Are you familiar with this sinking feeling in your stomach when your metrics, in particular RPM (revenue per thousand pageviews) and CPM (cost per thousand clicks), are going down? After blasting Q4, when numbers changed faster than fruits in slot machines, and euros were pouring in, this Q1 seasonal drop is the most unwelcomed.
Those seasoned publishers who’ve been a couple of times around the block will tell you to calm down and wait, but we here at Refinery89 know that it can be tough to sit and observe your revenues traveling south. So, let’s roll up our sleeves and help dear publishers through strategies that will make this low season in programmatic beneficial.
What is the Q1 RPM drop?
RPM seasonal drop is a downsizing in revenue per thousand page views that usually happens in January. Look at this Y2Y data, an average drop from Q4 to Q1 is around 30%
Many businesses are prone to seasonal ups and downs, especially those linked to goods and content consumption. Consumers’ interest grows around holidays, and shopping frenzies drive ad inventory CPM and RPM up to the sky. But as soon as people are back to routine and their bank accounts are on a diet, interest in consumption is growing thinner. But for publishers, it is a source of constant uncertainty.
Nevertheless, let’s not lose our marbles just yet and look at numbers.
We have compared RPMs from two different in size publishers, bigger and smaller, through the period from December 2021 to December 2022, and both reveal revenue drops in Q1.
As we can see on the graphs, January drops (marked) occur no matter your RPM rate.
So, this Q1 drop is a recurring event; however, let’s investigate further what can cause it and what can be done to ensure your, maybe not immediate, but further upturn.
Why Does RPM Drop in Q1?
1. Post-Holiday Ad Spend Decline.
As we mentioned before, consumption drastically drops in January. Advertisers tend to spend heavily in Q4, particularly during the holiday season, leading to a higher ad fill rate. However, as Q1 begins, advertisers typically reduce their budgets, provoking a subsequent drop in RPM for publishers.
2. Ad Inventory Performance Evaluation.
The beginning of the year is also when many brands revise their previous ad campaigns’ conversion and ROI performance. This evaluation period can result in a temporary pause or reduction in ad buys.
3. End of Fiscal Year Budgeting.
Many companies wrap up their fiscal years in December, leading to a renewed focus on budgeting and planning in January. This often results in advertisers re-evaluating and sometimes reducing their ad spend.
Okay, where is the benefit of this RPM drop?
1. Time to test New Ad Formats. Check what Refinery89 has for you
There is no better time to run some tests than the moment when your site is not packed with visitors and needs constant attention and optimization. Different ad formats, such as native ads, video content, interactive, or interstitial ads, can uniquely engage users and produce higher RPMs. By testing and evaluating various ad formats, publishers can identify what resonates best with their audience and optimize their ad inventory accordingly. Refinery89’s experts recommend trying interstitial ads, out-stream and instream videos, and pushups. Also, we can wholeheartedly advocate for our partner Outbrain’s content widget format.
2. Time to negotiate. Considering changing a partner? Reach out to get the best offer.
If you’re relying heavily on one or two major ad partners or networks, consider diversifying. By expanding your ad network partnerships, you’re more likely to get a better ad fill rate, even when some networks are underperforming. So, it’s a perfect time to look around for new partners and negotiate a higher floor price (but don’t raise it until the end of the slumber period), better ad fill rate, and commissions.
3. Tiem to create and optimize. Check out the Refinery Academy page for insights.
Quality content remains king no matter what hurdles Google throws in your SEO’s way (learn about the SGE algorithm and Featured Snippets Optimization). By ensuring your content is optimized and aligns with what your audience wants, you can maintain (or even increase) your site’s traffic, offsetting some of the RPM reductions. Alongside content, checking out those core web vitals will always do good for your site.
4. Time to Improve Site UX.
The user experience is pivotal. Slow-loading pages or too-intrusive formats can drive users’ bounce rates. After Google introduced Core Web Vitals (learn more), examining key metrics like LCP, FID, and SLC and ensuring that ads enhance the user journey is a piece of cake. A better UX can lead to higher engagement rates, improving RPM.
5. Time to adjust the floor price
It is customary and logical to increase the floor price and get the most out of the Advertisers’ bidding, but as soon as the season is going downhill, the optimal choice is to minimize the floor price, our expert will recommend 10-20% drop, to increase the ad fill rate. Refinery89’s experts state a good ad-fill rate of around 80%.
Don’t panic, Refinery89 gotya.
RPM downsizing in Q1 is a trend, and as unpleasant as it is, publishers have observed it for years. Those who remain agile, prioritize content optimization and UX, and are willing to experiment with various monetization strategies will be best positioned to stand against any RPM dips and ensure constant growth. And we are here to help, taking the most dedicated care of your ad inventory and constantly improving and rolling out new ad formats you can try.
Reach out, and enjoy the holiday season as everyone else.