Is a recession good for digital media?

It’s kinda gloomy at the moment, hey? The big ‘R’ word being thrown around left, right and centre and companies downsizing where they can. Digital media, as an extension of the marketing industry is caught up in the growing concern about job security and the general future of advertising agencies.

Those concerns may not be as accurate as they may first appear. We haven’t seen the economy in such a downturn in nearly 30 years, so effectively this is the first time Internet industries have faced this situation (ignoring the dotcom bubble burting days, which arguably Internet businesses brought on by themselves).

Marketing budgets are famously the first budgets to get cut during a recession (in spite of many experts encouraging businesses to increase ad spending to take advantage of the decrease in competition). So when the chips are down, what will marketers do?

Direct marketing

In the late 70s up to 1980 direct marketing (junk mail, telemarketing, coupons) really started taking off. Companies loved direct marketing because they could see a highly accurate measurement of the ROI (Return On Investment). Traditional print, TV and radio increases awareness, but it’s anybody’s guess how that converts to sales. Direct marketing was cheap and the results could be tracked. When the turn of the 80s brought about an ugly state of affairs for the economy, money was pumped into direct marketing as the rather nervous suits making the decisions could see where the spending was going.

Direct mail has clear similarities to digital media: it’s relatively cheap and completely accountable.

More knowledgeable clients

I think everyone involved with digital media in the context of either advertising or web design has experienced clients who know nothing about the Internet and new media. That’s fair enough to a certain degree – it’s ‘new’ after all. Although if you consider 1996 to 98 the ‘breakthrough’ years for the Internet going mainstream, that’s 12 years marketers have had to come to grips with this new medium.

These days ignorance is not an option, and as a result I’m seeing clients increasing their understanding of the Internet. The team at work I’m on seem to be asked less and less to create brochure-ware websites and simple banner campaigns. Instead we’re seeing more clients ask for applications taking advantage of social networks and web services. The clients I work with now are not only getting to grips with the Internet, but they’re actively involved with the development of ideas for new work.

Consumer habits

When I was a kid, if I was spending time at home it would usually involve the TV. These days television takes second place to time spent online. Advertising will want to go where the consumer goes.

Customer engagement

Outside of what would seem like obvious benefits to digital campaigns, such as saving money and tracking ROI, the Internet allows brands to take part in dialogues with its consumers. What were once faceless corporations with no more than a PO Box and a logo can now create a forum for hosting conversations about its products, its industry or any other activity it chooses to be associated with. The Internet has brought brands forward so far that they now have a voice as well as an image.

On the other hand…

Of course, I may be way out. Some of my peers believe that a lot of our clients see digital as an addition to other core marketing activities. For example, a website may be an extension of a TVC. In my opinion that may have been true five years ago, but these days web content stands up by itself. Take a look at how the US presidential nominees ran their campaigns – making use of every social network they could to get their messages out – Facebook, Twitter, and blogs all playing a part.

I’m not the only one

It seems plenty of other bloggers and industry news sites agree (or would like to) that the recession could be good for digital. This article by Netimperetive outlines pretty much what I’ve said already. There’s also this excellent post by Shalabh Pandey about digital media not being phased by the recession. He’s come to the same conclusion as I, and his post benefits from some good references.

2009 – Digital’s golden year?

There’s no doubt that next year is going to be tough for a lot of industries. I wouldn’t want to be making cars right now. For digital we’ll probably start seeing some really innovative ideas coming about as brands move into this space with the moneybags that were destined for the mainstream media.

Knock on effect for dot-coms

Relying on advertising, the dot-coms that are probably feeling a bit glum may want to be a bit more upbeat. If you’re an Ebay or Yahoo! or other publicly listed company you may not have much reason to feel any better since these guys rely on sophisticated business models that go beyond relying on advertising revenue (Ebay bought Skype! Why?). Smaller dot-coms may be better off and end up really benefitting over the next year or two.

Jobs

It’s early days, but I haven’t heard of any digital agencies letting people go. It’s pure speculation, but I expect there will be an anxious period when marketers cut budgets severely and some jobs are lost as a result, but as the Marketing Managers, Account Managers and Planners get into thinking about the following quarter (we’re talking 2nd quarter 2009) they may embrace the potential of the web, leading to the prophesied ‘golden age’.