Ad rates are usually climbing right now, instead we are seeing them decline? Why?
Let’s be honest, right now ad rates are currently pretty terrible. Usually Q4 is the time of year when online content creators get their yearly bonus, typically seeing an increase in ad spend. It’s estimated that at this time of year, roughly 60% of all ad spend is condensed into 6 weeks between the start of November and first couple of weeks of December, but for quite a few reasons, that just isn’t happening.
Check the Online Ad Revenue Index
One of the Tools I use to keep a track of how the online industry is fairing is Ezoic’s online Ad revenue index. This helps give a snapshot of how the market is performing as a whole. I think of this as like viewing the stock market. Although some sites can be up, and some can be down, the line represents the mean, which is where I believe my site sites. I can see ad rates are low, and this graph all but confirms it.
But why is this so different to last year?
Good question-this time last year we were coming off the back end of Covid lockdowns. Huge investment in tech had taken place, and people were still by and large working from home. Online was where EVERYONE was spending their time, and advertisers always follow where that attention is. It wasn’t on commuter trains or billboards-it was all digital. Partly the downturn in spend we are seeing is the fact that the world is spending more time outside once more, reducing the reliance on online shopping.
Other problems in the world are obviously having a knock on effect!
Right now the rate of inflation has gotten is of control, and prices are rising rapidly. This is causing further problems for people, as they are struggling to afford even just the basic necessities. The high rate of inflation is also causing problems for businesses, as they are struggling to keep up with rising costs. Advertisers are no exception, and they are seeing their advertising rates decline as a result. They are in a position where they are being expected to spend more, but for less return. We may have hit the point where this does not make business sense! Whilst your cat blog may be hilarious, its clearly not immune to inflation!
On top of that the war in Ukraine has had a significant impact on advertisers. Since the conflict began, ad rates have declined significantly as businesses have pulled their ads from Ukrainian websites. This has left many websites struggling to make money, and it has also had a negative impact on the Ukrainian economy.
Another hammerblow to the online advertising world is the collapse of FTX. This was a company investing heavily in its presence. They invested in F1, the NBA, the MLB to a tune of nearly 1 billion dollars combined. This will have a huge knock on effect on the way other crypto companies will operate, the scrutiny they will be under, whilst also removing a lot of advertising dollar from the ecosystem. This is not only bad because of the loss of net revenue, but also reduces competition. The inventory they would have secured at higher RPM’s now becomes available to other companies, at lower cost. Overall, the collapse of FTX will negatively impact the ad industry.
AND IF THAT WASN’T BAD ENOUGH FOR AD RATES
The end of 3rd party cookies will have a significant impact on advertising revenue. Advertisers rely on these cookies to track the behavior of users online, and without them they will be unable to target ads effectively. This will lead to a decrease in ad revenue for websites, as advertisers will be less likely to invest in online advertising. The ad rates we are seeing now, whilst compressed, will still perform better than non targeted ads. Unfortunately, what we are seeing now could well become the new normal.
With that in mind-there are a few things I’m doing to get ahead of all these issues. Currently, I am turning all my articles into videos using Ezoic’s new Flickify tool. All I do is upload my articles, and it automatically converts them into video to help boost revenue for the site! Pretty neat, and starting to see some positive revenue AND traffic from these videos!
When combined with their new tool Humix (video sharing) it’s given me something to think about that isn’t the depressing state of the ad spend thats out there.
Hopefully the world cup can bring in some extra revenue-we all could do with a success story there!
