As the year comes to the halfway point, and media buying departments take a quick breath before they prepare to head down the “big” half of the year, it is worth reflecting on the cycles and trends that shape our industry.
Advertising budgets are an interesting place to start. Monthly, quarterly and yearly cycles govern spend patterns in the industry. Usually, you will see spikes towards the end of the month as agencies and advertisers scramble to use up their remaining budgets. I say usually as an advertiser may have used up their budget several days before the end of the month. This applies more so at the end of quarters – where the pressure could be increased to spend that little bit more, or budgets may have been exhausted a month ago. Mix in burst campaigns, holidays, big gaming days – it is enough to send developers crazy, when all they are trying to do is track their advertising revenue from one day to the next.
The next aspect to look at is how advertisers determine their bid price for advertising. This will directly affect eCPMs earned by developers.
Obviously, return on investment (ROI) is the underlying factor. However, circumstances such as competition, market conditions, shareholder expectations etc can affect how much advertisers are willing to spend. A company in the process of fund raising may spark of a bidding war as they try and grab market share, while another reaching their campaign budget early may see the price fall dramatically for the remainder of the period.
The last area to address is overall market trends. When we analyze the performance of banner ads, we don’t lament the 0.5% click through rates they used to get 10+ years ago. This is because the performance of any new product goes through various cycles. A few weeks ago I wrote an article titled “Where are those $100 eCPM ad types?” which looked at the hype cycle of advertising. The reality is that in our super-fast paced industry, the move from one stage of the cycle to the next is even quicker. So while a year ago developers were seeing $100 ecpm on certain high performance ad types, those earnings have equalized at $7-15 ecpm as we enter the “plateau of productivity”.
So what do you do as a developer to ensure you are earning as much as possible? Make sure you are looking macro, not micro. While it is important to be watching your earnings daily or even hourly, don’t get caught up in the peaks and troughs that can come from daily cycles. Compare this month to last, last quarter to this quarter. Are you heading in the right direction? Are your actual earnings better – not just your ecpm. But more importantly, be aware of the changing trends and new developments in the market. New ad types will provide peaks to developers who jump on them early. But also expect earnings to steady out over time.
Nowadays, the advertising cycle is almost as wild as riding a roller coaster, but just as much fun.