Nobody Panic. Everybody Panic!
Thursday, August 23rd, 2007With the volatility on Wall Street related to the subprime lending mess and accompanying credit squeeze, there has been a lot of talk of a slow down in spending, particularly in discretionary spending. Like it or not, advertising and marketing is largely discretionary spending for businesses.
Two stories directly connecting the subprime mess and the online ad business made the rounds late last week. The first was about Countrywide Financial, the largest mortgage lending company in the country, and apparently the fourth biggest buyer of online media.
Everybody knows that mortgage companies spend a ton on online advertising. Between annoying remnant ads with dancing Santa Claus on them to stories of astronomically priced keywords, mortgage brokers and lenders have been some of the biggest spenders in online advertising. So if the subprime lending crunch turns into a full-on debacle, it could mean bad things for the online ad industry.
At the same time, John Osborn, the CEO of BBDO New York, said that companies worried about an economic slowdown should not cut marketing budgets, and particularly should not cut “experimental budgets,” such as “advertising on cell phones or hosting film contests” [?!].
The reason cited for keeping alternative advertising avenues in the mix was because they are “incredibly targeted.” If targeting is the key, one would assume online advertising fits somewhere in the mix of “alternative” and “targeted” advertising.
To be honest, when was the last time an ad industry spokesman came out and said that companies should cut marketing budgets? I’d be really worried if Osborn had said that, I guess.
The subprime lending mess may not mean a broader economic slowdown. Or it might. And if it does, regardless of the wise words and cost-effectiveness of online advertising (and film contests?!), they will likely be sacrificed in the name of the 30-second TV spot. Again.