May 14, 2019 | by Jon Fletcher

How seasonality affects advertising revenue for publishers

Planning for the patterns in advertising spend

Data is a beautiful thing. It represents clarity over a complicated problem. The more points you can trace, the more vivid the landscape becomes. Patterns wear through and outlying anomalies stand out even further.

Marfeel currently manages close to 1 billion sessions per month. This gives us unique access to well-defined patterns of behavior among advertisers—such as the seasonality of advertising spend.

Fluctuating advertising spends may frustrate publishers. They have to be consistent in their content, so why should their revenue flow and ebb at will? Fortunately, these patterns can be planned for and even exploited for higher revenue.

In this blog post, we’re explaining the fluctuations you can expect across the year, the reasons behind them and ways to maximize the revenue from seasonality.

Seasonality Patterns:

There are universal factors that affect every publisher and SSP, each year.

1. Budgets are spaced out more carefully at the start of the year

Every advertiser will target an ROI from their budget, based around monthly or quarterly targets, spacing out their total budget to meet these. This leads to lower budgets in the first two months of the year as they test the waters of their channels and work out the highest performing campaigns.

Here you can see the sharp decline and continued reduction in total ad spend and ARPU over the new year and into January.

ARPU seasonality

Once successful channels and creatives are established, spending will increase but this strategy consistently leaves the first two months of the year with the lowest average ad spends and ARPU of the year.

2. Advertisers flood their spending around holidays

Key dates such as Christmas, Thanksgiving, Black Friday, and Easter all create spikes in ad revenue. The simple reason behind this is that there are more people shopping at these times.

To concentrate their budgets, advertisers will start to limit their budgets in the lead up to the event before launching high-intensity campaigns

Here you can see the bump caused by Black Friday on total ad spend and the ARPU generated.

black Friday revenue seasonality

This produces a pattern of gradually-reduced spending before major spikes in the weeks and days before the holiday.

3. Marketers use up campaign budgets towards the end of the year

Unspent budget will get used up as marketers push to clock in sales and conversions before the end of the year. In the last quarter of 2018, you can observe the continued rise of advertising spend and ARPU, even accounting for the spending spike on black Friday.

seasonality in ad revenue

Agencies will never leave budget unspent. They will increase the intensity to drive higher numbers rather than return the unused budget. The series of spikes show that this pattern is also replicated within the months, with spikes at the start of each month.

You can also see in this final graph that spending is consistently lower in the first three months of the year when budgets are being more carefully spaced.

Dip in ad revenue seasonality

Beating the Dips

Maximizing the revenue from seasonal variation relies on two strategies. Increasing ad space value during times of low competition and reaching the highest-paying advertisers during peak demand.

1. Dynamically Adjust Floor prices

The simple rule is that as demand lowers, your floor price should also be lowered, to ensure your ad requests are filled. But, fluctuations in demand are so frequent that automated, machine-learning based systems represent the most effective options for publishers to fully maximize revenue.

In order to account for the seasonality dynamics, the floor price should be corrected by assuming the error between the target fill rate and the current fill rate is due to the unobservable changes in CPC

This system should then segment the inventory by various factors such as desktop, mobile, location, viewability score, and more. Then, based on historical performance and pricing will be for each section of your inventory based on its perceived value. If there are multiple rules created with the same targeting, the ad will serve through the rule which has the topmost priority.

Machine learning will then continue to find the floor pricing for each segment that achieves the highest possible revenue balance between fill rate and the eCPM advertisers are willing to pay.

2. Keep viewability high

Periods of lower ad spend means lower demand for the product. To keep generating higher revenue, publishers have to increase the value of the product for their market.

Viewability is now a hot-button topic for advertisers and during times of lower demand, they are in the position to demand higher levels of viewability for their ads. To ensure you can fill your impressions, focus on the viewability of your ads to increase their value. Most ads do not get paid until 50% of their pixels are visible in the viewport for at least 1 second. More viewable ads are the most valuable product and will enable you to capture a larger percentage of a smaller market.

3. Prioritize Page Speed

Finally, to maintain ad revenue through periods of lower demand, page speed is the most efficient way to improve the revenue you generate. It is built into every core metric for publishers. Faster page loading times mean:

  • Reduced bounce rates (Longer session times and more ad impressions)
  • Increased session depth (because the site is fast and responsive, encouraging further navigation)
  • Greater number of pages per visit (further opportunity to serve impressions)

Speed is bound up with every value metric in publishing and it is often far more effective to optimize your page speed than to fight against established patterns of seasonality. You can read our comprehensive guide to increasing mobile speed here.

There is no way to prevent seasonality in ad spend, but my measuring the revenue generated by each user (ARPU) it is possible to keep optimizing your pages for higher revenue from the traffic and ad requests that

If you’d like to see the real results of how we maintain ad revenue levels even amidst seasonal dips, check out our latest case study with Euronews.