The January drop in CPM

Monthly comparison of CPMs during 2019.
Monthly CPM comparison, 2019.

It’s all fun and games until January. The last quarter of the year treats publishers with juicy revenue peaks such as Thanksgiving, Black Friday and Cyber Monday and a (happy) ending with Christmas and New Year. Q4 is one long festive season for publishers in terms of high CPMs and revenue. But what happens when Q4 ends and CPMs drop?

The January drop

The January drop is already a seasonal trend in the ad tech industry, and it should not come as shock to anyone that CPMs and revenue will drop the first month of the year. Yet, many fail to plan for this and are a bit lost in what actually causes the numbers to drop so drastically. Let’s break down what the reason behind the January drop is and how you can make it less painful.

No money no funny

Advertisers pay for impressions. CPM = cost per mille, meaning the cost per thousand impressions. High CPM means that competition is high, and the cost per mille is driven up by the high demand. Low CPM, on the other hand, means that there is low demand and advertisers are not willing to pay as much for impressions. Everyone is broke in January, also advertisers. They’ve most likely spent the majority of their yearly budget during Q4 and are now trying to figure out how to do things smarter next year. January usually offers very low CPMs, since advertisers are not spending their marketing budgets this time of the year. January is a quiet month in very many businesses (apart from perhaps health and fitness). This dry season usually lasts until mid-February and Valentine’s day.

No traffic

January is also very low in terms of website traffic, compared to the end of the year for some sites. Consumers are no longer scrolling for gifts and festivity inspiration, and the decrease in traffic affects website revenue. Continue reading and learn our best tips on how to increase traffic to your site in case you are experiencing a drop in traffic.

Low fill-rate

This goes a bit hand in hand with the two above, so the equation should not be too difficult to crack. Low ad spending + low traffic = low fill rate. The more demand you have the higher you can push up your floor prices, and still, get a high-fill rate since advertisers are ready to compete and pay for those ad spots. However, in January, things are quite the opposite. If your asking price is too high and demand is low, you will be left with some unimpressive fill-rate numbers. In this situation, it’s better to test your floor and lower them to a level where your inventory is being purchased. If you stick to your Q4 CPMs you are going to have many empty ads on your site. 

How to make it less painful?

As mentioned earlier, the January drop is already an established, seasonal trend in the ad tech industry and publishers should prepare for it, the same way they prepare for the high season that lasts throughout Q4.

Planning

We can’t stress this enough. Take the January drop as the seasonal trend it is. It should be part of your year-plan and revenue estimations for the whole year. With thoughtful planning and our tips below, January does not have to hit as hard next year.

Optimize floors

Adjust your floors according to current demand. If demand is low, decrease the floor price. If your floor is too high, advertiser’s will pass on the opportunity due to the high asking price, and you will end up showing unfilled impressions. In order to avoid this, lower the floors until you have demand.

Tweak Ad units

Are you running the same amount of ads with the same set-up as in Q4? Most likely yes. Sometimes changing the ad landscape, adding ad units on unmonetized sites or changing the type of ad units to more trending ones can be beneficial this time of the year. Play around with units that have worked in other low-seasons. Typical low seasons are the beginning of every new quarter, summer holidays and well January if that somehow was unclear.

Improve SEO and traffic

Make sure your site is working and that your page load is not the reason for the low amount of traffic. Provide your visitors with continuous quality content and use relevant keywords in order to keep your SEO at a healthy level. This post digs deeper into how to acquire visitors to your site.

Reach out for help

Ad optimization is not easy, and sometimes it’s better to hire a professional than to try and save money by doing it yourself, you might end up with less money to play around with if you don’t know what you are doing. Optimizing floors, adding new ad units or changing the ad landscape requires a certain level of expertise and constant monitoring and fine-tuning. Invest in consultation from a professional or outsource ad ops completely if you have low experience and expertise in the area. 

We hope these tips will help you minimize the effects of the January drop and help you plan for it for 2021. The important thing here is that it’s seasonal, and not effecting you all year round. 

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