Tuesday, January 22, 2008

Recession is here! By Even Aas-Eng

Everyone who has money in stocks or funds has had a terrible 2008. And it continues today, as I write this Asian markets are down between 5 and 10% and the stock exchange in my home town Oslo is down about 5% today.

I guess this is interesting enough itself but since this is a blog about online media I will try and look at this from a different perspective. The media industry always gets hit hard by recession. Advertiser slash their budgets to save money and agencies struggle because the last thing on a CFOs mind is to put money aside for the next big brand campaign. I am sure that we will see this happening during the next years but with a twist! In all markets online media is experiencing a massive growth. In mature markets between 10-20% and in more undeveloped markets between 20-50% (undeveloped markets here doesn’t necessarily mean undeveloped economies)

The last couple of years I have said many times that I welcome the next recession so that online media finally will have its final and mayor break trough. This was obviously said with a smile as I also save in the stock market and I have very little to smile about at the moment… But I really think that my joke brings some matter of truth to the table. The staggering growth of online media spend will continue and in some cases I sincerely believe that the growth could be further increased by the wobbling state of the world economy. Why? Well as advertising budgets gets slashed and CMOs are pressured on their ROI it’s not totally off to think that they will allocate more money to the most predictable, accountable and cost efficient media channel. It might be a bit naïve way to look at things but it could happen. During the last years of growth, online media has taken big market shares but companies haven’t spent less money on other media channels. On the contrary, they have spent more. It’s my guess that most companies are in a position to save money on their marketing budgets without risking growth in sales or their brand. And it’s also my guess that they won’t save on their online campaigns.

So if it’s true that we will see further growth or even an increase in growth for online media spend it might be possible to make a buck or two in the stock market as well! For those who read the following you should keep in mind that I am NOT a financial analyst!
Google is down about 20% this year and I guess they will be down even more after today’s trading. Google is definitely a company that has many years of fantastic growth ahead of them. In many markets Google is still enjoying growth rates above 100% and Asia and Eastern Europe hasn’t really started yet. They don’t in the US but the US market is less and less important for Google. So Google might be a good buy if the market continues to slide.

The Swedish company Tradedoubler is also an interesting case. Last year AOL tried to buy the company for 215 SEK a share. Shareholders turned the offer down and the stock reached an all time high of 235 SEK. At the moment they are trading at 123 SEK! Tradedoubler is in the affiliate marketing business and they are doing well, so is affiliate marketing and everything seems to indicate massive growth in the years ahead.

There are many, many other interesting cases around. Companies that operate in the ad technology sector, tracking and web analytics companies, search engine marketing technology and e-mail marketing are all interesting.

So I guess my final conclusions are that there are many opportunities out there and that online media will not be hit by the sliding global economy.

God, I hope I am right!

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