Reality Bites

http://www.reuters.com/article/industryNews/idUSN1229945320070613

Quote: ""U.S. advertising spending is expected to grow this year at an even slower rate than previously forecast, as a sluggish economy has corporations scaling back budgets and looking for less expensive marketing choices, according to a new report... "The advertising market has moved onto a slower track than we thought possible just six months ago," Steven Fredericks, Chief Executive of TNS, said in a statement.""

If you run a company related to "Internet advertising" things don't look quite so gloomy of-course.

If you're a domainer, even better.. a significant tranche of your traffic is probably International traffic. How's that for diversification? Ultimately a low overhead, high margin business fares best in difficult times. This could be a harbinger of rough-air ahead for online or it could be the reality of sea-change setting in at traditional ad-serving/media outlets.  I expect the latter, but we'll see I suppose.

Comments

[Dave Wrixon]

Not sure about this. We have had our fair share of recessions in the UK and advertising tends to be counter-cyclical. If you are running at capacity you do not need to advertise. If you Revenue is too small to cover your capital investment repayments, you do it whether you can afford it or not. It is all about covering those fixed costs. The tougher the competition the more advertising matters.

Having said that a cash strapped company is going to look very hard at the bang it gets for its buck. Most traditional advertising is wasted, and very few people now which part of their advertising budget is effective. The appeal of online advertising is that there is a much more direct relationship between cost and generated sales revenues. When it is hard to justify an advertising spend, but you know your survival depends on it, this is important.

Because of the bidding systems on terms, you also know that you are paying the market rates, and it is also pretty much a given that it is cheaper than other channels. The other appeal is that online advertising through Adwords and the like is so simple it can be brought in-house, so the real costs can not only be reduce but hidden and even offset.

If you have staff that are underemployed, getting them to do your adwords campaigns might make a lot of sense, and who else has more knowledge or a greater vested interested than underemployed staff.