In this post we will attempt to answer the commonly asked question, “Why did my CPMs suddenly drop?”

It’s no secret that seasonality plays a large role in the digital advertising industry and has a direct impact on CPM performance. However, it is important to note that a site’s CPMs can fluctuate due to a variety of factors. Not to mention 2020 circumstances throwing everyone for a loop. However, we are going to focus on a typical year’s spend, and consider 2020 an outlier. That being said, numbers will vary by site and vertical so it is unrealistic to assume every site’s performance will be affected by the same things. In fact, 2020 might not have had that much of an effect on your site if you were in the home and gardening space but could have been drastically impacted if you were in the travel or entertainment industries. That being said, reports will show that most advertising companies tend to follow a consistent spend pattern throughout the year. In this post, we will share valuable data-driven insights for publishers that will unveil when and why there are performance highs and lows and how to maximize revenue when it matters most.

Typical Buyer Behavior

One of our Senior Yield Managers has a great deal of experience having worked on both the buy and the sell-side of the advertising spectrum and they were able to give authentic insight as to why advertisers behave the way they do.

A majority of spend behavior correlates with online traffic trends. Essentially, when online traffic is high, spend rises with it and as online activity dips, so does spend.

It should also be noted that companies typically have quarterly evaluations which require them to exhaust their budgets by the end of the quarter. This is why the end of a quarter is notorious for high CPMs and large revenue bumps.

Within each quarter, advertisers usually buy on a 30 day spend. Since the typical timeline is 30 days rather than 31 days, the 31st of the month may show poor performance due to budgets resetting.

When Should I Expect CPMs to dip?

While everything in this post can vary, the graph below suggests rough industry trends using Freestar’s network data from 2018. We will use this data to delve into potential CPM drops in the upcoming year.

Quarterly Trends

As you can see, CPMs tend to rise as the year progresses. Q4 is notorious for high performance due to the holiday shopping season, whereas Q1 drops off tremendously as annual budgets reset. Even though the last quarter typically produces the highest CPMs, it is important to remember that during the beginning of all quarters, regardless of the time of year, CPMs will typically dip.

Monthly Trends

While a majority of advertising companies evaluate on a quarterly basis, we should also be aware of trends happening month over month. Publishers historically see their CPMs dip at the beginning of each month, regardless of the quarter.

What might come as a surprise to some is that not all the highest performing months were in Q4. It is important to note that vertical will also have a large impact on CPM fluctuation. Verticals whose endemic seasonality is the best during other parts of the year may find different results. For instance, playoff sports in May/June will impact websites tailored to sports fans. Home and garden sites may find the winter months produce some of their lowest numbers due to the nature of gardening falling in the spring/summer. With that said, according to the data we pulled above, the months with the highest average ad spend in 2018 were as follows:

Daily Trends

To get as granular as possible, we pulled an Ad Exchange report across the Freestar Network broken out by day of the week going back until October 2018. As you can see, CPMs dip Sunday-Wednesday and tend to rise over the weekend, with the highest CPM typically falling on Saturday.

Holiday Trends

Advertising spend in June was likely as high as it was because it falls at the end of the second quarter. However, the drop off heading into July is noteworthy for a few reasons. Not only are budgets resetting, but advertisers may also be lightening their spend due to the Fourth of July. Being a cherished American holiday, most people typically spend their time off with friends and family and not sitting in front of a com