Forum Moderators: martinibuster
So considering a hypothetical recession, is AdSense relatively immune? Or will publishers feel the pain? I can't be the only one wondering, but I don't feel I have any insight on it. I don't think Google itself will be in any serious trouble, but advertisers may be another story. One can imagine shrinking advertising budgets. Conversely though, perhaps shrinking budgets could mean advertisers who left the content network would give it a second look, given the higher cost of search. The MFA shake-out might've been well-timed for this.
Maybe this is too speculative?
Fact check: Annual membership for MENSA is $52/year in the US and $55/year in Canada.
I seem to remember it being less than that, but the point remains the same. You would be banned for life for publicly denying that the mainstream media is not biased one way or the other. I got really tired of having the opinions of Rupert and Ted shoved down my throat via the RSS feeds on my Google homepage a long time ago. It's very unfortunate that some people do not realize that they are being pandered to. Just pick a channel that makes you feel good and they'll tell you what you want to hear.
Koan's point is that everyone finds bias in the media, and the biases we recognize or don't recognize are very much conditioned by whatever our own biases happen to be.
That's certainly true in my experience.
Yes and no. The growth of the Internet -- in terms of homes connected -- is slowing. More importantly, time spent on the Web is flat. This means that the average user is spending about as much time online this year as last.
Advertising budgets grow nearly every year but as the Web matures and established sites consolidate, it gets harder for smaller sites to avoid having their lunch devoured by others.
This thread, in other words, is not likely to arrive at any definitive conclusions.
Can't resist adding that blaming the media (a plural noun) for the financial crisis in the U.S. seems odd to me. There is no doubt that there is a pretty good-sized panic in the credit markets. What impact this has on any individual varies but it's hard to see how the press should be accused of crying "fire" when, in fact, there is one.
it's hard to see how the press should be accused of crying "fire" when, in fact, there is one.
bah.. we'll be just fine
This thread, in other words, is not likely to arrive at any definitive conclusions.
Just like so many other threads on this forum. But hey--if definitive conclusions were easy, Brett could have archived the answers and shut off the lights a long time ago. :-)
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It does not matter if there is a recession - it matters if advertisers think there's a recession. Question is, will they advertise harder to keep custom, and if they do cut spending, will it be online ads that are hit?
It's never boring in this game, is it?
It does not matter if there is a recession - it matters if advertisers think there's a recession. Question is, will they advertise harder to keep custom, and if they do cut spending, will it be online ads that are hit?
Who's "they"? AdSense isn't a mass-market ad medium, and whether the advertising economy is deteriorating, stagnant, or booming depends on the advertiser or publisher's niche.
Also--going beyond the scope of this thread for a moment--AdSense is just one piece of the revenue puzzle. If an advertiser cuts AdSense spending, that same advertiser may increase reliance on (and, if necessary, commissions in) affiliate programs. As always, having multiple revenue streams (preferably in multiple currencies) is the best way for a publisher to minimize risk.
ADDENDUM:
In my local metropolitan newspaper today, there's an article about a possible "retail bubble" that has recent sales statistics for a number of leading big-box store chains in the U.S. Target is doing fine, but Wal-Mart (which caters to a more working-class demographic) is hurting, and building-supply stores like Home Depot are struggling. So are the big electronics chains. This has obvious implications for AdSense publishers who cater to those demographics or sectors.
But other factors come into play, too: Not long ago, I read an article that said mail-order computer sales were in decline, and brick-and-mortar retailers were again selling a majority of the consumer computers in the U.S. The article speculated that growth in laptop-computer use may be a big factor in the change, because laptops are less generic in their look, feel, and user interface than desktop computers are, and people want to try out laptops before they buy. If you're an AdSense publisher who's been raking money from mail-order computer advertisers, the trend to increased brick-and-mortar computer sales (at the expense of mail order) is going to hurt you even if the economy is racing along at full speed.
Can't resist adding that blaming the media (a plural noun) for the financial crisis in the U.S. seems odd to me.
I haven't noticed anyone blaming the media for the financial crisis (assuming a crisis actually exists).
I do blame the media for making things seem different than they really are, regardless of the topic, and it usually leans to the gloomy side.
Drug companies and news companies are both in business to make money.
If a drug company hypes a disease to get people to buy its drug, they are spoken of like Satan himself.
If a news company hypes financial news, a political spat, a crime, hurricane, etc. to get people to come back for more of the same, they somehow often get a pass.
Funny how that works.
FarmBoy
The Dow lost only 16 points and analysts are saying that a recession is unlikely.If a recession did happen your per click revenue would probably decrease, but the cost of getting the traffic would likely decrease as well..
"99 out of 100 televisions recommend faith in the system"
While I hope the analysts are correct, I'd be careful not to put too much faith in their pronouncements. After all, how many of them were issuing warnings about an impending crisis in the mortgage industry before it happened?
Analysts are acutely aware that they can ill-afford to spook the herd.
Jake had a hamburger joint by an off-ramp on the motorway. He was making good money. One day his son came home from college and said 'Dad, get real, there's a recession. You've got to tighten your belt.' So Jake cut down on his advertising, fired a few waitresses, and got cheaper suppliers for his burger meat and coffee. Within a few weeks, trade had dropped by half. Jake thought 'Wow, my son was right. This is one mean recession ...'
One thing I'd have thought PPC has in it's favour is that it's trackable - I can see that for every $X I spend on adwords I'm making $Y in profit, and as long as $Y > $X + $worth_the_hassle I'm not going to turn it off.
1. We are most likely headed for a recession, not only in the US, but worldwide. Fiat-money (paper) economies are cyclical and the cycle is headed lower.
2. There is plenty of evidence that the leaders of central banks and other high-level financial institutions are very concerned about the blow-back from the sub-prime mess. The US Fed and other central bankers pumped billions of $$ into the stock markets over the past two weeks, to little avail. Without going into long-winded explanations, the coming recession will most likely be long and deep.
3. The mainstream media - left or right - is notoriously ignorant when it comes to financial issues. During the housing boom, they were all rah-rah, ignoring the fact that many loans were being made to risky prospects and as ARMs which reprice from interest-only to interest plus principal in 2 years time. Most of those loans were made in 2005 and 2006, meaning that the bulk of them have yet to reprice - and the borrowers default (at a current run rate of over 27%) - so the worst is yet to come.
4. Besides the people losing their homes because they were either hoodwinked by lenders or just ignorant (or greedy), the recession will likely be a top-down event. Larger businesses with lots of overhead will be the first to feel the pain. Any number of banking interests will be forced into liquidation. A number with heavy mortgage exposure already have. Business expansion will be forestalled due to tighter credit and within months layoffs will begin at some of the largest employers.
Small businesses will not feel the pinch as acutely, as they are more nimble and able to make quick adjustments. It will, however, be important for small businesses (like adsense publishers) to keep a solid cash balance. Anyone who is higly leveraged is exposed to lots of risk and potential collapse. That's why big business is going to hurt first - many are very leveraged and an inability to borrow will harm them.
5. While credit tightens, prices will come down for almost everything, by simple supply and demand. As more people lose their jobs and have less to spend, merchants will have no choice but to cut prices. (Wal-Mart is screwed. Their prices are already rock bottom.)
The bottom line is that the bulk of re-pricing ARMs is going to occur from October 2007 through May of 2008. The US should be in recession (defined as 2 consecutive quarters of negative GDP growth) by the 4th quarter of 2007 or the 1st quarter of 2008, though the general public won't know it until much later.
The prudent thing would be to minimize risk right now, cut back on any unnecessary expenses and build up a war chest of cash. Keep any expansion plans to reasonable levels. There will be bargains (yes, some site owners will not survive) galore, but most will not be able to borrow to fund purchases. Besides, who would want to borrow at 15-18%? Cash in hand will enable you to scoop up distressed properties.
The upside for online businesses is that while advertising will decline overall, the effect will be less pronounced in internet advertising. In fact, as print will be the hardest hit (and is already stumbling), there may be some boost in online spending. Plus, while fixed costs will remain somewhat the same, variable costs will decline, offsetting, to some extent, any reduction in revenue.
By long and deep, I mean we will not pull out of recession until mid-2009, so best to prepare for the worst. Seriously, did anyone believe that Americans could continue to borrow and spend forever. Payback is... well, you know the rest.
Finally, ignore my analysis at your own peril. Talk to me in six months if you don't believe me, or for that matter, many financial writers who are "under the radar" who are predicting pretty much the same, or worse.
One comment:
By long and deep, I mean we will not pull out of recession until mid-2009
How would you expect the Europeans and Chinese to fare as a result of our possible recession?
A good deal of European and Chinese money buys our debt and stocks and there's substantial trade between the EU, China and the US, so what happens here in America will affect those countries, albeit to a lesser degree. Both China and the EU are better prepared for a recession than the US, because they have solid manufacturing bases, whereas the US has shipped a lot of industry offshore (and much of it to China).
I think China will feel the effects in a more pronounced manner. We are their #1 customer, so if we stop buying, they'll feel the pain. The EU will likely be best off of all three, and just like in the US, it will depend on where you are and what you do. The big EU companies will probably shed some jobs in a downturn, but the social safety net is better in most countries than here in the US. Besides, no nation has a looser work ethic nor worse (or even non-existent) trade policies than the US.
How well people carry through depends to a large extent on government polices. Under our current administration, working men and woman are pretty much abused by the tax code and lack of unionization. China is still a brutal place to work, and still emerging, so unless the recession is really severe, there won't be much change there in overall quality of life, though they're already ripe for serious social disruptions and a recession could tip them over the edge. The EU, it seems to me, has better protection for the working class, whereas here in the US, the only people protected are the wealthy. By the time this all plays out, there will be new power in Washington which will pull us through, but not without a good deal of pain.
I hate to bring politics into the equation, but it's part of both the cause and solution. The current regieme in Washington brought this upon us with loose credit and a complete lack of regulatory oversight and they'll do little to fix it unless they can somehow line their own pockets. It will take until a change in 2008-09 to actually see positive government momentum.
There's little doubt that the Republicans, with their backs to the wall, have no problem leaving the Democrats with a huge mess, and they'll try to blame it on them as well. This failed administration of GW Bush et. al,, has steered this ship of state without a rudder. Now, we'll pay for it.
I would think that the EU in particular would show better resolve in managing their own economies, though there are sure to be disruptions.
The bottom line is that you're probably going to be better off self-employed or working for a smaller company than being a wage slave to a multinational.
Also, I've never had to ban a Mexican bot from crawling my network..
P.S. let's not blame Bush for every last little thing that happens in the country.. If we blame him for a potential recession then we must also give him credit for record government revenue, extremely low unemployment and an economy which has grown despite our country being bogged down by war.. Are these things really because of Bush?
A company's website is the best way for many to earn revenue and since most cannot SEO their way out of a paper bag and none want to pay up for real consulting help (although I am available!) - they will have to keep their PPC campaigns alive. It really should be the very last piece to fall for a company that is online.
They may lay off people, downsize etc., but if they generate any substantial busines from their website or wish to - they have to advertise and adwords is a major program (even if not perfect) that they know of.
Sure, ad budgets will go down or have already, but the best adsense publishers will still make their money.
I also think in a weak economy, more people enter the Internet world to get away from 9-5 and try their hand. Most fail, but they have to generate traffic somehow.
And we'll be here to help.
Just a theory of course.
