DM CONFIDENTIAL — Nobody likes to be the bearer of bad news. Shocking news, yes, but bad news no. While it might be true, bad news causes anyone to come away feeling hopeless.
They feel lost in a system and problem greater than themselves in which they have no ability to impact. It’s why hope sells, why the current President of the United States won, and why fear mongering works in the short-term but will always backfire in the end. It’s why best leaders and best employees when faced with addressing bad news will propose solutions to them.
Solutions, even if hard to achieve or lengthy in duration, paint a target to work towards. Actionable information even in the face of tough times leads to empowerment and belief in the ability to overcome. That said, we are still a product of our environment, and the more we found ourselves bombarded by negative news, the harder we find it to stay optimistic, especially when negative news seems to loom at every angle.
Given what’s going on in the macro environment, our reserves of focusing on actionable information and looking for the bright side will come under immense testing this year and even into next. The unfortunate truth, it’s getting really ugly outside. March, a month that New Yorkers say enters like a lion and leaves like a lamb, entered like a full den of lions who hadn’t eaten in days.
And it comes after months of dwindling supplies, preparing for a spring that looks for many to disappoint in its returns. For a group that has seen many already pushed to the breaking point, we find ourselves faced with the definite reality that it will get worse before it gets better. That was the indication from the stock market certainly, as it hit a record Monday, just not the right type of record. The Dow closed at a level not seen since 1997. Since November of 2007, the stock index has found itself on a veritable free-fall, giving back in fifteen months gains that took a dozen years.
Internet advertising has, to date, been a bright spot in the struggling economy. When forecasts of overall advertising showed a decline in spend, those monitoring the Internet kept predicting gains. Even when the severity of the credit crisis in early 2008 became clearer and mounting of corporate losses, along with the stock market’s beheading during October 2008, Internet advertising looked promising.
Not that Internet advertising was too big to fail, but in the eyes of those following the sector the medium still did not command its rightful portion of dollars. Analysts and executives all felt that that the shift of dollars into the Internet would make up other declines. It never smelled right to us, and we always wondered how, in a stock market that has lost almost half its value, could that not impact the Internet advertising space?
After the end of this month, the numbers look like they finally will. Some tracking the space now believe that for the first time in eight years, we will see a quarter-over-quarter decline in the total online advertising spend. That it is only happening now both makes sense and is fortunate. It makes sense because advertising doesn’t react in real time to the market. Whereas the market might be forward looking, advertising is often back-looking. Second, it’s given those in the space time to observe and prepare, as opposed to being blind-sided like so many in the financial sector.
As mentioned everywhere, things really stink, but they aren’t quite as bad as they seem, at least when put into true perspective. There was a recent Wall Street Journal Article, which no surprise was critical of the current President. Perhaps more important than its criticism was the reason for the disagreement.
Rather than the typical ideological disagreements, this article focused the objective, and that is namely, while horrible as our economy is, we shouldn’t compare it to the Great Depression.
As Bradley Schiller wrote for the WSJ, “In the last year, the U.S. economy shed 3.4 million jobs. That’s a grim statistic for sure, but represents just 2.2% of the labor force. From November 1981 to October 1982, 2.4 million jobs were lost — fewer in number than today, but the labor force was smaller. So 1981-82 job losses totaled 2.2% of the labor force, the same as now.” He continues by saying, “In 1930, the economy shed 4.8% of the labor force. In 1931, 6.5%. And then in 1932, another 7.1%. Jobs were being lost at double or triple the rate of 2008-09 or 1981-82. This was reflected in unemployment rates. The latest survey pegs U.S. unemployment at 7.6%. That’s more than three percentage points below the 1982 peak (10.8%) and not even a third of the peak in 1932 (25.2%). You simply can’t equate 7.6% unemployment with the Great Depression.”
The statistic that stays with us deals with the much maligned auto industry and the historic Savings and Loan scandals not too long ago. Says the WSJ, “Auto production last year declined by roughly 25%. That looks good compared to 1932, when production shriveled by 90%. The failure of a couple of dozen banks in 2008 just doesn’t compare to over 10,000 bank failures in 1933, or even the 3,000-plus bank (Savings & Loan) failures in 1987-88.” And, “Stockholders can take some solace from the fact that the recent stock market debacle doesn’t come close to the 90% devaluation of the early 1930s.” Intellectually good news, although it probably doesn’t’ feel so good for those that have seen their investment portfolios shrink by a third if not more.
Saying that things don’t stink as badly as they could will only mollify a few.
The real good news comes from the overall level of opportunity that actually exists, more specifically within our industry. If we think about display in particular, prices haven’t been this inexpensive in years. Companies that wouldn’t normally think of displaying ads are now having meetings around their possible display strategy, for example. Ultimately, what this means is a chance for business models that normally would have fallen by the wayside to potentially flourish. Of the people we have spoken to for instance, chief on their mind is deploying money in display advertising. It doesn’t matter that their business and display haven’t overlapped before.
They simply love the economics of the model. And, while a vast over simplification, that is really the cast in general, especially for those in performance based advertising. For all the bad news, there Is actually more good news in terms of opportunity (especially with regards to innovation). In a time of just surviving, few are thinking about how to thrive. Unfortunately, there isn’t a magic bullet in terms of what to do; it’s more an overall motivation that says you should do. The next big companies aren’t those that began yesterday; they are those that will begin today.
Courtesy of the DM Confidential editor