Earlier this year I wrote about “The Ups & Downs of Online Advertising” which dived into the changes in advertiser behavior that occur during the various seasons as well as brand marketing budgets and their quarterly cycle. In this post, I wanted to examine the changes that occur in December and January in a little more detail with the hope of helping bring some sense to the volatility of your website’s revenue during this time of year.
In much of the world, and in the United States in particular, there is a major increase in retail, travel and food purchases from mid-November to mid-December. The result of this increase for website publishers is that the “bids”, or amount that advertisers are willing to pay to show their ads, increases as they try to win more customers during this lucrative time. This, in turn, increases the amount that you get paid for your website’s advertising inventory. However, once Christmas passes, things turn the other direction.
Starting in mid-December, usually 4 or 5 business days before Chirstmas when order processing, shipping and receiving becomes difficult for most online retailers, we see competition in the online ad marketplace decline – but there still tends to be one group of advertisers holding rates up – brand advertisers.
As described in my previous post on the subject, brand advertisers tend to allocate their advertising budgets on a quarterly basis – and the last quarter of the year ends on December 31st. Brand advertisers will typically require a certain number of ads to be shown (impressions) during each quarter as part of their contracts. Due to the increased rates and competition, many brand campaigns have under-delivered in November and early December and are slightly behind delivering their campaigns for the quarter. However, with the lowered bids in the last half of December from retail advertisers, brand advertisers will purchase a lot of impressions to catch up. This will hold rates for your website’s advertising up a little. However, on January 1st, this all ends and its takes longer to recover than you may think. Here is why…
As discussed, brand advertisers allocate their budgets quarterly. This allocation process tends to be a fairly manual process, with contracts negotiated and renewed each quarter and then a process of the advertiser creating and distributing ads (“creatives”) and targets to ad agencies and networks and those agencies and networks setting them up (“trafficking”). Since many employees of both the brand advertisers and ad agencies are out of the office, this process tends to take, based on our own data, nearly 12 business days! What does this mean for you? This means that your advertising income will likely suffer until the middle of January, and, given the dynamics at play, there isn’t much anyone can do about it.
The good news is that these patterns are a normal part of a year running a website. Some times (November, early December) are up and others are down, but in the end, it’s important to focus on what you can control – your content – and not trying to counteract seasonal changes.