COVID-19 has thrown normal seasonal patterns out of the proverbial window. Need a refresher on the typical seasonal patterns? Here’s A Seasonality Primer that should help you get your bearings. But just like the rest of 2020, being unable to see any discernible patterns has made ad performance unpredictable.
When the pandemic began, we saw brands around the world blacklisting websites with coronavirus content, which when you think about how many websites mentioned the coronavirus, led to an overall decrease in ad spend, and a parallel decrease in CPMs and overall publisher revenue.
In this post, we break down each quarter of 2020 and how COVID-19 has impacted ad performance for our publishers.
First Quarter – A Slow Start
What we’ve seen from previous years is ad spend being relatively low in Q1. Advertisers target a specific ROI for their campaigns and spread out their ad spend appropriately over the quarter and the year as a whole. Consumer spend also tends to be curtailed in the first quarter as a result of belt-tightening in the post-holiday season, which leads to brands reducing spend at the beginning of the year. As a result of COVID-19, the industry saw much larger than expected decreases, especially where content was driven by events, travel, sports, or other industries hit hard by social distancing measures — these sites saw decreases in both their overall traffic and their CPMs.
When you compare the Q1 data from 2019 to 2020, you can see that there was an overall net decrease in CPMs in 2019 caused by major changes in the industry such as legislative changes and the announcement of third party cookies disappearing in 2022. In the chart below, we can clearly see the massive impact COVID-19 had on the value of ad inventory by the end of March 2020 in comparison to 2019 which saw an increase caused by seasonality (advertisers tend to spend more at the end of the quarter).
Second Quarter – Slow and Steady
In all honesty, April and May were not promising months. The most encouraging data came from June showing a jump in CPMs and an increase with CPM values basically returning to 2019 levels near the end of the month. The significant impact of COVID-19 on CPM values continued into April, but as the months passed, we saw a slow recovery. From the graph below, comparing each month of the quarter, you can see that the majority of that recovery occurred in June.
This quarter saw numbers slowly returning to pre-COVID CPM values (near the end of the quarter), with fill-rates, and revenue approaching an even keel with year-over-year comparisons to 2019. It’s important to note that some verticals were impacted more than others and thus, recovery periods may vary from site to site.
Third Quarter – Closing the Gap
With the typical beginning of the month decrease expected by seasonal spending patterns, the months of July and August we trended more or less as expected, but from a lower baseline. It’s in September that we showed some signs of serious recovery when comparing CPMs from 2019 to those of 2020. Given that there was no Amazon Prime Day this quarter (July 15 in 2019), the fact that CPMs were this healthy from mid-July of this year all the way through September was actually quite impressive.
As consumer spend began to rebound, advertising dollars followed, as the economy opened up and consumer spending patterns slowly returned to pre-COVID norms. We saw improvements in fill rates by industry too, with very few industries falling below the 70% mark. Interestingly enough, the three that did fall below that threshold (Hobbies & Interests, Society, and Science) may indicate subject matter fatigue given how much content we’ve collectively consumed while quarantine orders were more strict and we spent more time online at home.
Fourth Quarter – Above and Beyond
CPMs took a real hit at the beginning of the year as we’ve discussed and as illustrated in the graph below (showing the month-over-month CPM trend). In Seasonality and the Rising CPMs, we noted that October is back on track in terms of seasonality and is actually exceeding what we saw last year. In fact, it’s at the highest levels we’ve seen this year! There was a small but noticeable increase of CPMs on October 13 which could be attributed to this quarter’s Amazon Prime Day — a great way to start Q4.
In November, CPMs hit the highest values we’ve seen in the last two years. This increase is a result of the lead up to American Thanksgiving and continued throughout Black Friday and Cyber Monday. Our seasonality blog predictions may be coming true where we see Q4 consumer spend increasing significantly this year as a way to deal with the stress we’re all feeling. This increase could also be a result of unspent ad budgets by advertisers.
2021 – What’s to Come?
With the rising number of COVID-19 cases globally and many countries experiencing a second round of lockdowns, it’s difficult to remain optimistic during these times, but we hope ad performance to stay strong relative to normal fluctuations of seasonality. With the increased numbers we’ve seen in October and November, we’re expecting these numbers to continue into the rest of Q4. We remain hopeful for publishers that they see the kind of success that they need to keep their businesses thriving during this time of uncertainty.
At Sortable, we’re continuously monitoring the effects of COVID-19 on ad performance to ensure we implement optimizations and strategies to minimize its impact and maximize your revenue. If you’re interested in learning more or have any questions, get in contact with us at team@sortable.com.
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