Why Ad Prices Crash In January And How To Capitalize On It

Thomas
04.01.21 03:39 PM Comment(s)

Why Ad Prices Crash In January And How To Capitalize On It

The January Ad Slump

              The jingle bells have stopped ringing and an exhausted but satisfied public crawls back into work on January 4th to continue the “daily grind.”  It always seems that the holiday season somehow leaves you more burnt out than before it started, and the ad market seems to feel the same way.  After two months of increased ad spend, consumer purchases, and increased advertiser competition, the big guys on the advertising block are just as burnt out as you are.  They are slower to wake up from their post-holiday slumber and need time to evaluate their efforts.  In January we see this as the predictable ad slump, and just like previous years, it arrived just on time.


              Let us look at the some of the changes in ad prices my clients and I have seen since the sweet sound of Saint Nick’s sleigh rocked us all to sleep on Christmas Eve.

Ad slump exists, here is the data

First let us look at my YouTube channel which I have managed to grow to over 126,000 subscribers.  In the YouTube world we work with a value abbreviated as CPM and standing for cost per mile.  It is an advertising term used to determine how much is being paid per 1,000 impressions of your ad.  In the YouTube universe, a CPM of $10 would mean you get paid $10 per every 1,000 ads viewed on your video.  CPM for each content creator is different, so we will only use my channel for a like-to-like comparison.

 

December 1st – 25th

December 26th – Jan 3rd

$12.47

$9.72

 

Ads were paying $12.47 per thousand views as the yule time season ramped up but has dropped 22% since December 25th.

            Our peak CPM was on December 17th at $15.61 and has dropped rapidly (especially over the last 5 days) to yesterday’s CPM of $6.67.  What does this mean for advertisers?  It means that the average cost of reaching my audience has decreased by 22% over 8 days and is continuing to drop rapidly!  If you wanted your ad to be seen by 10,000 people on December 17th it would have cost you $156.10, whereas if you wanted the same 10,000 people to see your ad yesterday on January 3rd it would have cost you $66.70.

I’m cheap now!


           Ok, that was just one example, and YouTube at that!  Who even watches YouTube besides the average 30,000,000 daily viewers?  Let us look at one of my clients on Facebook who has seen a similar cost reduction in their advertising costs since the most wonderful time of the year.


November CPM

December

Last 7 Days

$6.48

$7.16

$4.26


         The last 7 days have seen a 40% drop is costs from the December average!  That would mean, to the wise and awake business owner, they could get the same amount of traffic that they did in December at 40% the cost or get a big boost in traffic at the same total price they paid in December.

This is the ad slump!  This is the opportunity that so many businesses miss out on as they wake from their holiday slumber!

But…consumers spend less in January?

              This is true, no argument there, and it may be why you have not been focusing January as your marketing month so far.  January does see a decrease in spending, check the following table from Gallup.

            In 2016 the self-reported daily spend for consumers was reported to have dropped $18 between January vs December, just about a 18% difference.  So, although spending has declined and you might be tempted to say that cancels out any benefit you may get through increasing your marketing budget, the percentage drop of average ad cost greatly exceeds 18% in all digital mediums I have had the pleasure of working with. 


            Your consumers may not be willing to spend quite as much with you as they did in December, but you will get in front of them for 40% less out of pocket! 

How to capitalize on the January Ad Slump?

Start testing new audiences/platforms

              Testing has never been cheaper!  This is the time to test out new audiences, new copy, new media, or new platforms.  Your cost of determining CTR, cost per lead, or cost per purchase has just decreased and now is the time to figure out how to maximize the effectiveness of each ad dollar.

Build out your audiences for retargeting

              In advertising, retargeting folks who have already interacted with your brand is a powerful way of converting them into a sale.  To maximize your potential retargeting audiences, you need to first get an interaction from said audience.  As an example, when someone visits your website and looks around for a few minutes, creative retargeting means you can find that person again later and serve them an ad directly.  Since they have already had contact with your brand before, they are far more likely to take the desired action. 


            When is the best time to build out audiences for future retargeting?  When ad prices have dropped 40% in 7 days!  It is the perfect time to really slam people with ads to get that first interaction so you can retarget them in the future.

Hire a marketing firm…you know…if you want

              This one may be a little self-serving, but it remains true.  The January Ad Slump is an optimum time to test run with a new firm or switch from self-management to a professional.  Ad costs are down so you can keep your budget a little more conservative and testing is cheap, so your new partners have plenty of room to test and find the best performing ad creatives, platforms, and audiences.

So, there you have it!  The January Ad Slump is in full force and it has never been a better time to test your toesies in the deep and inviting waters of paid advertising!  Let us know if there is some way we can help.