Last week, we took a basic look at CPMs, discussing what CPM stands for and how CPMs factor into your earnings. But there’s more to cover! For instance, why do CPMs sometimes drop suddenly during certain parts of the year?
As a content creator, you likely have a love/hate relationship with the advertising market. Some months you absolutely love what you read in your earnings reports, and other months you’re ready to take to the forums to vent about dips in your earnings. Though changes in CPMs can certainly be frustrating to deal with, take a deep breath: seasonal CPM fluctuations like this are completely normal.
Looking at the data
Looking at your own earnings data is one thing, but your reports don’t show you how other creators’ CPMs behave too. So we’ve taken a look at data from the Fullscreen data vault for you. On average, CPMs drop 45% after the holiday rush in December, then slowly pick up speed throughout the year.
The above chart is probably similar to what you’ve been seeing for years: strong December earnings, dropping drastically in January, then slowly picking up toward the middle of the year.
Why the drop?
Why are CPMs so strong at the end of the year and then suddenly drop at the beginning of a new year? In short, demand.
During certain times of the year, such as the holiday season, advertisers’ demand for ad space is much higher than normal. This limits the available monetized views on your videos, also known as inventory. With advertisers fighting over prime advertising spots, your eCPM naturally increases. In December, at the core of the holiday season, advertisers are willing to dish out serious cash to get their products seen and sold during the holiday buying frenzy. But once January hits, it’s just another month with very little demand.
Here’s an analogy. Let’s look at the Super Bowl—a very high-demand event that attracts tons of viewers. Ad spots are very limited, and major live TV events are few and far between these days, so companies are willing to spend upwards of $4 million per commercial to get their message out to the world during the Super Bowl. But after the Super Bowl, demand for ads goes back to normal, so ad prices drop significantly.
Sound familiar? Online ads work the same way. Advertisers spend a big chunk of their budget in December, when they know audiences are viewing (and acting on!) their ads—which means your CPMs and ad earnings are higher.
At the end of the day, these fluctuations happen across the board, whether you’re a YouTube content creator or a TV network. It’s all part of the business. Use this information to plan ahead for times when you know earnings will be low, and explore other revenue sources to try to make up for the “January blues.”
Follow Howard on Twitter @Pinsky