Seasonality, CPMs, and You

Seasonality, CPMs, and You

As the new quarter begins, you may have noticed a drop in your CPMs. Seasonality (looking at how youand the ad industryare affected by the time of the year) impacts advertiser spend and thus, CPMs. While some verticals are impacted more than others, it's important to understand how seasonality affects CPMs as they play a key role in forecasting and predicting revenue, and benchmarking.

Trends are always changing
Measuring trends on a monthly or quarterly schedule can be a difficult task as trends tend to change over time. If you look at major events, even those change year over year. Here are the main trends that we've observed:

  1. Advertisers increase their spend for significant events like Black Friday, Christmas, and Super Bowl Sunday. For each of these events, publishers will see a corresponding increase in CPMs.
  2. Apart from major events, brands tend to spend the least in the first month of the quarter, and the most in the last month of the quarter.

Figure A: Monthly CPMs “ This is aggregated publisher data from January 2018 to December 2018.
Screen Shot 2019-01-14 at 4.28.56 PMAs Q1 begins, you may experience your lowest CPMs in January as consumer spend and traffic decreases. With CPMs fluctuating month over month (Figure A), as we move into March, you may experience your highest CPMs of the quarter. Later in the year, advertisers tend to spend less in the summer months (July and August) but CPMs usually pick up again in September.

When you look at quarterly performance, rather than monthly, there is a pronounced drop in CPM at the beginning of every quarter as advertiser budgets reset (Figure B). Overall, CPMs increase steadily through Q3, with a significant jump in Q4. In this example, even with low campaign spend in July and August, Q3 out-performs Q2 as CPMs jump in September. As each quarter ends, it's normal to see a drop in CPMs in the weeks leading up to and starting a new quarter. This is a result of advertisers' depleted budgets, which directly impacts CPMs and fill rates.

Figure B: CPM drops “ Aggregated publisher data shows the CPM trends from September 2018 to November 2018.

Looking at quarterly performance (Figure C), we see that, overall, CPMs increase steadily through Q3, with a significant jump in Q4. As previously mentioned, even with low campaign spend in July and August, Q3 outperforms Q2 as CPMs jump in September. 

Figure C: Quarterly CPMs “ Aggregated publisher data from 2018.
Screen Shot 2019-01-15 at 2.25.24 PM
Seasonality with Sortable
Constantly changing trends, and the inability to forecast and predict revenue, can make site changes very challenging. We understand that publishers can experience pain points with seasonality, especially when CPMs do not increase as much or as fast as expected.

Sortable optimizes website monetization and ad stack performance through a combination of flooring algorithms, unique demand, and collaborating with publishers on techniques like lazy loading, refresh, ad layout, and a/b testing suggestions. 

Monitoring site performance (including viewability and fill rates) and comparing results to network-wide trends or anomalies helps our customer success team understand and be able to advise on site changes. For example, CPM by device changes might indicate a partner's participation has suddenly dropped. We are constantly working with our publishers to ensure that they are maximizing their revenue-earning potential at all times of the year. This reduces the impact of any significant seasonality fluctuations.

Your experience throughout the year may be different”not all verticals are equally impacted by seasonality. But if your vertical is one that is more sensitive to seasonal fluctuations, use the trend information we've discussed to help forecast revenue on a quarter-by-quarter or month-by-month basis.