Economic Downturn Affecting Online Advertising Budgets
by DazzlinDonna
I received an email this morning from a very large US media and entertainment company. Here is a part of what it said. “Unfortunately the recent economic downturn has left us in a position where we are unable to further pursue any advertising agreement for the upcoming holiday season. We apologize for the inconvenience this may have caused. It is our intention to re-visit this advertising program next year and, conditions permitting, hope to be working with you and your site.“*
Obviously, I’m disappointed that I won’t be receiving the benefits of having that advertiser come on board, but it’s the broader view that disturbs me more. How many more companies are pulling back on their advertising? How many more publishers are feeling the pinch from losing their advertising partners? How will this affect us all in the long term?
I don’t know the answers to those questions, but of course, I’m not crazy about the possible negative outcomes. Still, I wonder if perhaps we might see some positives from it all? Will we adapt (as we do so well) and find new ways of supporting our businesses? Will we change our revenue models, or even begin to use bartering instead of exchanging cash? I was twittering about bartering yesterday, before I received that email, so the timing is interesting. I’m feeling the squeeze of this economic downturn already, and I assume at least some of the people I interact with are feeling it as well. If nothing else, we all face the high grocery prices, and the still high gas prices (although thankfully, it has come down a little, it’s still very high). That squeeze got me thinking about getting together with a lot of you to barter our services. It was just a quick thought at the time, but now, after receiving that email, I’m wondering if maybe I shouldn’t pursue it even more.
So my questions to you:
- If you advertise online, are you cutting back on your spend?
- If you are a publisher, are you seeing reduced interest in advertising on your sites?
- In general, are you seeing a downturn in revenue from your sites’ goods and services?
- Do you have any ideas on how we can all ride it through?
- Would you be interested in bartering as one idea?
I’m interested in discussing this, so please comment if you have some thoughts on it. Thanks.
* Note: The site referred to in the email is not this one, for the record.
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_c.png?x-id=297cff92-def2-4752-9b5b-902f48b4fd67)
In the Real Estate industry, I have noticed a rather large cut in ad and marketing dollars. However, MarketingPilgrim is reporting a different trend. I think it might really have to do with what industry you might be in, or atleast that what I am seeing from Real Estate.
I like to say the freelance writing business is like the canary in the mine — we’re among the first to be “get sick” when the economy goes bad. With that said, I’ve been feeling the downturn for a little more than a year, so I’m not surprised to see the national figures finally back up what I’ve been seeing in my business. I’ve had several clients go belly up in the last year, and a couple more are on the brink.
I think the key for anyone is delivering a quality product and outstanding customer service. We can all charge about the same price for our services, but it’s going to be the “extra extra” that’s going to get the business that’s out there.
I think a lot of it depends on the industry. Believe it or not, some industries still haven’t been hit much while others, like the real estate industry, have been hammered by it and have been for quite a while now.
That being said, I think your point about adapting to new business models and maybe diversification of our monetization methods will be something positive to come out of this. If you can adapt enough to ride out the down turn, you’ll be in prime position to have a larger, and more diverse income stream when advertising dollars return.
Just the opposite, my best clients are increasing spending. While many people cut back in tough times, the truly successful understand that this is perfect time to grab market share.. Few people are advertising and diluting your message, radio, tv, billboard, banner ads, text links, etc etc, are feeling the pinch from fewer advertisers so you can negotiate much better deals than during boom times as well..
I think a lot has to do with your niche as well.. Our jewelry store has always focused on better product and service instead of price.. So these types of economic times, while they do slow our lower priced goods sales, really don’t affect us very much.. While the guys that focused on price are hurting, pulling back on advertising, allowing us to expand even more..
I’m a Publisher and I’m definitely noticing lesser interest from Advertisers in the last month or so. My feeling is that things will come back to normal soon. Products cannot sell without advertising and Advertisers require Publishers at least for that reason. There will definitely be a turn around soon. That’s my feeling.
As VP of Media Buying for one of the top 10 online ad networks, I have a pretty broad based perspective on Fortune 500 companies spend level for Q4.
So far the only companies I have seen cut back is Bank of America and Wachovia. Even the major US auto manufacturers are still spending.
@SEN
You are probably right with the Fortune 500 folks, but many smaller businesses like individual real estate brokers that I work with, are scaling back.
A close friend of mine owns a real estate company where he does the mortgages and his wife is the real estate broker. They beefed up there spending for a month which they took a huge loss on and have since cut back on all of there online advertising. This is understandable due to the marketing being screwed at the moment.
I do manage ad campaigns for companies in several different industries, they have actually cut back on their offline advertising and steadily increased there online spending. Companies see the advantage that online advertising posses against offline advertising and are moving more in that direction. Even with the tough economical times, these companies are not backing down on there advertising. A company that does not advertise does not make as much money. Advertising is the one thing that will never go away regardless of the situation.
As for bartering services, I have not really thought of that but do see where it could be beneficial for both sides if something could be agreed upon.
Steve
Very interesting article, and I’d like to answer each if I may…..
1. I haven’t really started yet, but I will be a lot chosier then I normally would.
2. Just getting started with this too…I’ll get back to ya though. How long did it take you to start filling your scratch-back widget?
3. N/A at the moment.
4. This is where “multiple baskets” comes in at it’s finest.
5. Is this a hypothetical or are you asking about between us and you? Either way the answer is yes for me…I’ve been thinking about this for a couple weeks.
@Dennis, that was a hypothetical question – just in general with anyone.
Gotcha, and I figured as much. Still, if you’re ever curious, shoot me an email and we’ll see what happens.
I can’t yet match you in traffic or subscribers (yet I say), but whatever. LOL
I’m seeing less clients than a did just two months ago, and I’ve only been getting more impressions, about the same amount of click. Also living where I do the exchange rate has made my ads about 30% more expensive, so yes it cut my budget by itself!
Hard but something we have to face. I think focusing on “non-paid for” marketing is going to be great for me. I have to optimize more and hone more. It’s a good incentive, and it will pay off in a few years when the economy goes for another bubble. For now, tough times!
And yes! Bartering is always a good idea!
I spoke too soon! VW just pulled 100% of their online advertising budget across the board for Q4.
Wow, SEN, that’s big…and painful.
Just stopped in after a long absence and what do you know – right on topic. I just got notice from a direct advertiser that they’re canceling the balance of the ad campaign they had with us, because of the economic downturn. They said our site was performing “excellently”, so it’s very disappointing.
Funny, though – I’m not planning on cutting back on our own online ad spends, because for our brick and mortar, that’s where we got nearly 80% of our business this year. And the money we spent was money simply taken away from the spends earmarked for our local yellow pages, so I’d be a moron to stop. I might be a moron anyway, but especially so if I did this.
For our brick and mortar I’m not a fan of bartering because I’ve had too many consecutive bad experiences. However, accepting bartered goods for advertising fees for my websites is cool with me.
It’s funny when things go bad companies cut their advertising; and in reality it’s like cutting their own throats. Advertising is still keeping your name out their and companies have to cut other places first to keep the advertising alive.
Now if the advertising is not working in one place then a company needs to track that and spend their money on what works. But to take your advertising budget down to 0 is the first step in the wrong direction.
One comment I read about Real Estate, this is the one field where advertising is more important than ever, the market is bad yes, but people are still buying and selling homes and a Realtor who is not advertising is not selling.
Dean
http://www.ireviewtechnology4biz.com
I feel that in certain areas people do cut spending but at the same time areas that are worth the extra expense that will increase revenue for their business during harder economic times will still be available. Business will cut spending in other less important areas, but even though there is hard economic times people are still marketing and advertising.