Friday, October 24, 2008
RIP Good Times: The Cleansing Begins
By Max Kalehoff I had a brief conversation this week with a close friend and colleague in the online advertising industry. Like everyone else, we shared sentiments in our quest to make some sense of the economic and political turbulence around us.
Here's where I stand today:
First, Q1 of 2009 is destined to be downright bloody in the online ad economy, amidst a larger U.S. recession. Keep in mind we're still riding the wave of a relatively strong 2007, as well as 2008 spending commitments that have been baked in for almost a year. We're also buffered partly by election-season ad spending.
But the real economic indicators suggest we're headed for a storm. We're already seeing panic, retreat and "anticipative layoffs" at a variety of companies, This includes start-ups (prompted strongly by VCs, like Sequoia), traditional media companies and advertising agencies. Consider plummeting auto sales, home sales and retailing. Even soft indicators like the exploding number of cheap gym-membership deals. Oh yeah, then there's the financial-sector calamity -- engrained throughout. It will be survival of the fittest.
Second, doom and gloom is a self-fulfilling prophecy. Businesses, governments and citizens must confront reality, but they also mustn't let panic take over unnecessarily, like a cancer. This recession is an opportunity for the most talented, devoted leaders to execute well. It's a time for businesses to invest cash more wisely, and, in some cases, even hire. Customers are hungrier than ever for authentic products and services that truly deliver. Customers' tolerance and financial ability to accept and enable the mediocre is fast waning. This is a time when the best will be rewarded with survival, and eventual growth.
Third, there've been a lot of adjectives used to describe what's happening in our economy. I've heard "correction," "crisis," "adjustment," "suppression," and "depression," among others. Regardless, the U.S. has been on an unsustainable path of consumption. You know there's a problem when Salvation Army locations begin throwing away clothes; I've seen that happen multiple times, and have had my personal donations frequently rejected as well. Marketers often complain that consumers now are in control. But if that were the case, how come Americans have driven themselves into unprecedented debt? It can only be healthy for our society to return to more modest consumption levels, and for businesses to fear extensive leverage. This economic downturn will prompt that -- or at least I hope it will.
Finally, on the verge of the presidential election, I find myself unhappy with both major candidates. Regardless, I hope we end up with the one who takes us on the path most divergent from the last eight years.
We're about to confront a tough period of economic, consumptive and political cleansing. It may get messy, but I'm optimistic.
How about you?
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Max Kalehoff is vice president of marketing for Clickable, a search-marketing solution for small and mid-size businesses. He also writes AttentionMax.com
Online Spin for Friday, October 24, 2008: