Most publishers see an ad revenue drop in the first quarter of the year. There is usually a sudden drop in web traffic and CPM rates after the surge publishers experience in Q4. If you are also seeing a drop in your ad revenue, fear not. Because in this article, we will see preventive measures to help you manage upcoming ad revenue slumps.
But first, let’s look at the reasons why ad revenue can drop in Q1.
Why ad revenue drops in Q1
Three main factors cause a slump in ad revenue after Q4. These factors include:
1. Decrease in website traffic
Towards the end of Q4, most people are browsing with high purchasing intent. More buyers are browsing the internet looking for Thanksgiving, Black Friday, Christmas, and New Year deals. Due to buyers’ browsing and purchasing behavior, publishers see an increase in web traffic to their websites during Q4. An increase in web traffic leads to more ad impressions — hence, increasing ad revenue.
But at the beginning of Q1, the change in season affects ad revenue.
After Q4, consumer spending decreases. Fewer people are browsing the web or doing online shopping. Due to the change in people’s browsing behavior, website owners experience a decrease in web traffic. A decrease in web traffic leads to a drop in ad requests and impressions. And if there are fewer impressions on your site, you will see a lower click-through rate (CTR) on displayed ads. Low impressions and CTR will cause your ad revenue to drop.
2. Drop in ad fill rate
Your ad fill rate is the percentage of ads that are served when a visitor visits your website. Mathematically, ad fill rate is calculated using this formula:
Ad Fill rate = (Total Ad Impressions / Total Ad Requests) x 100
As much as every site publisher will want to maximize fill rate at 100%, not all ad requests will get served with an advertisement. Advertisers want their ads to be served to the right audience. And since most people aren’t actively making purchases at the beginning of Q1, most advertisers are reluctant to fill up ad slots especially in January. This leads to a decrease in the demand for ad inventory.
To understand ad fill rate better, here is a simple example. Let’s say you sent 1000 ad requests from your website to an ad exchange and your fill rate is the percentage of ads that is “served”. If you have 1000 ad requests but only managed to serve 250 — i.e, only 250 of the total request is transformed into ad impressions, your fill rate will be 25 percent. (250/1000) x 100% = 25%
The higher your fill rate, the higher your ad revenue. Every time your ad request gets blocked and you have an unfulfilled impression, you are losing revenue.
3. Decrease in CPM
The revenue a publisher earns depends heavily on how much advertisers are willing to spend. Due to decreased traffic in Q1, most advertisers significantly reduce the numbers of bids they make. Advertisers tend to reduce spending and be more conservative with their ad budget at the beginning of the year. And a drop in advertising spending leads to a decrease in CPM rates.
Since CPM is the amount that advertisers are willing to pay per thousand impressions, the lower your CPM, the lesser your revenue. These three factors cause a decrease in revenue per thousand impressions (RPMs) in the first two months of Q1 when compared to Q4. Here is a graph showing the RPM trends from Q1 to Q4.
Preventive measures to stop ad revenue slump in Q1
1. Set lower floor price
A floor price is the lowest possible price any particular inventory can be sold for. In advertising, the floor price determines the minimum cost at which advertisers can bid for inventories.
In Q4, publishers set a higher floor price, especially in December. This is because advertisers are willing to spend on ads so it is easy to get the maximum ad fill rates even with a high floor price. On the other hand, failing to readjust your floor price in January will make it almost impossible to increase your ad fill rate.
Since most advertisers reduce the amount they spend on ad campaigns in early Q1, using a high floor price will filter out advertisers before the bid starts because they cannot match your floor prices. But if you lower your floor price, you will get more deals, see more fulfilled impressions, and boost your revenue.
2. Experiment with ad sizes and formats
During the months when there is a surge in web traffic and advertisers are spending a lot on ads, the ad sizes and formats you display on your website might not seem important because you are already getting a lot of impressions. But in the first quarter, when there is minimal traffic and fewer advertisers spending on ads, picking the right ad size and format is important.
There are a couple of ad sizes that generally lead to higher revenues. For example, wider ad sizes usually get more impressions than taller ads because they are more visible on a webpage. Wider ad sizes allow readers to read the ad with ease unlike in narrower ad sizes. According to our research, the ad sizes that positively affect revenue includes:
- 336 x 280 large rectangle,
- 300 x 250 medium rectangle,
- 728 x 90 leaderboard
- 300 x 600 half-page
You should also note that mobile traffic accounts for half of all web traffic. In Q1 of 2021, mobile devices (excluding tablets) accounted for 54.8 percent of the global web traffic. And since 2017, the value has been over 50%. So when setting up your ads, it’s important that you also use mobile ad formats. With the right placement, publishers can increase their revenue with mobile ads.
Some of the most popular mobile ad sizes include:
- Mobile leaderboard: 320×50.
- Large mobile banner: 320×100
- Medium rectangle: 300×250
Another tip to help you choose the right ad size is to work with your demand partners to identify the best performing ad sizes and formats in Q1. No matter the ad size and format you choose, make sure you regularly experiment and measure. This will allow you to choose the best ad size for your website.
3. Implement header bidding
Using header bidding on your site is an effective way to increase your ad revenue.
How does header bidding work?
Header bidding uses programmatic advertising so that publishers can sell their ad space simultaneously to different ad networks and exchanges. Header bidding allows publishers to increase the value of every ad impression because multiple demand sources can bid on the same ad inventory at once. Since header bidding allows publishers to make their ad inventory available to more advertisers, it leads to a higher CPM and increased revenue.
Here is an image that explains how header bidding works:
Additionally, header bidding also leads to increased ad quality. Advertisers who want to serve their ads to a certain publisher’s website; maybe because of the publisher’s audience or high traffic will not only bid high but also offer relevant ads so they can beat the competition.
4. Improve website SEO and user experience
The purpose of improving your website SEO is to increase your website visibility in search engines. The more visible your website is, the more traffic you will get. More traffic translates into increased ad impressions and higher RPMs.
Some effective ways you can improve SEO is by producing high-quality content, improving your website loading speed, building backlinks, and keyword optimization. During the ad revenue drop in Q1, you must avoid losing your keyword rankings as this will cause you to further lose traffic. It’s best practice to monitor your current rankings to see the articles you can update.
You can also target keywords with commercial intent for Q1. For example, more users will be searching for keywords like “gym memberships” and “Diet and exercise” in January. Look for keywords like this that fit your industry and create high-quality content. You can use Google Trends to find search opportunities relevant to your niche in Q1. This will help you increase web traffic and impressions on your site.
Additionally, improving the user experience on your website can also increase ad revenue.
With over 1.7 billion websites on the internet, publishers have to look for effective ways to encourage visitors to visit their site, and also spend enough time on it to watch or click on ads. SEO takes care of bringing visitors to your site. While the user experience keeps them on your site. When you offer a smooth user experience, you will see fewer bounces, increased ad impressions, and higher conversions – which will allow you to increase ad revenue.
Three ways you can improve your user experience include:
- Create a friendly website user interface that visitors can easily understand and access
- Feature ads that are useful and relevant to your audience.
- Consider animated ads. Animated ads are more interactive and help publishers to combat banner blindness.
5. Try web interstitial ads
Interstitial ads are interactive, full-screen ads that cover the interface of a website or an app. Interstitial ads appear between content and are placed at natural transition points of an app or a game.
When a visitor sees an interstitial ad, the only options are to click on the ad or close it to get back to the app or game. Due to the interstitial ads covering the full app interface, they are considered more effective than ad types like pop-ups, banners, and native ads.
Setting up interstitial ads in Google Ads Manager is one of the best ways to optimize your ad inventory and increase revenue.
According to tests we conducted, interstitial ads have been yielding an 11-15% increase in ad revenue. Note that this percentage varies per website. Factors such as site layout and speed affect the effectiveness of interstitial ads. Check out this article to see how you can set up interstitial ads in Google Ads Manager.
6. Enable ad refresh
Ad refresh is an optimization technique that allows publishers to increase the number of ad impressions served to a user in a single session by refreshing ad sets. The ad sets are refreshed based on preset triggers like user action (clicking, scrolling, using the search function). You can also set ads to refresh on a timed basis (every 30, 60, or 90 seconds).
While ad refresh is a good way to boost ad revenue, note that it is not suitable for every website. You need to ensure that your ad exchange and ad network support auto-refreshing ads. While OpenX, Rubicon, and Google Ad Exchange support auto-refresh, Google Adsense does not. To avoid risking your account getting suspended, read your demand partner’s policy and follow their specific rules for ad refreshing.
You should also consider your user experience. If you make use of ad refreshing a lot, it can reduce the ad viewability on your website. This will cause visitors to engage less with your site and eventually stop visiting – leading to low impressions and hence, decreased revenue.
7. Try out video ads
One of the most effective ways you can boost your ad revenue is to run video ads. More advertisers are spending on video advertising. In 2019, US advertisers spent $16.41 billion on mobile video advertising and $19.59 billion on other digital video advertising. By adding video ad units to your ad requests, you can increase the number of ad bids you receive. More ad bids allow you to increase your ad fill rate and boost revenue.
Customers are also more receptive to video ads. Videos are reported to see higher engagement and also boost brand awareness. However, note that not all demand partners will bid for video ad requests. So, check with your supply-side platforms (SSPs) to analyze your market before putting in your ad requests.
Dealing with a slump in ad revenue in Q1 can be frustrating. Especially after you have experienced high revenues at the end of Q4. But the steps mentioned in this article will help you boost your traffic, receive higher ad bids from advertisers, increase your fill rates, and boost your ad revenue. Those steps include:
- Set lower floor price
- Experiment with better ad sizes and formats
- Implement header bidder
- Improve website SEO and user experience
- Try out interstitial ads
- Enable ad refresh
- Try out video ads
The key is to remember that the first-quarter ad revenue slump especially in January is normal. You don’t have to worry too much. Just follow these tips in this article to prevent the slump as much as possible. MonetizeMore has helped 800+ publishers optimize their ad revenue by up to 40%.