• February 20, 2009

    Searchonomics - The Economic Pullback and Digital Advertising

    A barrage of grim economic news greets readers each morning. Those readers then go about making decisions in their daily lives. A system built on systemic faith can not be sustained if faith in the system can't be sustained. The nearly universal belief in a compounding continuance of financial good-times we've enjoyed over the past two decades has soured considerably putting people and their businesses measurably in the pullback phase. For digital marketers on the other hand, the pullback could soon turn into a big push forward. First the bad news... Money, that means of exchange many of us rarely even touch anymore; is scarce partially because we believe it to be and partially because it is in reality scarce. For the past ten years or so, much of the economy has rested on the back of ginormous deficit spending both personal and public. Much of that money being spent was borrowed against the wealth accrued by investment funds. The rest was money borrowed against the wealth of developing nations, the largest of which is China. In both cases, the actual money never really existed. There is no stash of gold, diamonds or super-rare limited edition baseball cards providing an underpinning of value to any of it. Like the rises in perceived personal wealth from the tech-bubble of the late 1990's or the housing bubble of recent years, the monies that sustained enormous growth in the economy was in reality entirely speculative. There's a lesson in that. As with credit cards, all bills must be paid with interest, even if expenses were incurred based on a glut of imaginary money. We notice it now because nobody is prepared to bet on speculation. Like a candle burning from both ends, the paid was most immediately felt at both the grassroots consumer level and at the heights of the financial services industry. Consumer reluctance and the temporary cessation of available credit to individuals and businesses become a chicken&egg like vice squeezing the juice out of the rest of the economy. Systemic economic problems are starting to catch various sectors of the digital marketing industry. Earlier today, a poll published by Barry Schwartz at SERoundTable.com suggested approximately 69% of Google AdSense publishers report lower monthly earnings. Webpronews is reporting that while revenues at financial publication TheStreet.com are down, employment sites have seen triple digit growth. The first quarter of 2009 has been the first quarter in which we the people are seeing the effects of an economy in full contrition. It's scarier than we imagined, partially because we're finally "there" and partially because the cascade effect that's happening really does make the situation scarier than we previously thought. Before '09, the crisis was still existential and hope in change allowed us to stretch our sense of disbelief for another few months in the wish a superman president can instantly make things better. As the country learns that simulation takes a while to take effect, the sense of pullback increases. Then the better news... For the digital marketing community, especially those dependent on mass-media advertising models, the future is probably sunnier than it is dim. All new advertising is digital or it has an increasingly large digital component. In the digital marketing world, advertising should pick up sooner than later. Some SEO and SEM shops are totally bucking the overall economic trend and actually hiring new staff members. It might be a good time to hire or lock-in current workers too. Search and digital marketing is likely about to surge, at least until the end of this year. Consumer demand is expected to begin a soft rebound in the third and fourth quarters of this year as age and obsolesce in automotive and electronic goods combine with the pent-up energy of a consumer society to stimulate spending. A glut of merchandise currently being cleared off store shelves will require replacement, thus driving up orders in the manufacturing sector. Driven and sustained by consumers, businesses will have to do business with other businesses. How long the bump will last or how deeply such a bump might impact on the national and global economies remains to be seen. All indications suggest the economy is in for a long and awful ride but business is not going to stop being conducted and advertising is always an important facet of building business. A rising tide lifts all boats. Because digital advertising is often dependent on search functionality, search marketing (both PPC and Organic Results) is a strong sector. That means online PR, content creation and reputation management will also be strong. Due to the social penetration of portable media devices, online radio (like WebmasterRadio.FM) is proving to be a stronger than expected advertising venue for marketers. With commuters educating and entertaining themselves via podcast while in transit and listening to their iPods at work or in leisure, downloads of online audio are increasing. Similarly, online video is streaming ahead of traditional delivery businesses such as cable and satellite. The digital marketing world will have to endure a few more months of pullback before enjoying the full benefits of redirected ad-spend. That surge is probably coming sooner than later though.