July 8, 2008

Bad economic news is good marketing news

by Brian Turner

A big range of negative economic indicators today, all pointing to a UK recession – or at best, a very sharp economic downturn:

Let’s be clear first of all – a recession is not an inherently bad thing – it’s a natural part of an economic cycle, especially one where there has been excess growth.

The Credit Crunch clearly underlines excessively overvalued financials which have created unrealistic stock market conditions, and additional flawed economic outlooks.

The MPC committee of the Bank of England also has its asses flapping in the breeze for pegging interest rates to promote the property market which is now crashing.

Recession = lower consumer spending, which is generally seen as bad in business terms.

However, internet marketing has an advantage over most traditional marketing formats in its clear cost-effectiveness.

PPC can be bought and tracked for ROI, and returns on SEO are usually in a region below 20% cost-per lead costs from PPC.

So a recession is likely to hit traditional media marketing harder than internet marketing, and I predict the economic downturn will be a turning point that will see budgets shifted more quickly from offline to online markets.

In the meantime, there are also opportunities to be had.

Personally I’ve been watching the financial sector closely, and the exaggerated optimism pre-Credit Crunch has been replaced with an exaggerated pessimism – leading to banking shares tanking here and across the pond.

Sure, we are definitely not out of the Credit Crunch yet – default rates on mortgages in the US are still climbing, which means US banking will be hit for some time yet. And the UK property market is only in the early stages of decline.

Still, many banking shares look like a bargain – tracking BARC, HBOS, LLOY and RBS the companies have current valuations of between 30%-60% of their normal trading during 2002-2005.

Many other sectors outside of energy have also been hit.

For those with liquid reserves (ie, cash in the bank), now could be a very good time to ensure you’re poised to wait for the markets to bottom out, and then invest in an intelligent and targeted way for strong long-term growth prospects.

In the meantime, PPC, related internet marketing strategies and niche specialities (social media, video, local search) as client services look like clear investments to survive and thrive a potential internet boom in online spending.

Questions? Discuss this in our Internet Business forums for help and advice

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