Due to the financial and digital interconnected nature of the world we live in, the programmatic advertising industry has not been spared for publishers and advertisers, and it, too, is experiencing powerful economic shock waves and acute volatility during the same period.
Sadly, it appears that the social and economic impact of the pandemic will be with us for weeks and months to come, and we will need to adjust to thrive in challenging circumstances.
Almost in one fell swoop the traditionally massive budgets from travel, accommodation and related industries vanished which have large repercussions on the auction dynamics.
As you can see from the graphs below, the downturn in eCPM prices that publishers are experiencing right now is a global trend for all publishers from the effects of COVID-19.
Here is an example of Month-over-Month eCPM comparing Q1 2019 (as a normal situation) to Q1 2020 (COVID-19)
Here is an example of the significant drops of eCPM across all of our buyers.
Looking at the data, it is clear that COVID-19 has caused advertisers to reduce the size and reach of their advertising budgets and campaigns, which, conversely, has caused global eCPM rates to fall to unseasonably low rates.
This powerful ripple effect has produced a very real impact on publishers revenue streams, especially programmatic first publishers.
Predictably, the most common reaction to an unstable period is to hunker down, reduce expenses and maintain a low profile.
In our opinion, not being pro-active during this period is the riskiest response to the uncertainties of the current economic climate.
While you are navigating your way through the uncertainty, we believe that this is an opportunity to set-up your business to be ready for tomorrow.
How should publishers improve during these unprecedented times of volatility and uncertainty? Here are three ways that you can make strong and effective improvements to your website during this period.
- Investigate and address your current vulnerabilities
- Maximize your current cash flow
- Analyze and adjust your current pricing
During normal times, a publisher has an assortment of tasks and optimizations that you conduct on a daily basis to improve your revenue. Whether it’s two-click policy compliance, A/B testing ad units, or EBDA, all are important to review and optimize consistently.
But analyzing how you can improve the most by addressing what’s working least is an essential task to take on. It forces you to ask uncomfortable questions about your strategies and the effectiveness of the main generators of your revenue.
Right now is a good opportunity to analyze and optimize important aspects of your website that perhaps you didn’t have the time to question or even the resources to approach during normal periods
- Re-organizing your ad stack
- Adjusting your website to optimize for speed
Publishers should even take some time to view what the competition is doing for their website and aim to learn from their changes and action. There’s probably something that they are doing to improve that would be wise to consider as well.
Specifically, by analyzing your vulnerabilities across your website and the revenue generators, your ad units, you can significantly improve your financial bottom line.
Protect and Maximize Your Cash Flow
Ad revenue is the lifeblood of your business as a publisher. Money must continue to flow in and out to ensure your business stability.
During this period of instability, begin implementing strategies to keep your revenue flow moving, whether its optimizing your CPMs, or trying new monetization sources in an attempt to revitalize and improve the eCPM of an ad placement.
An effective method to achieving this would be to thoroughly review your inventory.
It would easy to presume that large ad units on your website look attractive alongside your content as well as being financially beneficial. Though upon further inspection, deciding to only place large ads on your content might not be the best strategy for achieving peak monetization on your site despite the high CPMs it may be earning each month.
As a rule, AdSense recommends only placing three ad units per web page. If you have more than three ad units on each page, this could be an opportune moment to begin removing the least profitable ad units from the pages and begin adding new types of ad units to turn the tide.
The reason is because placing too many ads on a page has proven to have a negative effect on the user experience and potentially will slow your load times on your pages. In addition, placing too many ad units on a single page can have negative effects on key performance metrics which effect your revenue.
- Bounce rate
For example, a webpage containing around three powerful ads, in which each earn desirable CPMs, has the power to yield high RPM or eCPM. Conversely, if you decided to place more than four ads on the same page, you may find that the page has less user sessions and a higher bounce rate, which as a result will yield less revenue generated per overall session by users in comparison. One way to confirm your users’ interactions with your webpages would to be to refer to heat maps to view how your traffic is actually interacting with your website.
If you see something obvious about your user behavior, consider moving the location of the ad unit to potentially improve its exposure.
Diving in deeper, having too many ads on a specific webpage can cause the following negative metrics to rise across your website:
- Slow load time on a webpage
- Decreased viewability percentages
- Lowered number per avg. pageviews per session
- Shortened avg. session duration
In particular, page bounces are a very problematic consequence of too many ads because a high bounce rate increase ends up producing:
- Decreased click-through rates
- Stagnated campaign performance
The combination of all of these factors could create a scenario where advertisers are bidding less on your ad placements in programmatic exchanges, which means less revenue in general. The key point here is to start applying your focus on identifying your weakest ad units and then building a plan for addressing them.
After looking through your ad units, this could be a good time to also consider your pricing.
During this period we recommend to all of our publishers to always be experimenting with price adjustments to better meet the actual market price advertisers are seeking to spend.
It could be as simple as consulting with your monetization team and your data to experiment to see whether is down because of the current economy or that your ad units need price adjustments.
Obviously it is disconcerting to make the decision to seek less revenue for your traffic. But it is critical to investigate whether you’re leaving money on the table by being too expensive for advertisers.
Imagine your surprise when you find out that you can increase your monthly revenue by lowering prices!
It is safe to say that 2020 has been especially tough for the world. The emergence of the COVID-19 has had a profound effect on the health of world citizenry and the stability of the global economic markets.
Understandably, this is a challenging time for your online business to be at the mercy of outside economic factors which are affecting your revenue. Not having control and seeing reduced is understandably frustrating.
As you respond and navigate this challenging period, it’s important to consider the lessons of the economic recession of 2008 to better understand how to emerge stronger for tomorrow.
Start today and begin looking at everything. Whether that’s accessing your vulnerabilities, conducting an evaluation of your ad units or testing the market value of your ad units.
We hope that this overview about maintaining and optimizing your revenue during this difficult period will enable you to consider all of the different ways to improve your website for when the economy gets up and going again.
We believe that being ready for the challenges of tomorrow starts today.
If you require any assistance, we’re here to assist you and show you the way to reaching your goals going forward.