Tuesday, September 29, 2009


Musings About the Ad Biz

It never ceases to amaze me how little the business world knows about the ups and downs about the ad industry. They know that when things get bad, advertising is one of the first things to cut. What they fail to understand is that when they cut advertising, they cut demand and sales go down as a direct result on a great majority of products and services. One of the reasons that Social Media is successful is that it was considered a cheap alternative to traditional advertising which it is not. Social media, in my opinion, works more like PR than advertising and it has not reached a point where it will replace traditional advertising by a long shot.

Where is the ad biz headed? Well, it depends on what you read and to whom you listen. Most forecasts come from some industry analysts who look at the business on a total spending basis by quarter. They compare this year to last year and times before that to come up some results. Everyone and his brother could tell you that the first two quarters of this year were dismal for the business. Now, some forecasters are saying that the reduced spending has bottomed out. That's the good news. The bad news is that the media has had to lower thier prices to get advertisers back into their tents. So, when spending resumes, it won't be as profitable for the media and, as a result, for the agencies that work on commissions.

Look for more online spending and a continued increase in interest in Social Media over the short term. When the economy starts to get better, it should be about the time we see the big sporting events like the Super Bowl, the Vancouver Winter Olympics and the 2010 World Cup carry the day for the industry. In the meantime, let's keep a close watch on how Facebook, LinkedIn and Twitter learn how to make thier sites able to generate advertising revenues.

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