Why Ad Revenue Falls Every January

Every January, a lot of app developers and bloggers open their dashboards and assume something has broken. Earnings that looked healthy in December fall away in the first week of the year, often while traffic holds steady or even climbs.

In most cases nothing is broken. Ad prices follow the advertiser calendar, and that calendar peaks at the end of the year and resets at the start of the next. Your audience did not get less valuable overnight. The people bidding for it simply have less money to spend for a few weeks.

This guide explains why the dip happens, how to tell a seasonal drop from a real problem, and what is worth doing while prices are low. Dollar figures are estimates from our benchmark tables, the same ones behind the revenue calculator, and any seasonal percentages are hypothetical illustrations.

How advertiser budgets run through the year

Most advertisers plan spending by quarter. The final quarter carries the heaviest load: retailers chase holiday shoppers, game studios push new releases, and many brands have budget left that they would rather spend than lose. Demand for ad space rises through October and November and usually tops out in December.

Then the year turns. New budgets are often approved but not yet released, campaigns that ran over the holidays end, and some buyers pause while they review results. Fewer advertisers compete for each impression, so the winning bid in each auction is lower. That is the whole mechanism. Auctions price your inventory, and auctions need competition.

The pattern repeats on a smaller scale at the end of every quarter, but the December to January step is the largest one most publishers see.

Why eCPM falls while traffic rises

January is also a busy month for audiences. People unwrap new phones, install apps, start fitness or budgeting plans and spend time indoors. So you can get more users and less money at the same time.

The two numbers move independently because revenue is impressions multiplied by price. If eCPM, the average earned per 1,000 impressions, falls faster than impressions rise, income drops. Our eCPM explainer covers the formula in detail if you want to split your own figures apart.

A worked example

Take a Tier 1 Android game on AdMob with 10,000 daily users, each seeing 2 interstitials and 3 rewarded videos. Our benchmark tables put those formats at about $8.00 and $12.00 eCPM. Assume December runs at those central figures:

• Interstitial: 20,000 impressions at $8.00 earn $160.
• Rewarded: 30,000 impressions at $12.00 earn $360.
• Total: $520 a day.

Now a hypothetical January. Users rise by 10% to 11,000, and eCPMs fall by 25% to $6.00 and $9.00. These percentages are illustrations, not measurements.

• Interstitial: 22,000 impressions at $6.00 earn $132.
• Rewarded: 33,000 impressions at $9.00 earn $297.
• Total: $429 a day.

Daily income is down about 17.5% even though the audience grew. A site sees the same effect. At an AdSense Tier 1 RPM of about $7.00, 300,000 monthly pageviews earn around $2,100. A hypothetical 30% lower RPM of $4.90 turns the same traffic into about $1,470.

Seasonal dip or real problem?

A seasonal dip has a recognisable shape. A real problem usually leaves a different trail. Work through these checks before you change anything.

Compare year over year, not month over month

December against January will always look bad. Compare this January with last January, and this December with last December. If the drop from one to the other is similar in both years, you are looking at the season. If this year's fall is much steeper, dig deeper.

Check impressions and fill

Seasonal dips hit price, not volume. Impressions should track your users, and fill rate should stay close to normal. If impressions fell sharply, or the share of requests returning an ad dropped, something else is going on. Our fill rate guide explains what normal looks like.

Look at the split by country and format

A season tends to lower eCPM across most countries and formats at once. A problem tends to be narrow: one ad unit stops serving, one country collapses, or one network in your mediation stack disappears. Break the report down by dimension, as covered in reading the AdMob report.

Warning signs that are not seasonal

• Impressions fall while active users stay flat.
• One ad unit or one network drops to near zero.
• Requests fall, which often points to an app update or SDK change.
• A policy email or a serving limit appears in your account.

If you see any of these, read why ad accounts get limited and invalid traffic explained before blaming the calendar.

What to do in January

The worst response to a seasonal dip is a panicked one. Doubling ad frequency to make up the gap trades long-term retention for a few weeks of pennies, and players or readers remember the experience after prices recover.

Useful moves instead:

• Review floor prices. Floors set during the peak may now be too high, which can push fill down at exactly the wrong moment. Bring them back in line with current bids. Our guide to choosing floor prices covers the method.
• Run the tests you postponed. Lower prices make January a cheap month to test placements, caps and layouts. A mistake costs less than it would in November.
• Ship the risky updates. SDK upgrades and mediation changes you held back before the peak can go out now, with time to recover before the next one.
• Focus on retention. Users who join in January and stay are worth more when prices climb again later in the year.
• Reforecast with honest numbers. Plan the first quarter at the low end of your range, not the December figure.

The ideas for earning more without more users are a good list to work through while traffic is high and prices are soft.

Planning around the cycle

Treat the year as a curve, not a line. When you forecast, use a band rather than a single number. Our tables run from 0.7x to 1.35x around each central figure, which is a reasonable way to think about a quiet January versus a busy December. You can model both ends in the AdMob revenue calculator or the AdSense revenue calculator.

Keep a cash buffer if ad income pays real bills, since payouts lag earnings and a soft January shows up in a later payment. Then prepare early for the next peak with our guide to preparing for Q4. The AdMob help centre and AdSense help centre explain how each platform reports earnings and when they are finalised, and our methodology page describes how the benchmark figures are built.