SEMs Need Not Necessarily Fear a Recession
January 15th, 2008 Posted in EconomicsThe latest news from Wall Street and Bay Street forewarn of an impending recession on the horizon. While news like this normally upsets the masses due to investment losses and corresponding declines in consumer spending, it need not discourage search engine marketers. Why?
Let’s look at the effects of a recession, first and foremost:
- Reduced business lending
- Sharp downturn in corresponding consumer spending
- Tighter budgets and profit margins
- Reduced consumer confidence
It’s not all doom and gloom however, as many sectors may actually benefit from the aforementioned effects of economic recession. From an online marketing perspective, the effects of a recession can do a lot of good for advertisers. Let’s look at a few of these effects in greater detail.
Reduced Business Lending
Putting a positive spin on reduced lending is easy for marketing folk. Quite simply put, decreased commercial lending is likely to raise additional barriers to entry on any given market. Investment capital can be hard to come by; even more so in a recession. Less funding for start-ups could allow existing advertisers to weather the storm online.
Consumer Spending Decrease
With potentially less money being made at work and the increased probability for job loss, consumers may have to tighten their belts over the course of a recession. This means digging deep, making smarter purchasing decisions, and bargain hunting. Consumers may be less likely to convert on a impulse item in a mall or grocery store, heck, they may stay home more often because of increasing gasoline prices. Add a writer’s strike to the mix and you have potential for disaster - for some.
I’m willing to go on record and say consumers will turn to other media, such as the web, not only to research their purchasing decisions, but ultimately convert on them as well.
Tighter Budgets and Profit Margins
Your business is likely to tighten marketing budgets on official consensus of an economic recession as well, meaning online marketing efforts will have to be lean, mean, and profitable. If my predictions are correct and my selection of various socio-economic factors hold true during a recession, online campaigns are likely to see a huge increase in traffic. Search marketers that have a solid grip on “bread and butter” campaigns are likely to weather this double whammy with little to no need for concern.
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