Goodbye, Q1, and hello, Q2. If you’re reading this, you survived what is historically the slowest time of the year in the advertising industry – and in this case, it was a strange one.
With a new quarter upon us, let’s take a deep breath and reflect on the first three months of 2023. How did ad performance measure up in Q1 compared to what we predicted?
Back in 2021, we started a series on the Mediavine blog titled Behind the Numbers with Brad (BTWNB). I coined my very own acronym (and developed cartoon noodle arms). Maybe I should start working out.
More importantly, I teamed up with our data department on a calendar to help publishers understand what to expect for the coming months, and year, ahead.
The calendar uses past eCPM data to predict which days of the year are more likely to be subpar in terms of ad performance, and which will perform best.
The Q1 portion of the 2023 version of this calendar is below:
In order to make this data easier to digest, and to better show the actual trends, we’re taking a different approach in today’s edition of BTNWB.
Because the goal of the calendar is to predict trends in eCPM, and visualize the factors that might influence them, let’s look at Q1 in linear graph form:
This line graph projection tells the story of a “normal” Q1, based on historical data.
What Mediavine publishers notice anecdotally is backed up by the numbers: eCPMs start very low at the beginning of the new quarter, and especially the new year.
Gradually, we expect an increase over these three months, with some peaks and valleys along the way – notably around the Super Bowl and Valentine’s Day.
Now, let’s compare the above projection with what actually happened, and our takeaways from the quarter. Here’s the same graph with actual eCPMs overlaying:
My first takeaway is that we’re beginning to see a change in end-of-month and end-of-quarter spending patterns.
Several years ago, I outlined the trends we often see in programmatic advertising based on the time of year in a blog post titled “Ad Revenue by the Seasons” – by far the most popular post I’ve authored on the Mediavine blog, and for good reason.
The trends outlined in that post have stood the test of time. Whether we’re going through a pandemic, a mild recession, or a booming economy, the trends have held relatively true.
We’ve almost always seen an increase in eCPMs toward the end of a given calendar month, followed by a decline on the first day of the next month.
Similarly, eCPMs peak at the end of a quarter as advertisers are dumping their unused ad budgets into the marketplace in true “use it or lose it” fashion.
However, in two of the first three months of 2023, what we saw deviated from this a bit.
Yes, eCPMs increased as we neared the end of the month, but the decline began a few days, or even a week prior to the end of the month, not on the very last day.
Check out a “close-up” view of this, showing just last 10 days of each month, below:
My second observation is that increased spending patterns ahead of major events and holidays seems to be ending earlier than in years past.
In previous years, we’ve often seen eCPMs peak the day before or the day of the holiday in question. In 2023, this doesn’t seem to be the case.
Case in point: The one-two punch that was Super Bowl Sunday (February 12) followed by Valentine’s Day two days later.
Our predictions for the first few days of February are always dismal. The beginning of a new month, especially in Q1, is a recipe for lower ad performance.
Yet, the Super Bowl and Valentine’s Day offer some bright spots in a dark month, in more ways than one. Both result in increased traffic to many Mediavine websites in the lifestyle space, as well as increased spending from brands trying to find the right audience.
We predicted the increase in spending would start gradually, about a week prior to the Big Game, and peaking just before the event itself.
Instead, we saw some of the strongest eCPMs on February 3, nearly 10 days before kickoff.
As you can see, that peak was short-lived, as spend returned to average levels for the next few days, before spiking again from February 7-10.
In years past, this increase was a steadier line inching up toward the main event(s), but 2023 had a different story to tell. Spend quickly fell to average levels by the Saturday before the contest, and never really increased again. Odd behavior compared to years past.
My third and final observation – and in my opinion the biggest surprise – concerns eCPM at the end of the first quarter.
This trend felt like the easiest of all to predict. Spending peaking at the tail end of the quarter is as bankable as the Green Bay Packers letting me down in January.
This year was no different for my beloved team, but as far as eCPMs are concerned, 2023 threw precedent out the window again as Q1 drew to a close.
As you can see below, spending fell off earlier, and a little bit more sharply, than anticipated:
So what now? How can we use this data to move forward?
Each of these three trends are indicative of the same pattern – or perhaps the breaking of a pattern. So far this year, industry-wide increases in spending do not seem to be peaking, sustaining and falling quite like they have in the past.
Being proactive, this tells me that planning ahead for the times when we expect higher eCPMs should start even earlier. Pushing your great content to run a week ahead of a holiday, or an end-of-month spike, might now be too late.
Data tells us to begin planning a few weeks ahead to be sure you capitalize on the higher eCPMs, which may come and go earlier than in the past.
It’s hard to understand why this is the new normal (at least for Q1). Advertisers pour millions of dollars annually into research and analytics, ensuring they know exactly when will be the most effective time to spend their ad dollars.
Is their data telling them that the biggest return on investment is now happening earlier than in years past? If so, why might that be?
Have supply chain shortages prompted consumers to shop earlier for the ingredients for a legendary game day spread, or a perfect Valentine’s day gift?
We don’t have all the answers yet, but these are important questions that we will continue to ask ourselves and our partners in the industry.
For now, all we can do is follow the data, and offer our best prediction for the future. Whatever additional surprises 2023 throws in our direction, we’re here to make the best of them for our publishers, and I’ll be back to break them down for you again soon.
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