inventory, chances are, the profits might not be the same as Q4 with market not offering the same CPM.
Impact of Advertiser’s Budget Allocation
With the start of a new year, advertisers and marketers also start by allocating new budgets for upcoming projects and tasks. In order to make their budgets last longer, advertisers play cost-effective when it comes to advertising spends. It is important to note that a slight decline in an ad publisher’s revenue not just happens in January but in the starting month of any quarter.
Usually, most businesses start their year by devising new strategies for better profits. The planning of these strategies often takes time before getting executed. Resultantly, they prevent advertisers from executing the campaigns further affecting publisher’s ad earning in parallel.
In a nutshell, advertisers allocate minimum budget in January making it a low-earning month for publishers. And they decrease the CPM rates on their campaigns, making publishers to either sell their inventory at a lower price or show unfilled impressions.
Is Everyone Losing Money?
Yes. If compared to Q4 earnings, publishers see a significant decrease in their ad revenue.
Here is a graph showing ad revenue fluctuations:
Notice the decrease in revenue in the month of January?
We calculated this by evaluating the monthly eCPM of the publishers in our network, based on the data collected from almost 4 billion ad impressions. Here, the relative index shows the ratio of average eCPM of each month from January onwards to December divided by the maximum eCPM for all 12 months times 100.
Relative Index = (Avg. eCPM / Max. eCPM) * 100
Using the relative index metric, you can see the change in monthly earnings of publishers, with respect to their maximum earnings to get a better idea about decrease in January revenue.
Preventive Measures for Publishers
Ad revenue slump starts with January and shows major impact in the starting weeks. The first suggestion for publishers should be to stop panicking. A drop in ad revenue may seem scary at first, however, publishers should treat it as a seasonal trend which should resolve with time once the slump clears.
Meanwhile, here are measures publishers can take to avoid further damage to the revenue:
Continue with relevant content: Yes, there is a decrease in the traffic and fill rate. However, soon the traffic and revenue will start to stabilize. Hence, to keep your users engaged, you’d need to continue feeding them with relevant and quality content. This is needed to gradually increase and improve engagement, and hence the ad revenue.
Optimize the inventory: Bring the floor price of inventory back to a neutral to avoid unfilled impressions. Test out the number of ad units and their placements for a better fill rate. Lastly, go for the trending ad sizes and layouts.
Improve website SEO: This includes content quality, website health, and keyword optimization. During the slump, you can’t afford to lose ranking keywords. As a practice, monitor your current rankings and introduce more keywords to your database to keep up with the search engines.
Implement header bidding: Header bidding enables higher competition on publishers’ inventory. It helps them reach out to buyers across the globe and sell their inventory at greater value. Furthermore, publishers can also compete among different auctions, like run Open Bidding and header bidding, to avoid unfilled impressions.
Consult Ad Ops Professional: There can be a lot of moving factors in revenue optimization, like ad layout optimization, to understand while keeping up quality content and SEO. In such a case, publishers should consider ad ops experts for assistance. An ad ops expert will constantly monitor the website and improvise as per the coming demand, all for better monetization.