Publishers firing up their computers to check earnings early in January often get a nasty surprise. Many niches experience lower CPMs and traffic in January than at any other time of the year and this can come as a shock after the highs of the December holiday season.
Note: This article was originally posted on 9th January 2017 and has been regularly updated to ensure we have provided the most accurate information.
Understanding the problem
With any drop in revenue, the starting point is to understand the problem. Your revenue can drop due to one of three things happening:
Drop in ad requests
Sudden drops in ad requests around the start of January usually relate to traffic changes and this is easily checked against analytics. If traffic has dropped and that drop reflects changes in previous years your main option is to wait it out. Do check the other causes as well though, as traffic drops are often accompanied by other problems. Year on year traffic comparisons in Google Analytics are good first checks.
Drop in fill rate
Fill rates can drop in January if floors aren’t adjusted to reflect seasonal buying patterns. Whilst you might be able to fill impressions with a $5 floor in December, you might not be receiving the bids to support that same rate in January. If that happens your fill rate will drop and you need to decide whether to accept that, add additional demand or lower your floor prices.
This issue should only impact publishers imposing floor prices through Ad Exchange, their other networks of via the AdSense ad-balance tool. If none of these are used, then fill rate should be maintained automatically as the price drops. Speaking of which…
Drop in CPMs
Even those sites who maintain the number of impressions served can experience significant January revenue drops as CPM rates drop thanks to lower advertiser bids. CPMs are generally lower at the start of every quarter but can be particularly harsh in January.
Of the three factors, this is the issue impacting most publisher in January. Publishers in niches with high first-quarter demand, such as fitness or travel are generally protected, but most publishers do see a decline in rates as advertiser spending drops.
Why advertisers spend less in January
The rate publishers receive for each impression is governed by auction. More advertiser making strong bids supports high rates, but any drop in that “auction pressure” leads to rates being suppressed.
The start of January sees two patterns coming together: The Post-Holiday slump and the quarterly buying cycle.
The post-holiday slump
Ad spend in Western markets peaks in November/December as advertisers try to capitalise on the high conversion rates during the spending spree surrounding Thanksgiving, Black Friday and Christmas. Budgets are ramped up then cut suddenly again as the spending frenzy ends.
Come January, the budgets are often far more conservative to balance the spend of the previous quarter as well as to reflect the decreased sales opportunity of the new season. Fewer bids and lower bids conspire to cause many CPMs to tumble.
The quarterly buying cycle
January 1st isn’t just the start of a new year, but of course, a new quarter too and ad spend follows a quarterly cycle throughout the year. Advertising budgets are frequently set quarterly and campaigns end at the end of the quarter, reducing demand come the first of the month. Throughout the year the first day of a quarter is often plainly visible looking at CPM drops resulting from this buying cycle. See this article for more about quarterly buying cycles.
What to do if your ad revenue drops in January
It’s worth saying that these patterns don’t affect every publisher, but they are widespread. With many publishers experiencing the “double-tap” of lower traffic and lower CPMs, the revenue hit can be substantial. Whilst the seasonal cycles are outside of publishers control, there are a few recommended steps if you are hit by such a drop.
- Don’t panic!
Big, scary drops in January aren’t nice, but they aren’t unusual either. This is a common pattern. It doesn’t necessarily mean anything is broken or that you need to roll out drastic changes (that might interfere with recovery). - Understand what has dropped
OK, revenue has dropped, but what caused that? Traffic? Impressions? Fill? CPMs? “Revenue is down” is never an answer, but is a prompt to ask what caused it. - Check whether the drop is normal for your site
Graph traffic, ad revenue and CPMs for previous years. Do any of these normally drop or is this something new? If you see regular drops that recover you might need to wait it out. If this isn’t a usual pattern then you might need to dig further to find other causes. - Use the opportunity to make and test changes
Lower revenue can make it a good time to make changes with lower risk. Try new placements or new demand. Roll out some new content that might reverse the traffic patterns, run ad-serving and content experiments.
Would you benefit from having better support on issues like this?
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It’s true that it’s quite a shock at first!
Something should be done about this
For my site December has always been the slowest month by far. January is already going to be much better than December and I’m determined to accelerate the rate of adding new high-value content.
Wow this website is so amazing.
Thank you, Mat Bennett,
I was too much worried about the revenue dropping issue on my website. Thank you for clarifying it in a very good manner.
Thanks so much sir, i was thinking my blogging career would just end this January, but now i understand how everything works in January.
Indeed my RPM has been so low, but i hopeeverything picks up by February.
Stick with it! The drop from the heady heights of December to the lows of January can be a shock. It does improve though
Thanks for sharing, i also experience the slight drop in revenue too.. But i believe everything will bounce back to normal starting from February.
Yes i really agree with this, so i can make lots of money from my blogs Abeg.
Nice one Emmanuel.
For my site December has always been the slowest month by far. January is already going to be much better than December and I’m determined to accelerate the rate of adding new high-value content.
Thanku for understand with this pattern i was thinking that i should leave blogging . But thanks for this beautiful article . When you talk that dont get panic then i get relaxable
There was a big drop in revenues starting from the beginning of January 2019, and it was getting worse gradually every since. Now, in the beginning of March the RPM is 3-4 times then it used to be.
Yes, you are right. I have also seen the drop in ad revenue in January 2019. Thanks for sharing this article.