As US Economy Weakens, Ad Spend Steady Online But Drops In Traditional Media
Sep 21, 2007 at 10:07am ET by Greg Sterling
MediaPost has two stories today that start to answer a larger question about how the Internet will fare in a weakening economy. For some time people have been speculating that if the economy hits a meaningful downturn or heads into recession, what will happen to the Internet ad spend? The question is now being answered — so far, so good. This article discusses the financial category and that Google’s share of that ad spend is holding amid the mortgage and credit crisis.
A second piece talks about data from Nielsen, confirmed and similarly reported by others (such as TNS), reporting that ad spending is down across the board in traditional media:
The big research company says that for the first half of 2007, ad spending slipped 0.5% versus the same time period for 2006. Not surprisingly, the Internet led the way–again–as the most improved category, up 23.6% versus a year ago.
On the losing end were some long-suffering print categories: Local newspapers were down 8%; national newspapers fell 5.9%; business-to-business magazines were off 5.7%; local magazines tumbled 5.2%; and local Sunday supplements gave away 4.7%.
Many of the TV platforms were also in the red, with spot TV taking the worst hit–down 4.6%. Network TV didn’t have much to cheer about either; it was off 3.8%. Cable TV was the least hit, slipping just 0.3%. One bright spot for TV was the spot TV business in small markets–DMAs 101 to 210–up 3.2%.
During the last recession in the U.S., when the “bubble burst,” the Internet was not as well established as a consumer medium. Given how attached consumers in the U.S. and elsewhere are now to the Internet — and how it is gaining share and time spent vs other media — the ad-spending data above are no surprise.
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This trend should continue during an economic dip. I’ve been on both ends of the Advertising industry, and it always results in the same thing. Advertising budgets are the first to be cut, in the past most companies would begin by cutting Radio (intangible), Television (Costs) and Print ($0 Budget).
Search Marketing can be categorized the most cost effective media out there. At this time, there isn’t much research on global demographics vs volume to really push up the costs, so it works for everyone. In many cases, cutting out all other media would result in a 70% savings at the same time increasing search budget. What Search Marketers should be doing at this time, is negotiating additional funds from their clients in lieu of the economic dip. It’s not that difficult to request more funds for Search, while showing a savings on cutting out other media. I did it with several clients, it’s not that difficult, and if everyone took the same opportunity, search will continue to increase.
There was an article on the potential housing crash last month, predicting a drop in search revenue, I predict otherwise, this should increase search revenue, you just have to know how to sell it.
Now, you’d think that a weakening dollar in the US and it’s affect of strengthening the dollar in Canada would have use Canadians all giddy and happy - right?
Wrong.
Over the past few decades, more and more companies base din Canada have turned to doing business in US Dollars.
Take anyone using Google Adsense for example.
I remember as late as December of 2006 cashing my Adsense cheques and getting an additional 15%+ due to the exchange rate.
I just cashed some US Funds 2 days ago and for the first time since I was in diapers, I got less for the US money.
I might have to start billing clients in Canadian funds if this trend continues…