Understanding Q4 & ‘Q5’ Advertising Trends to Maximize Reach & Performance

Real-world data sourced from Varos reveals Q4 and Q5 advertising trends for CPMs and spend across Meta, Google, and TikTok. Data includes advertisers spending at least $10k/month.

As the year draws to a close, Q4 emerges as a critical period for advertisers. The holiday season, spanning October through the end of the year, brings heightened competition and increased advertising budgets. But there’s another (unofficial) quarter that you also need to be aware of.

‘Q5,’ the period from December 26 through the second week of January, has traditionally seen CPMs dip, making for an attractive opportunity to advertise at a lower cost when consumers are still actively shopping. But is that still the case or should advertisers proceed with caution before ramping spend during Q5? As usual, the devil is in the details.

We’ll examine advertising trends in CPMs and spend levels during Q4 and Q5 across the major advertising channels—including Meta, Google (Search, Shopping, Performance Max, and YouTube), and TikTok—to understand how these patterns have evolved over recent years. Our data comes from Varos, the world’s largest ecommerce and SaaS data co-op.

Whether you’re a seasoned growth marketer or new to the game, this deep dive into Q4 and Q5 advertising trends equips you with the insights to successfully navigate this critical period. 

Q4 Advertising Trends Overview

During Q4, advertisers face increased competition, leading to higher CPMs across all platforms. It’s a crucial period for businesses aiming to capture holiday shoppers' attention, resulting in a significant uptick in advertising spend.

Channel-Specific Analysis

Meta

• CPM Trends: In 2023, Meta's CPM increased from $12.22 in October to $16.31 in November, marking a 33.5% increase. December saw a slight decrease to $13.42, a 17.7% drop from the previous month.
• Spend Levels: Advertising spend on Meta surged by 39.7% from $232,397 in October 2023 to $324,838 in November. December's spend decreased by 23.8% to $247,465 as campaigns began to wind down with the holiday season nearing its conclusion.

Google

• CPM Trends: Google's CPM increased from $17.72 in October 2023 to $21.28 in November 2023, a 20.1% rise. CPM slightly decreased to $19.70 in December, a 7.4% decline from November.
• Spend Levels: Google saw a 34.6% increase in spend from October 2023 ($140,202) to November ($188,690), followed by a 15.9% decrease in December ($158,634).

TikTok

• CPM Trends: TikTok experienced a significant rise in CPM from $8.91 in October 2023 to $10.43 in November, representing a 17% increase. December's CPM slightly decreased to $10.31.
• Spend Levels: TikTok's spend jumped by 69.4% from $88,560 in October to $150,063 in November but decreased by 13.8% to $129,297 in December.

Q5: December to January Transition

As the holiday season concluded, CPMs and advertising spend levels experienced notable declines across all channels.

• Meta: From December 2023 to January 2024, CPM dropped by 23% from $13.42 to $10.33, while spend decreased by 9.2%.
• Google: January 2024 saw a decrease of 14% in CPM from December's $19.70 to January's $16.94; spend also fell by 7%.
• TikTok: CPM fell by 27.5%, from $10.31 in December 2023 to $7.48 in January 2024; however, spend increased slightly by 0.9%.

Year-over-Year (YoY) Comparisons

Over recent years, Q4 has consistently shown an upward trend in both CPMs and advertising spend:

• On Meta, the average Q4 CPM increased from $13.28 in 2020 to $16.31 in 2023.
• Google’s Q4 CPM rose from an average of $15.28 in 2020 to $21.28 in 2023.
• TikTok’s Q4 CPM saw the most dramatic increase, from an average of $2.93 in 2020 to $10.43 in 2023.

These increases reflect growing competition and larger digital ad budgets during the holiday season.

In addition, TikTok exhibits more volatility than other channels, with significant spikes during Q4 due to its growing popularity among advertisers targeting younger demographics.

Q5 Analysis: Take Advantage of Lower CPMs (for Some Channels)

In my experience as a growth marketer, advertising representatives have always pushed advertisers to spend up during Q5 because CPMs are quite a bit lower than the rest of the holiday season and shoppers are still in a buying mindset. 

While it’s difficult to prove the buying part, we looked at the CPMs to understand how much CPMs declined during Q5 to see if that’s really the case. When comparing a shorter period of time—like the week before, the week of, and the week post-Q5— there are definitely some steep declines. However, when looking at a longer time frame, such as Q4 through the fourth week of the new year, the Q5 period is more restabilizing.

On average, CPMs drop:

• Q5 compared to the previous week: -13%
• Post-Q5 compared to Q5: -10%
• Post-Q5 compared to week prior to Q5: -22%

It’s fair to say that advertisers should capitalize on this period, but of course the devil is always in the details—different channels perform differently.

Advertising Channel Call-Outs

In the charts that follow, you’ll see the “pre-Q5” spend, which is the week prior to Q5, the week of Q5 (December 26 through January 1), and post-Q5, the week after Q5.

TikTok

YoY, spend continues to increase during the Q5 period. However, the 2023/2024 season saw the largest spike. On average across the four years, we’re seeing:

• Q5 compared to the previous week: -17%
• Post-Q5 compared to Q5: -15%
• Post-Q5 compared to week prior to Q5: -30%

Recommendation: Continue capitalizing during Q5 and after Q5.

Meta

YoY, spend continues to increase during the Q5 period. However, the 2023/2024 season saw the lowest decline in post-Q5 CPMs compared to pre-Q5 CPMs. On average across the four years, we’re seeing:

• Q5 compared to the previous week: -14%
• Post-Q5 compared to Q5: -10%
• Post-Q5 compared to week prior to Q5: -23%

Recommendation: Proceed cautiously spending during Q5 and post-Q5. It seems like advertisers have learned to take advantage of this period, so CPMs aren’t going to be as dramatically lower as we’ve seen in the past.

YouTube

YoY, spend has remained somewhat flat during the Q5 period. On average across the four years, we’re seeing:

• Q5 compared to the previous week: -17%
• Post-Q5 compared to Q5: -5%
• Post-Q5 compared to week prior to Q5: -20%

Recommendation: Proceed cautiously spending during Q5 & post-Q5. Advertisers have learned to take advantage of this period, so CPMs aren’t going to be as dramatically lower as we’ve seen in the past.

Search

While CPMs aren’t as commonly used for Search, for the sake of apples-to-apples comparison, they were used. YoY, spend has remained somewhat flat during the Q5 period, while CPMs have continued to rise. On average across the four years, we’re seeing:

• Q5 compared to the previous week: -6%
• Post-Q5 compared to Q5: +2%
• Post-Q5 compared to week prior to Q5: -4%

Recommendation: There’s no advantage to spend up during Q5 from a CPM standpoint, it’s recommended to continue buying as long as cost per acquisition (CPA) is still in line with performance.

Shopping

Similar to Search, CPMs aren’t as commonly used for Shopping, but again, for the sake of apples-to-apples comparison, they were used. YoY, spend has declined during the Q5 period, which is likely due to spend shifting over to Performance Max. Combining Performance Max with Shopping data was considered, but ultimately we decided against it given that they’re very different channels.

CPMs have continued to rise, and on average across the four years, we’re seeing:

• Q5 compared to the previous week: -3%
• Post-Q5 compared to Q5: -3%
• Post-Q5 compared to week prior to Q5: -6%

Recommendation: Have you considered shifting over to Performance Max? There are plenty of reasons not to (and I’m somewhat of a dinosaur), but it might be worth testing and considering the shift if you haven’t already. As for Q5, there’s no advantage to spending up.

Performance Max (P-Max)

Again, for the sake of apples-to-apples comparison, we used CPMs. YoY, spend has continued to rise during the Q5 period, while CPMs have also continued to rise. On average across the three years (our data source doesn’t go back prior to the 2021/2022 holiday season), we’re seeing:

• Q5 compared to the previous week: -7%
• Post-Q5 compared to Q5: -1%
• Post-Q5 compared to week prior to Q5: -8%

Recommendation: There’s no advantage to spend up during this timeframe from a CPM standpoint. However, it’s recommended to continue buying as long as CPAs are still in line with performance.

Capitalize on Pockets of Opportunity for Maximizing ROI

Q4 remains a pivotal period for advertisers seeking to maximize their reach during the holiday season despite rising costs and competition across platforms like Meta, Google, and TikTok. Understanding these trends allows businesses to better strategize their advertising efforts for optimal impact.

By analyzing these trends and preparing for shifts into Q5 and beyond, advertisers can make informed decisions that align with their marketing goals and budget constraints for the upcoming year.

‍Looking to chat about Q4 and Q5 advertising trends? Get in touch with Right Side Up—we’ll connect you with a growth marketing expert like Katie Freiberg. Check out our blog articles on CPM trends for Meta, Google, and TikTok as well.