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Recession and Advertising don’t Mix |
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For all those online businesses whose profits depend on advertising of other firms products comes a warning. We are currently in a slow period (some say it’s a recession). This economic condition is due to get much worse in the coming months. |
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| Author: Madison Walker |
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They are both completely dependent on their clients advertising. During the recession that began in 2007, Google’s profits suffered so greatly that its stock reportedly fell nearly 450 points during the fourth quarter of 2008. If the recession we are currently in continues to worsen, then you can look for a huge drop in not only google and facebook revenues, but also the revenues of multitudes of other businesses depending on advertising as their livelihood. Worsening economic market conditions will bring about less consumer spending and less profits for all businesses. Predicted higher interest rates, rising inflation, and local and state tax rate hikes will add fuel to slowing consumer spending.
The idea that online businesses are immune to recession is, in my opinion, totally false. I believe online businesses will have a real decline in sales and will cut back drastically on their advertising expenditures. I believe all businesses including online businesses will suffer and I believe that firms depending completely on advertising will suffer the worst.
I believe facebook, google, and a multitude of other businesses tied to advertising are tinkering on the edge of a sharp fall. Pay-per-click advertising depends on the clicks producing sales. What do you think will happen when the $3.00 per click ad no longer produces sales, or the $3000 per month ad produces only a $1500 profit? Read this quote from a recently published internet blog: “However, there is no question the recession is having an effect. Google cut its head-count for the first time, laying off around 100 recruiters.”
This is a quote from a Jon Jordan article at atlanticbt.com/blog/will-google-be-hurt-by-recession-update-1/.
The experts who have been right so far are predicting an increase in job layoffs leading to higher unemployment. This is just one more factor that can slow consumer spending. These experts are predicting a further devaluation in home values which will bring about an increase in home foreclosures. The government has printed trillions of dollars in paper money to avoid defaulting on our nation’s debt to foreign countries.
Experts believe this is sure to bring about inflation which everyone is already feeling to a degree, but nothing like what is predicted to come. It stands to reason that growing inflation means consumers can’t buy as much and you can bet that what they do buy will be basic necessities first. I believe that starting a new business is very low on the list of things to do for most people right now.
I feel that probably a lot of web design businesses are feeling the pinch. Here is a quote from small business forum whose thread reads: “It's not that I'm not talking to people, it's just that they don't have the money. The people I sub for are taking cheaper clients and are asking me to lower my rates.
My monthly arrangements are consistently 10-20 days late and are complaining that they can't afford it anymore, and that their businesses are struggling.” This quote comes from a web design company at small-business-forum.net/managing-your-business/. In conclusion, I believe there are many web based businesses felling the impact of the recession. Good advice would be prepare for the worst and hope for the best. Written by John F Smalley.
About Author
Smalley Web Solutions has been involved in Texas website design for over three years. In April of 2009, we moved to Austin, Texas where we have been involved in the Austin website design market for over two years. Our e-form design service just recently became one of our more important and in demand services. Smalley Web Solutions can be reached at URL: www.webwizardonline.net or email: franklinsmalley@yahoo.com
Contact us to obtain a cost-effective quote now.
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