January is yet again here, the time of the year publishers fear the most, mainly due to the dropping ad revenue and poor performance the month brings along.
January is yet again here, the time of the year publishers fear the most, mainly due to the dropping ad revenue and poor performance the month brings along. We know how frustrating the January drop can be, like a slap in the face after the glorious Q4. There are however things you can do to make January less painful on your wallet. In this article we’ll explain why the January drop occurs, and what measures you can take to survive it.
There are many reasons why January is a slow month in many industries, not only in online advertising. The end of the year is a festive season for publishers, and most of Q4 offers high CPMs and great revenue. The sudden decrease in numbers also makes January extra painful. Here are the main factors that affect the January drop:
Everyone is broke in January, and everyone is planning their budget for the rest of the year. So simply put, little money is spent in January and therefore little revenue is being generated. Companies are making strategic plans for how to allocate the budget for the upcoming year, and a minimum budget is set for January in most cases. It’s not only the beginning of a new year that decreases revenue numbers, it’s very typical that the beginning of each month has a little drop in performance and revenue, as yet again, companies are allocating the budget to last not only throughout the year but throughout each month. The lower budgets leave publishers with lower CPMs and unfilled impressions, and unfortunately a poor revenue.
Consumers browsing behaviour shifts abruptly in January compared to the end of the year. The festive season is over and the purchasing interest drops, which leads to a significant decrease in traffic online. Lower traffic means a decrease in ad impression, resulting in lower ad revenue.
Fill-rate calculates the percentage of ads that are served to website visitors on your website. High volumes of traffic combined with high CPMs usually mean high fill rates, since everyone is competing for those ad spots. In January, when both traffic and CPMs are low and advertisers are not as keen on your ad spots, you need to adjust the floor pricing or you will be left with a low fill rate. A low fill rate naturally means a low revenue, as only a percentage of the potential revenue is earned.
After a very competitive Q4 when it comes to bidding on ad inventory, competition drops drastically when the new year hits, pushing down the ‘price tag’ for ads. Publishers are highly dependant on advertisers’ willingness to spend. In January, when advertisers’ budgets are tight and there is a significant drop in ad spending, CPM rates are pushed down. The lower CPMs the lower will your ad revenue be. No matter what measures you take, it’s very hard to keep a steady revenue level with dropping CPMs, unfortunately.
While this might sound depressing, bear in mind that this is only the reality for the beginning of the year and this too shall pass. While you can’t affect CPM rates much, there are lots of other preventive measures you can take to make the January drop less severe.
Floor price determines the minimum cost for which ad inventory can be bidden on. In Q4, when demand is high and advertisers have large budgets to spend, publishers can raise their floor price and therefore earn more on ads. In January however, when demand is low, you need to adjust your floor price to a lower level, or you will be left with unfilled impressions. Playing around with floor price until you find the perfect price for the current situation will help you minimize ad revenue loss.
These are things you should focus on year-round, but especially during the more quiet times, it’s crucial to make sure that you don’t lose any unnecessary traffic. Make sure you continue to deliver valuable content and show up on search engines. Some effective ways to improve SEO are keyword optimization, backlink-building, and improvements in page speed. A great way to re-use old content is to edit popular blog posts and articles with new keywords and make them pop again.
Optimizing ad inventory is naturally something you always should do, but especially low activity periods, it’s a great time to play around and see what works best for you. Try changing the number of units and see what gives you the best fill rate, try new placements, but don’t go loco. Trending, safe units tend to perform better during the low season. There are a few, standard ad unit sizes that tend to perform better, the 728x90 and the 300 x 250 units are examples of these. Keep in mind that mobile ads are highly popular and stand for over 50% of mobile traffic today, so if you are not offering mobile ads yet, yesterday was the time to implement these.
Dealing with the January drop can be highly frustrating, and trying to figure out things on your own can be very challenging. This is why we highly recommend working with professionals. Ad ops professionals have experience from fluctuations like the January drop and can advise you on which preventive measures to take. Ad optimization and floor price testing can also be challenging, and expensive if done wrong, so turning to a professional for help will lead to better results and more ad revenue.
We at Kiosked are always happy to help our publishers with whatever questions or needs they have. Drop us a line at firstname.lastname@example.org if you want to talk more about what we have to offer.
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