CPMs and Seasonality: Everything Publishers Need to Know
There’s a season for everything, both in nature and business. In nature, temperatures and weather fluctuate, and the same is true for CPMs. All publishers experience seasonal fluctuations, but you can manage the effects of CPM seasonality if you’re prepared. Not only will you protect your ad revenue, but you can also take advantage of some fluctuations.
In this article, we’re going to:
- Briefly explain CPM seasonality.
- Look at a few causes behind CPM fluctuations.
- Explain when seasonal fluctuations tend to happen.
- Give you a few tips on how to deal with seasonality.
Let’s start by explaining a little bit more about CPMs and seasonality.
What Is CPM Seasonality?
Seasonality refers to events that happen regularly over a period and indicate a trend. Think of the seasons of a calendar year. We can easily predict when the average temperatures are likely to rise and fall because we’ve experienced those changes regularly over several years. It’s regular and predictable.
The same thing happens with a publisher’s CPMs. At some points throughout the year, CPMs are more likely to fall or rise. That phenomenon is called “CPM Seasonality.”
Why Publishers Must Understand Seasonality
CPM patterns can give you valuable insights into the performance of your ads and your website. For example, if you know when a rise or fall typically occurs, it’ll be easier to spot whether a fluctuation is due to seasonality or a different problem.
There’s another benefit, too. If you know your seasonal trends, you’ll be able to prepare for any CPM dips and mitigate the effect on your revenue.
What Causes CPMs to Fluctuate?
In our experience, there’s no way to identify all the situations that can cause CPMs to fluctuate. However, there are a few common trends that publishers should be aware of so that they can prepare.
On average, quarterly trends are the same for most publishers, regardless of their niche. One of the key reasons is that advertisers typically have a set quarterly budget. At the start of the quarter, they’ll spend more conservatively.
However, buyers will try to exhaust their ad budgets towards the end of the quarter to avoid missing any opportunities. Consequently, things tend to start slow, with CPMs increasing towards the quarter’s end.
Interestingly, the fourth quarter consistently outperforms Q1, Q2, and Q3. The sudden rise in CPMs and revenue can be attributed to Black Friday, Cyber Monday, Thanksgiving, and Christmas, four significant events that happen within that quarter. On average, publishers will earn between 3% and 5% more during Q4 than other quarters in the year1.
To take advantage of this trend, keep adjusting and raising your floor prices strategically throughout the year. Try to strike a balance between your floor price, revenue generation, and fill rate. You don’t want to price yourself too high.
Additionally, try to negotiate a few key direct deals that you can take advantage of throughout the year or consider a private marketplace (PMP).
The January Slump
January is the slowest month in almost every industry, and the same holds true for publishers. There are no major events, and buyers have exhausted their budgets to take advantage of the December rush. Most users are also low on cash, and it’s the end of the fiscal year to boot.
It would be foolish for advertisers to spend more on ads when very few people are buying. To deal with the January slump, start by reducing your floor prices until your RPM starts to increase. It’s also a good idea to take advantage of intelligent ad refreshing.
Big Commercial Events
Everybody loves a good deal, so it shouldn’t come as a surprise that CPMs skyrocket during big commercial events like Black Friday and Cyber Monday. Advertisers want to take advantage of people’s willingness to spend money, so they’re willing to up their bids and push more ads. In turn, publishers see a significant rise in their CPMs.
Products and discounts are the hotspots during commercial events, so it’s an excellent opportunity to capitalize on affiliate revenue. Write content that’ll help your visitors make buying decisions, and then add your links. Product reviews, “Top” lists, and similar posts can help you earn more.
If you don’t work with affiliates, consider raising your bid floors slightly to get a little more revenue out of these events.
The trends we mentioned above are the ones publishers will typically encounter. However, there are other factors, like niche and geography, that can influence your CPMs. For example, a finance site may see an increase in demand as tax season approaches. Similarly, a local news site may experience a rise if there’s a significant local event or festival.
The best way to capitalize on these trends is through direct deals with advertisers. Since you’ll be prepared in advance, contact relevant buyers to negotiate for higher rates in exchange for premium ad space.
Unforeseen Events and Outliers
You can’t predict everything, and 2020 was a prime example of how unforeseen events can impact CPMs and ad revenue. It’s important to distinguish between a trend and an outlier and adapt your strategy accordingly.
Image Source: Wikimedia Commons
Header Bidding Can Help You Manage CPM Seasonality
Are you using header bidding yet? If your answer is no and your goal is to increase your CPMs during low “seasons,” real-time header bidding (RTB) may just be your answer. Regardless of CPM seasonality, header bidding can help boost your revenue. With access to more demand sources, you’re more likely to earn higher CPMs while selling a larger chunk of your ad inventory.
Before you implement header bidding, make sure it’s the right solution for you. It’s also a good idea to know which strategies will boost your results and which practices you should avoid. Larger publishers can also consider using a managed ad tech services provider.
Publishers need to be prepared for CPM seasonality and its impact on their ad revenue. With the right strategy in place, you can mitigate the damage during slower months while taking advantage of the high season. You can also use ad technology like header bidding to boost your results even more, regardless of the season.