CPMs Change Throughout the Year
Ben Morrisroe, Marketing Coordinator
15 April 2019
Have you ever wondered what is causing your CPMs to fluctuate so much throughout the year? Sometimes it's obvious. You may be coming up to Christmas or Black Friday and you can expect an increase as advertisers start upping their spend to catch all the purchase-hungry consumers. But, apart from these events, what makes CPMs move up and down throughout the year and what can you do to predict (and maybe even mitigate) these changes?
What Affects CPM Prices
Let's take a step back and look at what CPM is. CPM means cost per mille and is the price an advertiser will pay for 1,000 impressions of their ad on your site. This is determined by the amount of competition there is for impressions on your site. The higher the competition and/or the more valuable the user, the higher the CPM you receive.
So when advertisers increase their ad spend coming up to major events, we see a corresponding increase in CPMs. But we also see regular drops and increases in CPMs throughout the year across all of our publishers which can be harder to pin on a corresponding event.
The January Blues
Based on our data, publishers will find a major dip in CPMs in the month of January - the “January blues”. This is because consumer spending and traffic is down post-Christmas. Agencies and advertisers will also be busy planning budget spend and making deals for the rest of the year so spending is reduced while those campaigns are waiting to go live. CPMs drop from their peak in Christmas to 51% of what they were!
Our Fuse dashboard showing the change in CPMs
Advertisers Quarterly Spending Patterns
Apart from the “January blues”, a cyclical pattern of rises and falls in CPMs can be seen within the data. Dips at the start of a quarter and rises towards the end are due to the way advertisers spend their budget. At the start of the quarter, advertisers are making spending plans and purchases so less activity is seen. At the end of the quarter, these advertisers are looking to spend the rest of their budget before the quarter end, corresponding to an increase in your CPMs due to increased competition. CPMs tend to drop around 20% at the beginning of each quarter.
June can also see spikes in advertising spending as many companies have their fiscal year coming to an end. Any money unspent will be factored into future budgets and may be taken off the team next year round.
Traffic has some seasonality to it too within different industries, leading to changes in CPMs. Summer can see a decrease in spending, particularly in Europe as many people take time off work for holidays. If a quarter ends on a weekend this can lead to an even more dramatic drop in CPMs as new campaigns can be even slower to get up and running at full speed.
So What Should I do About it?
Well, it's important to know when to expect these dips and rises in CPMs so you can better benchmark your performance and forecast future revenue. Look at your past data and see where you tend to see dips in your CPM. Think about your industry from a buyers perspective. If you run a dating website then February will be a big month for you as advertisers will heavily increase spending around Valentine's day. If you run a personal finance website or health and fitness blog then the January Blues may be your pot of gold as consumers rush to your websites to start their New Year's resolutions richer and healthier.
Knowing when to expect these fluctuations will prevent you from getting caught off guard when a drop comes rolling along and help you to plan cash flow around these times. We would suggest not to make any dramatic changes during a slump and use the time to work on upcoming content to take advantage when advertisers are buying big. If you need to do any testing on your site, the first month of the quarter is a good time.
The last month of the quarter, Black Friday and Christmas periods,