Some thoughts on digital in a recession

Oct. 10, 2008 | by Philip Buxton

In the style of Chris Morris in The Day Today, the national media have now declared: “It’s recession!”. So many of us digital folk are wondering what’s in it for us. Here to follow then are some thoughts from our guest poster Phil Buxton on the slump’s likely effects on the UK digital landscape.

1. Ad spend – search’s share grows further

When times were good, the industry had its opportunity to prove that digital advertising was a high-impact, broad-reach, brand-building medium – it couldn’t. So, now times are bad, all brand budgets (what’s left of them) will be directed in what advertisers know and trust – and that be telly. Online will be left with what it does best – delivering solid, revenue-generating leads. Affiliate marketing as a sector is beginning to struggle. I suspect this is because affiliates can only make real money where the merchant they’re working for has holes in its own search strategy. Those holes are being filled, which leaves less and less easy wins for the affiliates to pick off. So they deliver less value for advertisers, make less money for themselves and either morph into proper agencies or disappear. What money formerly spent on affiliate commissions that the internet manager can hold to, will be spent on web build, SEO and search.

2. Digital agencies – a shake-out

Large digital agencies already have a recruitment freeze in place. Unfortunately, staff keep leaving because most people at a digital agency work 12-hour days under intense pressure and for little emotional reward. So, believing life is completely different for their peers in other agencies they jump ship for a bigger pay packet and better job title. There they discover that, now they’ve been promoted, they have to work even harder than before and spend most of their time trying to retain or replace staff who, being equally misguided, want to leave for another agency. Meanwhile, advertisers keep pumping what money they still have into digital web build, SEO and search, which means the agency is forced to go along with it all and themselves poach staff from other digital agencies with the promise of higher wages and a better job title, or lose business. This all means that margins will fall even farther than they have already. That I suspect will hurt some agencies very hard. Whether big or small, only the very good – those with genuine expertise – will survive relatively unscathed.

3. Social media – where it’s at

As budgets fall, advertisers will be forced to get clever with what money they have. That, in digital, means what’s often called online PR and is coming to be called social media. It means having people in-house or at the agency whose role it is to find conversations about the brand, make sense of what’s being said and help the client understand whether, and how, it should join in. And to work properly those people need to have a say in how the organisation should change in response to what’s being said. It is a business strategy, not an advertising one and the success or otherwise of such a strategy is almost impossible to measure by established ’media’ methods, which means it’s very hard to work out how or how much to pay for it. But then no-one said recessions were easy.

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    Comments (2)

    • Some thoughts on digital in a recession « Media Quake

      [...] Full post here [...]Oct 14, 2008 03:02 pm

    • Chris Eden

      Lets hope it's not all quite so gloomy for our agency Phil! Although I agree that it will only be those that are genuinely really good at what they do, with lots of experience, that won't be affected as badly by the economic crisis.

      Demonstrating to clients clear ROI is a must and this is where design for measurement will become even more essential.Oct 10, 2008 12:27 pm

     
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