I’ll never forget the feeling of frustration I experienced in January of 2012. My wife’s blog had been live for 1.5 years, and she was starting to get some decent traffic. She had attended her first blogging conference a few months prior and had, somehow, set up network ads to run on her site. The blog was growing quickly and so where the demands on her time. She was getting a bit overwhelmed (understandably) and needed me to take over monetization of the blog, so she basically handed me a jumbled mess, shrugged her shoulders, and said, “Please help!”
As I started to decipher the language of ad networks and the actual financial meaning behind the reports I was generating, I realized our ad revenue for January was WAY down from December’s earnings. Yet our traffic was UP in a major way, as in double the traffic!! (510,000 pageviews in December vs. 1,035,000 in January). Arggh! What was going on? Where’s the manual?? Turns out this was the result of a normal business cycle, but I had to learn that and prove it to myself through experience.
The Ad Budget Cycle
January ad revenue sucked (and sucks every January) due to the ad buying cycle. I’ve witnessed it year over year, and this has been confirmed with discussions with account managers at major ad networks. Marketing departments have budgets for what they can spend in a year, and they spend what’s left at the end of the year.
Many ad buys are focused around holidays and seasonal events, so after the Halloween>Thanksgiving>Christmas marketing onslaught, January gets no love. You’ll get a bump around Valentine’s Day (a total Hallmark holiday if you ask me…but I did just pick up a special bottle of wine today 🙂 ), and then things will gradually pick up and get stronger in Q3 and Q4.
Let me show you with actual figures from one of our ad networks. This graph shows fill rate, which is ads served/ad requests. So a fill rate of 75% means for every 4 times your page loads (and sends an ad request), the network will only serve an ad on your site 3 times. If you’ve got nothing setup to backfill, 25% of the time you’ll be seeing blanks. Revenue = fill rate * CPM (cost per mille, or thousand impressions), so a drop in fill rate directly affects your revenue, assuming a similar CPM.
What about Google Adsense? Well Adsense usually fills pretty close to 100%, however revenue still drops (the CPM or CPC rate) in January since there is less demand.
The Take Away
- Don’t freak out (like I did) when you see January’s low numbers. It’s not your fault.
- During Q1 especially (or whenever ad revenue is down for your niche), consider running house or affiliate ads as backups.
- Budget for the dip in income so you can maintain positive cash flow.
Right now I’m busy as heck. I wanted to write this post a month ago since the info was more timely. It was to be a quick update to save people from freaking out. But as I wrote it, I realized many beginner bloggers could use an “Ad Network 101” post to learn the vocabulary and basic concepts of working with ad networks before making sense of what I explained above.
I even asked you on Facebook which you’d rather hear about first, “Ad Network 101” or why ad revenue sucks in January. The overwhelming response? You wanted the crash course on the basics. I hear you. It’s been halfway written for some time. But the fact of the matter is you are getting this post first instead because it’s way easier to write, and all this stuff happened in January:
- 2 week only window to sell a digital product (for the first time). HUGE success but also very time consuming (editing, product/shopping cart setup, creating sales pages, recruiting and managing affiliate partners, accounting, customer service, promotion, etc.)
- Working on a site redesign for 100 Days of Real Food. We are using a web developer, but there are a lot of decisions and mock ups involved.
- Winding down one company and staring another in a different state to facilitate participation in the Amazon Associates program (a big portion of our income).
- Electing to be taxed as an S-corp to save some on self-employment taxes.
- End of year accounting.
- Letting one assistant go and taking on that work while I find a replacement.
- Applying to additional premium ad networks and working on optimization.
- Reaching out to some influential people to schedule some interviews and get our story out.
- Figuring out how to add back 28,000 email subscribers I had unsubscribed (it’s a really long story, and it was not an easy process).
- Planning a mastermind weekend retreat.
- Plus all the regular stuff…
There, I feel better. Excuses conveyed. 🙂 Stay tuned for the Ad Networks 101 post.