A question that we are frequently asked at Ad Results Media is, “How does seasonality affect performance?” The short answer - very materially.
In many ways, this intuitive answer shouldn’t really surprise or impress anyone. As we approach the holiday season, consumer spending ramps up as many workers receive year-end bonuses and the general festiveness of the season leads to increased economic activity. So, it isn’t really much of a surprise that podcast advertising effectiveness and commensurate podcast advertising efficiency also increases during this time period.
What is a bit more intriguing of a question to answer, though, is whether the improved performance over this time period in podcast advertising is driven by higher conversion rates, more impressions, both, or neither. The data chart provided shows that the improvement is primarily driven by higher conversion rates. The CPA decline from $123 to $89 is about 28%, which is basically the same increase in conversion rate from 14% to 18%. Although, it does seem reasonable to think that both positive effects can come into play depending on the specific circumstances.
Chart 1 illustrates this point as we can see that average CPA (see Appendix for notes on the calculation methodology) across our client base declines materially in December (concentrated in the first two weeks of the month). Many of our clients are consumer discretionary products that make excellent gifts (please reach out if you want some suggestions!) or are health and wellness-focused. The 10-pound holiday bump is a real thing, and we could all use a bit of help in that regard to start the new year.
Because we are an agency that has a specialty in not only podcasting, but across other channels as well, we see some other interesting dynamics. The same data used above for podcasts is shown below for other channels.
A couple of things are noticeable in Chart 3. We see the decline in CPA as we get into December across all channels. But we also see a noticeable increase in CPA for local radio during the summer months. This is an effect that is also predictable. During a normal summer season, many people take nice long vacations, change working hours, and are not listening on a standard schedule to local radio broadcasts. Many local radio performers also go on vacation during that time period, further depressing ratings and the effectiveness of advertising at that time.
Our dataset at Ad Results is quite rich, so we can dive quite a bit deeper than just looking at channel performance across months. One exercise that we do is to create buckets of our customers based on their economic sector. If we look at a similar chart of the performance of podcasts, but by economic sector, we again derive some interesting insights.
While podcasts on average improve materially in performance during the holiday season, that effect is not shared equally across all economic sectors. Apparel, Grooming and Beauty, Health and Wellness, and Home Goods all show much stronger improvement in CPA during the holiday season relative to business services, for example. Which again makes intuitive sense. These are the sectors where one is more likely to find good gifting items or items to get started on that New Year’s diet.
At Ad Results, we use this data to modify yearly advertising budgets to take advantage of the natural ebbs and flows of your annual business cycle. Willie Sutton once famously said that he robbed banks “because that’s where the money is.” We believe that it only makes sense to advertise when people are listening and are willing to spend.
Data is taken from over 100 clients from 2017 to today.
To normalize data across clients with different goals, we have taken every client’s key performance KPI (e.g., Cost Per Install, Cost Per Sale, Cost Per Download, etc.) and treated them as if every client had a goal of $100 for their KPI. Therefore, for the data above, everything under $100 is beating target, and everything above $100 is missing target.