How the Economy is Impacting
Advertising and the Internet

The economy continues to be the top story at business…when will it turn around, and will that be before or after more bankruptcies? This deep trough the economy is in is affecting all businesses, everywhere, but none more than the advertising industry. Agencies are closing down, newspapers, radio stations and tv stations are watching as ad dollars dry up faster than a puddle in the hot summer sun.

In advertising, there are two kinds of business: agency and direct. Agencies represent the large and jumbo businesses, like national brands we all know and local, large businesses like car dealer groups. Direct business tends to be small and medium businesses, who can’t afford agency commissions yet but through advertising, hope to grow big enough to have agency representation someday. Agencies place advertising for their clients, usually regionally or nationally.

Media outlets get direct business through their sales staffs, whose job it is to beat the streets looking for new business and to super-serve their existing small business clients. When the economy tanks, as it’s doing right now, human beings tend to behave like human beings…go into survival mode, saving as much as possible and spending as little as possible. Business owners must pay their fixed costs – rent, wages, taxes, and cost of goods if they are retail or hard-good service businesses. They often look at any sort of advertising as “well, when there’s enough money, then I’ll think about it.”

Without some sort of advertising, there’ll never be enough money. There are so many options for consumers that businesses have to stand out somehow. A business owner may believe he has the very best product since sliced bread, and it may be true, but if he’s not letting his potential customers know about it, he’ll go out of business quickly.

For the businesses that use agencies, budgets have been cut for newspaper, then radio, then television. Those three industries are struggling to find ways to stay afloat and it’s not an exaggeration to say that many will fail before the current economy starts to pick up. For businesses that use agencies, budgets have not been cut for internet advertising.

As an example, General Motors pulled back their advertising dollars by 200 million dollars for this year. They didn’t cut a dime from their on-line initiatives. That’s a flaming stake in the ground for the effectiveness of internet marketing.

Small and mid-sized businesses should use a combination of marketing that is designed to reach their target customers. Print and radio are often very good choices for business, because of the affordability and portability of the message. But it is essential right now for all businesses to be on the internet, not just with a website but with web advertising. There are many options, and most are very affordable. The best reason to use the internet is the immediacy of the buying decision – a visitor can just click, decide and buy right on the spot. No need to drive anywhere or call anyone – the deal is struck and money is in the bank of the business owner.

Businesses are moving to the internet, and that does make sense...if you have a medium that can help you make a sale right away, rather than days or weeks from now, that should be where the ad dollars go, probably most of the time but certainly in tough economic times.

What’s going on in the world right now isn't good news for print or broadcast media, which are already taking huge hits in their bottom line. But the smart media outlets will see the writing on the virtual wall, which tells them the direction to focus their efforts – the internet. The companies who know how to take bad news and make it work to their favor are the ones who'll weather the current tough times and flourish when the bulls start running again.

As always, if I can answer any questions for you, don't hesitate to contact me. I'm Sandy Weaver Carman, owner of Voicework on Demand, Inc. and you can email me by clicking here.