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Google, Advertising, and the Recession
By Max | March 25, 2008
I know some of you have been wondering where I have been. I am still here, but my hiatus was purely do to laziness. I’ll try to write a couple posts over the next few days…
The jury is still out on whether the US is currently in a recession. Some genius economists have to measure GDP growth and see that is negative for two consecutive quarters before calling it an official recession. One thing is for sure, business has slowed.
One of the first things to get cut in a recession is advertising. I think we are going to see some weaker results from internet advertising than in the past few years. If you want to know what I am talking about, just take a look at Google’s stock price over the last few months. Apparently, they are not immune from the business cycle. They are still growing, but just not as fast as everyone expected.
I am seeing this carry over into my sites’ earnings. All three of the major ad networks that I run ads on are giving me reduced payouts for the same traffic as I was getting last year. I would like to hear from folks who are seeing the same thing just so I know its not completely my fault. 
What does this mean for us in the web business? It is important not to panic. For one thing, recessions are never the end of the world. In the end, the economy always comes roaring back. Because of this, I believe there is an opportunity for some serious profit. Timing could be important, and there is certainly risk of further earnings deterioration, but I believe that this spring and summer will be a great time to buy websites. Think about it… Some frustrated webmaster out there has seen his earnings drop each month. He may just think its his own bad luck or increased competition in his niche. You need to get out there and find these guys. They might be ready to sell thinking they’ll avoid further loss. You can swoop in and snap up a decent site at a reduced cost. When the economy and the earnings come back, you’ll make a great return.
Here’s what to look for…
1. Steady or increasing traffic - This is most important. You want a site that will be around for awhile earning so you can whether the storm.
2. A timeless niche - You don’t need something that’s going to be around forever, but you want to buy a site whose subject will still be relevant once the economy recovers.
3. CPA income - I believe CPA income streams should do better than other forms like CPM and CPC. The reason is that companies making a certain profit per sale are willing to pay a certain amount to get that sale. Why would they reduce their payout if the program is still profitable for them? They only pay you when they get paid, so it doesn’t hurt them. Reduced marketing costs in other forms of advertising could indirectly affect CPA campaigns, but I think it will be a less immediate impact than CPM or CPC. Some CPA campaigns might even take off? Are there any job hunting CPA campaigns to run for example?
Happy bargain hunting.
Topics: News |
March 25th, 2008 at 9:38 pm
There you are. I figured you were just out raking in the dough on the net.
If it ain’t a recession I would hate to see one. My small web earnings are holding their own but in the real world most people I talk to are concerned.
Good idea to look around for opportunities to pick up a great site from a shortsighted owner.
March 26th, 2008 at 8:53 pm
FYI, 2 quarters of negative growth is A technical definition of a recession. However, a group in the United States called the NBER is responsible for dating ‘official’ recessions (http://www.nber.org/cycles/recessions.html) and they use a different set of criteria. They also take for-freaking-ever to recognize a recession (9 months after the fact on the last one).
March 28th, 2008 at 1:37 am
Most important, nice to have you back (writing)!
April 1st, 2008 at 2:24 pm
I also look for space to expand or diversify. There has to be future for the website.
April 4th, 2008 at 2:50 pm
Interesting note in this vein, it looks like MySpace missed Murdoch’s sales target. The estimates could have been too aggressive, or they could be feeling the pinch:
http://www.alleyinsider.com/2008/4/news_corp_web_unit_will_miss_revenue_goals_after_all
April 18th, 2008 at 2:54 pm
My approach to having a “recession-proof” business (online of off-line) is to sell “things that make other things work”. Once I started doing that, years and years ago, I never had a bad year.
May 1st, 2008 at 9:03 am
I hope you don’t mind the off-topic comment but I see your site survived the “dreaded Google PageRank update” (insert ominous voice) unscathed.
Congratulations
Charles
May 4th, 2008 at 9:08 am
Are you coming back to post some more buddy?
May 16th, 2008 at 3:18 am
I had written an article about the same couple of days back. My opinion is not different either - affiliate income can be really huge compared to the peanuts that you receive for a hundred thousand his from CPC/CPM networks…
Read on if you are interested…
http://www.dollarshower.com/top-affiliate-programs/
Ajith
May 18th, 2008 at 1:54 am
Btw, have you stopped publishing your income reports?
I am a bit curious to know which are the best performing ads or aff networks here…
Ajith Edassery
May 18th, 2008 at 12:24 pm
Will you post again on this blog? It’s been a while
John
June 1st, 2008 at 4:27 pm
You can use Google trends to find “timeless” niches with solid results.
June 2nd, 2008 at 8:32 am
Recession really has a great impact but in my opinion, it isnt very well felt by those working online.
July 3rd, 2008 at 9:11 am
Fuel prices should not effect IT industry much.
July 3rd, 2008 at 9:26 am
Fuel prices directly won’t, but it will indirectly do..
July 9th, 2008 at 11:09 am
paulette, you are absolutely right recession affects but it is really bad for those who earn money online
August 7th, 2008 at 2:29 pm
I know we have had to cut back in our advertising due to the increased decline in the economy.
September 6th, 2008 at 7:14 am
I agree with you, Steve. But I think it is a kind of addiction one should overcome