Why do CPMs drop suddenly every quarter?

Anyone who runs an ad-funded website soon becomes aware of how CPMs are far from static. Sudden changes in rates can be a sign of a problem, but there are also regular patterns that impact CPM rates and are beyond the control of publishers.

Knowing the broader patterns of demand allows publishers to better understand when CPM changes are network-wide or indicative of a more local issue. As well as avoiding time-wasted on diagnosing issues out of publisher controls, understanding these patterns is vital to publishers who buy traffic.

The data

We’ve analysed network-wide rates to highlight the key patterns impacting publishers in 2016 using request CPM. Request CPM is a great metric to monitoring overall performance as it takes into account both the amount paid for each impression and the number of impressions that go unsold.

Pulling data across the DoubleClick network globally, we analysed each day’s average request CPM in 2016 as a percentage of the highest performing day.

The quarterly CPM drop

The data shows a clear drop off at the start of each quarter, highlighted red in the image below. This doesn’t happen for every publisher, but is a clear pattern across the network as a whole.

The quarterly buying cycle

This predictable, sudden drop at the end of the quarter happens because of the way digital campaigns are bought and booked. Agencies generally receive quarterly budgets and run campaigns to fit those calendar quarters. With large numbers of campaigns ending at the same time, demand drops off and publisher revenue follows.

This sudden drop in demand is compounded by the fact that bids tend to be higher as the quarter draws to a close. Agencies who have bid conservatively during the quarter will increase bids to maximise the use of their budget before the quarter ends. Looking back at our chart you will see this is apparent by request CPMs increasing in the weeks leading up to each drop.

Painful, but swift

Rates tend to start their recovery after a few days, slowly ramping up as the quarter goes on. As the end of quarter approaches agencies increase spend to ensure all budget is used, ramping up results before the cycle repeats.