Key Points

  • Ad revenue across the entire industry is at a 5 year low, lower even than the lowest ad revenue numbers recorded during the height of COVID restrictions in the US.
  • Industry indicators estimate that ad revenue will continue to be lower than last year’s metrics for the first half of 2023.
  • Industry researchers expect a resurgence in ad revenue to come in the second half of 2023.

Analyzing Ad Revenue Trends

To help publishers understand the state of ad revenue across the industry as it stands currently, how it relates to past performance, and what the outlook for 2023 looks like, we dug deep into data analysis and research.

This article breaks down historical industry trends and looks to trusted research organizations for predictions going into 2023.

We identified these trends based on historical data over the past 5 years. To dig deeper into understanding some of these trends, we took to our internal Publisher Earnings Index (PEI), a measure of average publisher revenue normalized over time, which gives a good indicator of seasonal changes up and down in average revenue across the industry.

These trends are industry-wide. To ensure that these trends represented not just our own portfolio, but the industry as a whole, we confirmed similar trends for each of the data points noted in this article with external sources, like Ezoic’s Ad Revenue Index for instance. This helped to ensure that each issue addressed was consistent across not just our publisher portfolio, but the industry as a whole. Further, it confirmed that each trend was industry-wide and not specific to any technology or demand source.

Typical Seasonal Changes in Ad Revenue

Let’s begin by reviewing typical seasonal ad revenue trends. While most publishers are aware that there is typically a pretty decent dropoff in revenue between December and January, sometimes just how big that dropoff is can be overlooked.

Playwire PEI Trends _ December - January Ad Revenue Drop

Source: Playwire Publisher Earnings Index (PEI)

Over the last 5 years, the average drop in revenue performance from the height of December spending to the first week in January is about 77%.

Average December to January Ad Revenue Drop: 77%

So, it bears keeping in mind the sheer avalanche of that drop-off, as it is easy to forget when the pain isn’t fresh but over a year old.

Year Over Year Comparisons

Looking at the drop from December to January is great for understanding relative change, but one point that is still valuable to look at is the overall performance of the “high” period of December against previous years.

Playwire PEI Trends _ December Performance Over the Last 3 Years

Source: Playwire Publisher Earnings Index (PEI)

December of 2022 showed nowhere near the performance of December 2021 or 2020. In fact, December 2022 showed a full 30% lower performance than December 2021.

December ‘22 performance was 30% lower than December ‘21 performance.

So, if you are comparing your performance over last year’s performance, it is important to keep in mind that both December 2021 and 2020’s performance was incredibly high by comparison to other Decembers.

When you couple a slow December performance with the massive standard 75% drop in revenue, it’s no wonder that it might feel like your revenue dropped off a cliff. The industry is in perhaps one of the strangest positions it has been since the height of COVID.

So, if you’re wondering why your revenue this January feels especially painful, it’s because the entire industry is feeling it.

How Low is Revenue Right Now?

Speaking of COVID, let’s take a wider view again, and generally compare industry performance today with that of the last 5 years.

The industry is currently sitting at the lowest ad revenue earnings in the last 5 years, lower even than the low presented at the height of COVID-related restrictions in the US, and pretty much on-par with numbers way back in January of 2019.

The industry as a whole is currently sitting at the lowest ad revenue earnings since the height of COVID.

Playwire PEI Trends _ Low Points in Ad Revenue Over the Last 5 YearsSource: Playwire Publisher Earnings Index (PEI)

So yes, we are having a rough January to be sure, but putting it in the perspective of the entire last 5 years, makes it obvious that the industry is in a painful state regardless of the fact that it is January.

Economic Trends

Continuing down the rabbit hole of reviewing ad revenue over the last 5 years, you can easily see the storyline of what has been happening economically develop graphically.

Playwire PEI Trends _ COVID Timeline and Recovery Trends

Source: Playwire Publisher Earnings Index (PEI)

You see the 5 year low hit at the height of COVID restrictions. Then you see a gradual and continuous recovery through the end of 2021. From there, the industry shows its traditional drop between December and January, followed by a massive boom bolstered by the excitement of a return to normal following COVID with record-setting advertising spending over the holiday season in 2022.

Many economic predictions released in the last quarter of 2022 had warnings of budget tightening in preparation for a potential recession, showing up without fail in the January performance of the industry as a whole.

Comparing with External Sources

As previously noted, we compared every data point covered in this article with external sources to confirm that the trend was present industry-wide. We basically found the exact same story and similar trends for each trend mentioned across these external sources as corroboration that all players in the industry are experiencing similar circumstances.

Industry Outlook

Let’s shift from investigative to speculative now to look toward the future and try to understand how revenue might look over the course of 2023.

Ad spend had been consistently dropping month over month in the latter half of 2022, which we are now beginning to see the results of showing up in publisher ad revenue. According to Standard Media Index’s September 2022 Core Data report, ad spend dropped by 5% year-over-year from the previous September, continuing a trend that had been happening for the prior 4 months.

Magna Global, one of the leading global media investment companies, highlighted some important predictions to be aware of in their most recent report. Essentially, they expect ad spending to remain slow and sluggish early in 2023, but picking up in the second half of the year.

While there has been clear budget tightening in the presence of a potential recession, Magna believes that economic indicators like the change in inflation and current unemployment rates point to a likely resurgence in the back half of the year.

Overall economic indicators show clearly that the economy was slow for the majority of 2022 and will remain slow at least through the middle of 2023.

What Can You Expect?

The bottom line:

  1. Buckle in for a tight first half of 2023, regardless of what kinds of ad monetization solutions you use, or which demand sources you have access to. The trends are affecting the industry as a whole.
  2. There is a light at the end of the tunnel as major industry researchers are predicting things to pick back up in the second half of the year.