How can publishers combat the drop in advertising revenue in Q1?
HELP! In the first quarter, my RPMS dropped dramatically.
Typically, annual spending patterns for advertisers are similar. RPM, or ad earnings per 1,000 pageviews, typically falls in the early months of January as people return to work after the holidays.
Between the middle of October and shortly after Christmas, when advertisers devote a significant portion of their annual budgets to attracting holiday shoppers, ad spending reaches its peak. Ad spending reaches its peak during this time, resulting in higher RPMs.
However, once the holiday season is over, people return to work, and consumers shift their focus. As a result, advertisers reduce their ad spending following the holiday season as they prepare budgets and plans for the new year, affecting Q1’s RPMs.
RPMs typically begin the year at their lowest point at the beginning of January, but they gradually increase throughout the remainder of Q1. Publishers must therefore stop getting irritated about the RPM dip during the first quarter of the year and get ready for the events in February and Q2.
Let’s talk more about the nightmare of the Q1 RPM decline!
Include ads’ requests.
Pageviews and sessions are directly proportional to ad requests. During the holiday season, users typically frequent websites to find the best deals on things like online shopping and purchasing. Page views and sessions per user would rise significantly during this time period compared to their average in previous months. This spike goes away after the holidays and returns to normal, if not lower than their monthly averages. In the end, this behavior has a direct effect on how many ads are requested from a publisher’s website.
Between the end of December and the first week of January, RPMs typically decrease by 35-75%.
Publishers must monitor their RPMs as well as their traffic and earnings during the first quarter, particularly during this time, and adjust their strategies accordingly. This could mean changing where their ads are placed, trying out new ad formats, or putting more of an emphasis on creating high-quality, relevant content.
CPM will fall.
During the first quarter, advertisers and buyers tend to bid lower on ad impressions in anticipation of the change in user behavior. The majority of their advertising budgets are revised during this time period in light of the holiday-related conversions and ROI. From their point of view, this directly results in a decline in inventory value, which in turn contributes to the overall decline in CPM/bids.
What can you do now that you have a better understanding of the reasons why ad revenue decreased in the first quarter?
Consider adjusting the floor prices since it’s time for a quick change.
Increasing floor prices during the holiday season (November through December) is a well-known tactic. The obvious next step would be to adjust floor prices and bring them down in line with how Advertisers and Buyers bid. Even before participating in an auction, drained buyers would channel out their bids in response to high floor prices. In the event of lower-valued bids, lowering floor prices would also prevent a decline in the overall fill rate. To improve overall performance and revenue, the best initial strategy would be to balance floor prices and fill rate.
Onboard the best demand partners to investigate potential revenue sources.
Adding more competition to your ad stack is the best way to increase the value of your inventory. Try out brand-new demand partners or get better deal terms. It’s a great time to put Header bidding to the test if you haven’t already. Header bidding makes your ad auctions more competitive.
Determine whether there are any additional causes for the RPM decrease.
Even though a drop in RPM in the first few weeks of January is a common occurrence, it’s important to see if there are any other factors that could be causing the revenue drop. A decrease in the number of ad impressions, a decrease in user engagement, or a decrease in site traffic are all examples of this. It is essential to identify the specific cause of the decrease in RPM and take the necessary measures.
Using historical data, compare the decline in revenue:
You can determine whether the percentage of the overall decline is abnormally high by analyzing historical data and comparing the revenue of the current year to that of previous years. If the RPM drop is unusual, this will help you determine whether or not a more serious issue exists.
Check the page to see if there are any new policy violations:
To ensure that publishers adhere to their terms of service, AdSense has established stringent policies. Your AdSense account could be completely banned or your RPM could be lowered if you break these rules. At all costs, ensure that you adhere to the AdSense policies.
Check to see if the demographics of your audience and user spread have changed:
Your RPMs can also be affected by demographic shifts in your audience. For instance, a decrease in RPM may occur if new traffic is arriving from a tier 3 region, but the region’s ad prices and demand are low. Your RPMs can also be affected if the user spread is skewed, such as when the majority of users browse on mobile devices and the ad units are not optimized for mobile.
In conclusion, in order to determine whether the drop in RPM is normal or if there are other underlying issues, it is essential to monitor your RPM and examine the data, both historical and current. You can address the issue and increase your earnings by determining the root cause of the drop in RPM.
Play around with your website’s layout.
This is the ideal time to experiment with a new website layout or alter the placement of advertisements. When compared to testing during peak-performing months, the risk of losing revenue is lower during the first quarter, as previously mentioned.
After a successful fourth quarter, no publisher wants to see a drop in ad revenue in the first quarter. Unfortunately, this is part of the seasonality of digital advertising revenue. To combat the Q1 slump, keep in mind to adjust your floor prices, test out new demand partners, run header bidding, and investigate ad revenue drops more thoroughly. Why not let the experts in ad optimization take care of it for you if you don’t know how to adjust floor pricing or optimize your advertisements accordingly?