Understand the causes and consequences of lower advertising rates in Q4 2022 and Q1 2023

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Advertising rates are an important indicator of the health of the advertising industry, and fluctuations in these rates can have significant impacts on businesses and the economy as a whole. In this guide, we will delve into the causes behind the anticipated decrease in advertising rates during Q4 2022 and Q1 2023, and examine the potential consequences that this trend may have on the industry and the wider market. By exploring the factors contributing to this shift and their potential implications, this guide aims to provide a deeper understanding of the dynamics at play within the advertising industry during this period.

Market check

The key hits: 

  • Travel is the top-spending advertising category so far this quarter, according to five publishers. 
  • Technology ad dollars, however, looks as though they won’t come back into the mix until Q2. 
  • The finance category is seeing mixed results at the moment. While 4 out of 5 publishers said this category is down, one media exec reported this category is up. 

So far, the overall trend for publishers’ advertising revenue is down in the first quarter but not all advertising categories are to blame.

While several publishers have reported that their direct-sold ad businesses are pacing between single-digit percentages to 25% lower than forecasts and open programmatic market RPMs are down between 20-55% year over year, the auto, travel and finance are all strong advertising categories, according to five publishers who spoke with Digiday for this story.

“I think the traditional assumption is that when a slowdown comes, everyone’s impacted — all of the economy is impacted equally. That doesn’t seem to be the case for the last few quarters, including the start of this year,” .

On average, advertiser budgets are down between 5% to 20% this quarter over Q1 2022, according to two execs who sit on the buy-side and were also granted anonymity in exchange for candor. While this range is broad, the buyer added that each client is approaching budget cuts differently and the category they fall under is impacting spending as well right now.

Here’s a breakdown of which advertising categories are spending, aren’t spending or are semi-spending with publishers this quarter. 



Nearly every publisher referenced travel as the advertising category spending the most year-over-year right now, with confirmation from one media buyer that those budgets have been least impacted by the economic downturn. 

The travel category has been steadily strong since COVID vaccinations became widely available and over the past couple of quarters, that travel spend has increased beyond what it was in 2019. “Travel has now eclipsed pre-pandemic levels for us,” said the first media executive. 


Despite one media buyer saying that their auto clients’ budgets were down this quarter, three media execs said the auto category was performing well for them.

“Auto is super hot right now. There’s a ton of car launches coming this year. Super heavy [electric car] focus [and] there’s a lot of marketing dollars that are going to go into the launch support,” said the first anonymous media exec.  

Consumer packaged goods (food and non-food) 

Three media executives said that CPG was a top spending category this quarter.

“[Consumer packaged goods] are seeing pretty good returns in their business and they haven’t really slowed down [on advertising],” said the first media exec. 

Both non-food CPG and the food and beverage categories are seeing growth this quarter, according to a fourth publisher who spoke on the condition of anonymity. And while not specifically a CPG category, they added that pharma was up inline with both CPG and travel. 

Citing the improvements to the supply chain, a fifth publisher who spoke on the condition of anonymity said “CPG is where we’re seeing a huge amount of opportunity come in.” 

Not spending


The tech category dropped 2% in ad spend from January 2022 to January 2023per MediaRadar data.

Tech was the most commonly cited, non-spending category this quarter by every media exec interviewed for this piece. This is unsurprising given the amount of layoffs happening in the tech industry right now.

“Tech is one of our biggest categories [and] you look at the layoffs and for obvious reasons, they’re just not willing to engage on marketing budgets,” said a second media exec who spoke on the condition of anonymity. And despite Google, Amazon and Salesforce all being top advertisers for this publisher, they will not be spending on ad campaigns until the second quarter this year.

Not quite unusual, as the tech category often swings heavier in the back half of a calendar year, thanks to many product launches that are anchored to the fall season, but the first media exec said that “some of the big tech companies are seeing a big slowdown,” even compared to traditional pacing for the first quarter, “whereas in the middle to end of last year, they were still running pretty hot.”


“Beauty, I think the overall sentiment we’re hearing from clients is that holiday sales weren’t great and that’s impacting some Q1 budgets,” said the third media exec. 



The financial category dropped 16% in ad spend from January 2022 to January 2023, per MediaRadar data

In-line with tech, business/B2B and finance are “pretty soft,” according to a third publisher who spoke on the condition of anonymity. Three additional publishers agreed that this category was down for them in Q1.

“Finance was so slow and so quiet … and the RFPs that we usually get in November, we just got [in mid-January]. And so that means they might not hit in the first quarter, but we’re just glad that we’re seeing them,” said the second media exec, who added that despite their late arrival, the RFPs do not have any budget cuts compared to this time last year. 

And yet, the fifth publisher said that finance, specifically around credit cards, banking and personal finance, is an extremely opportunistic category this quarter, so much so that they’re planning to launch a new personal finance editorial vertical on their site. 

Retail & fashion 

The retail category dropped 12% in ad spend from January 2022 to January 2023per MediaRadar data.

Retail is “way down,” said the fourth media exec, who added that this is not unusual coming off of the holiday season. 

Luxury fashion, however, is still spending, the exec added, which was backed up by the third executive.

Ad rates have remained stagnant as we arrive one-third of the way through Q1. US ad rates are currently down 22% compared to last January.

ad rates january 2022 january 2023 comparison

What’s important to remember about January 2022, however, is that it started off riding the high of the end of 2021. It then dipped starting around August and stayed level for most of the rest of the year.

ad rates january 2021 january 2022 january 2023 comparison

All that said, it is likely ad rates will remain where they are for most of Q1, as advertisers are playing it safe. Ad rates are currently higher than in all years prior to 2021.

ad rates monthly average month over month
Average ad rates per month, starting in April 2016

If you were hoping for a ‘2021 effect’ this year to make up for lower ad rates in 2022 just like after 2020, you’re unlikely to see it. 2021 was an outlier and a result of the world opening up once more, not just as a way to make up for poor ad rates in 2020.

2022 was then the year everyone watched as the economy slowly became worse and worse, and people began pinching pennies increasingly more. By the end of 2022, it was obvious things were likely to get worse before they get better, and ad rates dropped off.

We are still living in the aftermath of that, and it is likely that advertisers are going to continue to be conservative in spending, as consumers are likely to spend less in general while we all wait to see if a recession is imminent.

ad rates per day month over month
Daily ad rates starting in April 2016 through the end of January 2023

Which niches saw improved, decreased ad rates

The trend ‘Dry January’ has ad spend for non-alcoholic beverages up the week of January 9, 2023, compared to the week prior. According to MediaRadar, advertisers spent $7.5mm, which is a more than 40% increase WoW. Specifically, advertising spending for soft drinks rose 1,000% WoW.

Tech advertising saw barely any changes in ad spending, though telecommunication companies (Verizon, T-Mobile, etc.) reduced their ad spending by nearly 20% WoW. This shouldn’t be surprising, as many telecommunication companies do big ad spend pushes around the holidays. Information technology, however, like GoDaddy and Wix, was up 150% WoW with over $25mm spent on advertising.

technology advertising spend breakdown

Beauty advertising spending has been in decline since right after Christmas; the week of December 26, 2022, ad spend was down 30%; the following week, it experienced another 20% decline. The week of January 9, 2023, saw another 5% decrease. Interestingly, ad spending on cosmetics was up over 1,000% WoW, amounting to nearly $10mm.

beauty advertising spend breakdown

The most interesting ad spend trend was that Athletics experienced a decline, which is not typical for this time of year since this is a popular time of year for health-related ads, as many people set New Year Resolutions to be healthier. Ad spending was down 50% WoW.

Publishers in these niches may have noticed their EPMV and/or revenue drop or rise, depending on which category their website falls in. If you’re a recipe site, Dry January is officially over, so it may be advantageous to make some fresh content on alcoholic beverages; don’t abandon articles on non-alcoholic beverages, however, as there are still plenty of people who extend Dry January past the end of the month.

If you’re an information technology site, it’s possible to get in on this ad revenue by creating good content on products and tools to create websites, possibly a ‘pros and cons’ article. It seems as if these companies are doing big pushes right now, as it’s likely people will pick up new hobbies and set new goals for 2023; one of them may be starting a website.

By following ad spend trends, you can look to see how your niche’s ad spend is looking, and make content that is more likely to receive ad dollars.

Social media will be hit hardest by decrease in digital ad spend

Speaking of ad dollars, the channel seeing the biggest decrease in ad spending during this downturn is social media.

An eMarketer report shows that the social media ad spending forecast has been reduced by $16.21 billion.

us social network ad spending forecast has changed

The biggest ad spend decline is coming from Meta, or Facebook, at $11.02 billion.

Some of this decline has to do with privacy changes, with Apple leading the way. Additionally, the possible coming recession, inflation, supply chain disruption, and geopolitical instability are making advertisers reconsider how they’re spending their money.

Site redesigns can affect your rankings

Speaking of ad dollars, something that may cause your site to lose ranking, and thus traffic and revenue, is redesigning your site.

Gary Illyes from the Google Search Relations team recently posted on LinkedIn that a site redesign may make search engines “go nuts.” 

An article by Search Engine Roundtable says this happens because search engines use the HTML of pages to make sense of the content, i.e. when you break up paragraphs or remove H-tags because of some CSS styling you want, you change the HTML parser’s output. In basic terms, changing the core HTML can cause these ranking changes.

Instead, it’s suggested that publishers should try using semantically similar HTML when redesigning their site and avoid adding tags where they aren’t needed.

If you’re wondering why you’re losing ranking and you’ve recently completed a redesign, it may be that the search engine doesn’t recognize the site the way it used to. Redesigns can be beneficial, but only if they’re executed properly.

How marketers are responding to Google versus the DOJ

Marketers are reconsidering their relationship with Google after the DOJ recently filed an antitrust lawsuit against them. It’s the most serious antitrust challenge against the company to date.

If you are unfamiliar with the lawsuit, check out The Publisher Lab’s recent podcast.

Basically, the lawsuit targets Google’s sell-side tools and demands the break up of Google Ad Manager suite. Much of the suit is about how Google has been able to maintain a 20% revenue share fee that it has charged on its ad exchange since 2009. It does not, however, call for the break up of any buy-side items like paid search or YouTube, or demand-side platforms like Display and Video 360.

the DOJ files an antitrust lawsuit against Google

Even before the lawsuit, some advertisers had moved away from Google, like British Gas, and moved to independent ad servers, though this is certainly the exception.

At least at this point in time, there are few that can completely abandon Google; they are still the major player in this industry, and there won’t be any significant changes for years, especially as Google will fight the lawsuit. However, it is becoming increasingly easier to distance oneself from them, as more alternatives are being introduced into the space all of the time. Marketers will have to consider the cost of switching and learning other platforms against the value that Google currently brings them until things become more clear.

If you are connected to other platforms outside of Google to earn money from ads, you may see an increase in revenue trickling in from these platforms as more and more advertisers shift their time and money elsewhere to stay out of the crossfire of the lawsuit.

The changing atmosphere of the open programmatic market

The open programmatic market is in a time of transition.

There has been an increasing amount of programmatic auctions initiated by mostly lower-quality publishers—mostly those who only operate the site to make a buck—beginning to clog the ad tech pipeline. These publishers are running auctions for the same impressions as ad tech vendors simultaneously, who are attempting to reduce the number of auctions they’re a part of. While this makes publishers a lot of money, this is bad for advertisers because they could unknowingly bid against themselves.

As stated in the article, “…the lowest quality supply is occupying a growing share of programmatic inventory on the market as a result of auction duplication.”

how programmatic advertising works

While these publishers’ ads.txt files are growing as they allow an increasing amount of advertisers to bid on their ad space, advertisers have been slowly moving away from the open market and into private marketplaces. Of course, the open market is still dominant as of right now, so it is hard to completely move away from due to ease and the low cost of buying.

Instead of a premium programmatic marketplace that builds on many one-to-one deals with publishers, agencies are trying to keep their own supply of curated inventory that builds on many lookalike deals with multiple publishers, using supply-side platforms to do it.

Basically, these new ‘curated marketplaces’ could become the agency’s own ‘open auction.’

As stated, the open auction is still the most popular. There are ways to weed out the low-quality inventory and the number of auctions each programmatic marketplace can issue, but it can only do so much with the practices currently in place. As time goes on, filtering lower-quality inventory is becoming more and more sophisticated.

High-quality publishers who aren’t trying to game the system don’t have anything to worry about, but it is worth knowing that some agencies are looking to keep a closer watch on how their inventory is used and by whom.

What might the rest of Q1 ad rates look like?

With January 2023 in the rearview mirror, what have we learned about what the rest of Q1 might look like?

  • Advertisers are being cautious about spending and that doesn’t look to be changing anytime soon, which means ad rates are likely to be stagnant for most of Q1
  • Certain niches are going to perform better at various parts of the quarter, depending on holidays (Valentine’s Day, Black History Month), social trends (health and Dry January after the turn of the New Year), and how much money was spent in the niche previously
  • Social media ad rates are falling below forecast, but it’s not to be completely ignored, especially with the rising popularity of TikTok; consider how advertisers may be reallocating some ad spend to social media and how you can use social media’s popularity to your advantage

What can I do to improve my ad revenue?

1) Choose Your Target Audience

The cost of CPM and CPC will vary depending on the country where your target audience is located. For example, the CPM of an African or Balkan audience will be much lower than the CPM of an American audience, owing to the relevant population’s purchasing power.

The same principle applies to the demographics of an app’s target audience. If, for example, an app is aimed at minors, most of the target group will likely lack the means to complete a digital transaction, representing a conversion bottleneck. 

So if ad revenue is low, the reason might be that the target audience comes from the regions with low CPM and CPC or from an age bracket with limited liquidity.

2) Increase Content Quality

Content quality is essential for ad revenue. The advertiser pays for views or clicks, which requires an audience and high traffic. And the best way to increase traffic is to provide good-quality content. That’s why placing ads within low-quality content is unlikely to generate revenue. 

The content needs to be unique, credible, and valuable for the audience before Google will recognize it. And yes, it needs to be SEO-friendly, with keywords with a high search volume and low competition, if possible.

The better the SEO, the higher that Google—and other search engines—will rank your page.

3) Provide Dynamic Content

Pages where the content doesn’t change are unlikely to deliver in terms of advertising revenue. It’s not enough just to post an article and hope for the best. Google likes forums, blogs, or vlogs, where publishers and users interact with the content constantly. It’s all about showing high engagement levels.

4) Offer a Free Tool

And on the subject of boosting user engagement—Google Adsense advises that websites that offer a free online tool are perfect for attracting both new and repeat visitors. 

5) Choose the Right Niche

Ad networks discover CPM and CPC based on supply and demand. This means that some industries or niches with high demand will have a higher level of monetization.

Some of the highest-ranked niches are insurance, online education, marketing, legal averaging, cryptocurrency, online banking, internet, technology, car industry, eCommerce, and health. 

6) Bypass Ad Blocker Issues

According to Statista, 763.5 million internet users use ad blockers to prevent ads from appearing, which ends up hurting ad campaigns. 

There are two strategies publishers can use to bypass these ad blockers.

The first is by asking the audience to turn off ad blockers while on the website, app, or channel. This is a risky tactic since it may result in the audience leaving regardless of how engaging or unique they find the content. If your audience begins to bounce it can hurt both your monetization goals as well as your Google ranking.

The second approach is to use native ads, which are incorporated within the website’s content. This tactic is more appealing because it doesn’t irritate the user and adds value to the content. For example, it could be beneficial to display an ad that promotes eCommerce software on a page about eCommerce revenue strategies.

7) Optimize the Number Of Ads Displayed

In the marketing world, less can often mean more. Too many ads displayed within an article, video, or app, might cause the audience to leave, once again hurting advertising revenue. This will also affect a website’s Google rank, leading to a reduction in traffic. 

Furthermore, if there are more ads than content, Google might consider it to be a violation of Webmaster guidelines. And, finally, advertisers don’t like to be squashed into a single page.

That’s why it is best to optimize the number of displayed ads, even if it means displaying only two ads on one page. The optimal number depends on the size of the ads, length (especially if it’s a video ad), and form. Google Analytics is a helpful tool for checking displayed ads optimization.

8) Track the Ads’ Performance

Typically, ads that the audience reaches first have the highest CTR and, therefore, publishers tend to place ads with the highest CPC or CPM in the most attractive positions. To discover that position, publishers need to experiment.

Google AdSense provides some general advice on ads placement, but every publisher needs to find what works best for their page or app. For better monetization, it’s best to keep an eye on performance and change the order of ads as and when necessary. 

9) Use Flexible Prices and Paid Advertisements

Seasonality is another characteristic of ad revenue. That means that you should expect less revenue in January and June, while holiday season months (Christmas, Black Friday, Valentine’s Day, Mother’s Day, etc.) will be peak advertising times. 

If a publisher relies on ads as their primary revenue source, then they need to adopt a strategy that manages demand fluctuation over the year. Yield optimization is one such strategy.

It allows publishers to make the most out of their ad space, selling all available ad inventory for the highest price throughout the year. Reaching the highest price of your ad inventory is possible through Google Ads auctions, which allows publishers to sell ad space to the highest bidder.

The strategy primarily relies on potential customers’ behaviour, making the prices flexible and adjustable, and will depend on multiple external factors such as seasonality and demand.

10) Optimize Ad Sizes

Though bigger ad sizes are better for online ad revenue, users might not appreciate having their screen real estate being dominated by advertising. And given that more than 60% of organic Google searches in the US currently come via mobiles, choosing sizes is something with careful consideration. After all, a good user experience is something that will impact your site rank. 

For horizontal ad spaces you can use the Medium rectangle, the 300×250, which is typically used for horizontal banner ads. Alternatively, a Square at 250×250, or a 200×200 Small square, also displays well on both desktops and mobiles

Vertical ad space can have a high-performance rate and a good user experience on mobile phones, as they can “increase processing fluency”, according to one study. For vertical ad spaces, Google Ads recommends you use the following sizes: 300×200, 300×100, 300×50, 250×250, and 200×200.

Google Adsense uses several banner sizes for its ads, making advertising much easier for publishers and advertisers.

11) Use Different Ad Types and Ad Formats

Since publishers can use a variety of channels—such as websites, social media profiles, video channels, blogs, apps, etc.—the types of ads and ad formats will change accordingly. 

Whether the ads are in a text form, image, or video, they can appear as a push notification, banner, native ads, interstitial, or pop ad. Some of these ad formats might have better advertising revenue than others, depending on the industry and targeted audience, and it is always good to test and analyse their performance. Some ad types will perform differently on desktop vs mobile.

It’s always good to embrace format diversity on websites, as this generally provides a better user experience and increases the click-through rate (CTR). On top of that, advertisers will appreciate the effort.

12) Choose the Correct Ad Placement

If you’re struggling with low ad revenue, one of the reasons might be wrong ad placement on a website or bad timing for an app. These missteps can cause low ad visibility and can significantly affect revenue.

Check whether ad placements are visible and easily clickable for site visitors. Some will perform better, and others will be less effective. For example, ad space in the middle of the content, below the navigation bar, or within the whitespace has much better monetization.

13) Speed Up Your Website

Sometimes the reason for low ad revenue is a website’s slow load speed. Overloading the site with content, including paid ads, can result in a terrible user experience, lowering the Google ranking.

Publishers can implement lazy load to overcome this obstacle, speeding up the initial page load by first loading the top images or videos. When the user scrolls down, the system loads the rest as needed. 

In conclusion, the anticipated decrease in advertising rates during Q4 2022 and Q1 2023 is a complex issue with potentially significant consequences for businesses and the wider economy. While the pandemic and Ukrain war has undoubtedly played a role in driving down rates, other factors such as changes in consumer behavior and the rise of new advertising channels are also contributing to this trend. As a result, businesses and advertisers need to be agile and adaptable in their approach to advertising during this period, exploring new channels and strategies to maximize their reach and effectiveness. By remaining informed and responsive to these shifts, businesses can navigate the changing landscape of the advertising industry and continue to succeed in this critical area.


Peggy R King

Peggy R King is a Consumer Technology Writer at Easy Tech Tutorials. In 2017, she began his writing career as a Reporter for a local media house. After two years of working in the traditional media, Peggy decided to pursue a career that combines his two passions: writing and technology.

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