Leaning Into the Abyss

My column’s moniker has a cruel irony to it this month as companies peer into the abyss of a business decline with no apparent bottom. Follow the Money only begs two questions nowadays: What money? Where do we follow it to? Like a fog-locked airport with a damaged radar dish, the emedia fleet feels grounded as we edge toward a wholly uncertain 2009. "No visibility" is the stock response when I ask every media and online tech executive I can find about prospects for the next year. The consensus seems to be that 4Q 2008 will dip a bit for ad-supported concerns, if only because the holiday season requires media buys, and many budgets were already committed before the crisis hit in September.

There also has been no small amount of denial in the industry. On both the consumer and B2B econtent sides, I hear the same optimistic scenario that online media is positioned to weather the storm better than offline media. Money will follow demonstrable ROI in tough times, the story goes. Our measureable platform with performance-based models such as lead generation and cost-per-action pricing will attract a greater slice of a dwindling pie. Well, maybe. The popular Silicon Valley site TechCrunch has a morbid but necessary Layoff Tracker that, by mid-November, charted 63,825 lost jobs across 202 firms. Time, Condé Nast, Razorfish, Nokia, and even the venerable National Geographic were shedding jobs. And here is irony for you: Remember Philip Kaplan, the wise-cracking chronicler of the first dot-com decline at F**dCompany.com back in the day? Now, as CEO of the ad network AdBrite, he and his firm just slashed 40% of the work force to achieve profitability in hard times.

Which is not to say digital media can’t maintain altitude even in stormy weather. The CEO at one prominent trade enewsletter firm boasted to me that September and October 2008 were the best 2 months in his company’s 8-year history, and he has telecom and biotech clients poised to increase their spend next quarter. Several mobile content and ad companies insist they are seeing increased interest and also booking 2009 business on emerging media such as in-text SMS advertising.

However, the reality for most companies is that we are looking into a big, black, 1Q 2009 hole right now, and we may have to wait until late in the quarter to get a glimpse at the extent of the storm damage. Almost all marketing budgets will be reassessed from the bottom up in early 2009, and only then will we see how overall spend gets meted out. Theoretically, this process could be good news for digital companies relying on performance-based marketing programs. The crash couldn’t have come at a worse time for print publishers. Many magazines and newspapers have been suffering ad page declines throughout 2008. The new situation gives marketing managers the opportunity to reassess their ad spends in a more radical way than they have in the past. Offline media, such as TV and print, have enjoyed the power of budgeting inertia for nearly a decade now as the digital world attracted more eyeballs than revenue. This market crash and credit crunch might be the seismic event that finally shakes some of the marketing spend out of the old media orbit and toward more measurable, efficient platforms.

That is, if we are poised to exploit the opportunity and not hunker down in storm cellars. While "trimming one’s sales" in a storm is understandable, this is also the time for digital media companies to press their case with marketers, to roll out those case studies proving ROI, and to bring clients packages that generate the leads other media can’t deliver. Let me suggest that this is also the time to position companies for that next wave of emedia innovation. Even as media spending recedes, certain trends in usage and media migration will not. Social media, database services, mobile media, and behaviorally targeted, data-driven ad networks will gain power and importance in the next year regardless of spending patterns. These are the companies and technologies that wise CEOs hope to buy up cheaply in a down market, and these are the areas that any publisher should sustain. The impulse to curtail experimental endeavors in tough times is as understandable as it is short-sighted. The art of surviving a storm is not just staying afloat but positioning the boat to catch the next winds.

In this downturn, there is an important lesson to be learned from the great dot-com bust of 2001. Many print publishers overreacted to that crash by scuttling their online endeavors. Most of them still are playing catch-up today.