Earlier this year, we discussed how it's important to understand how seasonality affects CPMs in order to effectively benchmark, and forecast and predict revenue. As we move into July and August, publishers in the northern-Atlantic regions, like North America and Europe, may experience one of their weakest quarters of the fiscal year. There's no need to panic”this is a common occurrence in the advertising industry.
Advertisers in these regions increase their spend for major events like Black Friday, Christmas, and Super Bowl Sunday. They also tend to spend the least amount of money in the first month of the quarter, and the most in the last month of the quarter. As a result of this, publishers will see corresponding decreases and increases in CPMs. Essentially, advertisers spend the most when consumers are more likely to make purchases, and consumers aren't spending significantly in the summer months. Here are the main reasons for the summer slowdown:
- Lack of major events “ In comparison to other months, there are no significant consumer holidays that would result in an increase in ad spend. Although the Fourth of July is a popular holiday, consumers don't necessarily have a need to shop for it.
- More vacations “ Many consumers use the summer months to spend quality time with family and friends rather than spending it on goods or services. Since there are fewer users to advertise to, there's a loss of competition, driving down ad spend and CPMs.
- Lowered ad budget “ Due to this yearly trend, advertisers generally lower their ad budgets in Q3”decreased ad spend equates with decreased CPMs. Advertisers will budget accordingly by redirecting spend to prepare for the next quarter which can be more profitable.
As you can see in Figure A (below) comparing 2017 and 2018, July and August experience some of the lowest CPMs of the year. CPMs increase into September and leading into Q4. Ideally, the money that was lost in Q3 is made up in Q4.
Figure A: CPM Index for June to December in 2017 and 2018
If possible, we recommend that publishers curate their content related to travel and summer-focused topics to mitigate the decrease in CPM. Publishers can begin promoting summer-oriented content to try to improve their user base to get more lucrative summer advertising campaigns. Travel and summer-focused publishers may see increases in daily revenue as more traffic comes to the site, but they'll still see a CPM decrease since advertising budgets are lower in this quarter.
These seasonality trends are more prevalent in Western cultures where the school year is between September and June. Seasonality differs between regions and the societal norms within the culture. South-East Asia, for example, has different holidays and events and thus, their seasonality would coincide with that.
Even with an optimized ad stack, there are limited actions we can take to get consumers to return to their devices and their usual spending habits during the summer months. It is, however, a short period of time relative to a full year. At Sortable, we continuously monitor site performance and ensure that you're aware of trends like this happening. If you're interested in learning more, get in contact with your account manager or email firstname.lastname@example.org.
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