13 October 2008

Recession Adsense and Affiliate Marketing

As stock markets around the world show signs today of stabilising and emerging from the utter panic which appeared to have gripped them it is time to lift our eyes from the immediate crisis and look at the consequences of the financial crisis for Internet publishers and marketers and the potential impact on advertising income.

What now seems clear is that Western economies at least are likely to experience a year or two of recession. It is impossible that a reduction of economic activity of this scale will leave Internet businesses untouched.

Although steps are being taken to free up credit markets it is almost a certainty that credit will remain tight for some time. The impact this recession will have on Internet marketers, Publishers and others who rely on AdSense and affiliate income is worth exploring;

1. Reduced credit card availability and activity.
It seems a reasonable bet that banks and other financial institutions will tighten their qualifying criteria for issuing credit cards. It also seems highly likely that consumers, frightened by the credit crisis, will increasingly look to repay credit card debt rather than take out new debt. It is unlikely that these trends have peaked yet. For Internet marketers this means fewer people looking to make Internet purchases and probably fewer people with credit cards to fund such purchases.

2. Consumers looking for essentials.
In times when money is tight we can assume that people will look to maintain the essentials of life and will cut back primarily on inessentials and speculative purchases. Again this trend may not have peaked. Comments on forums would suggest that affiliates in the travel field have not yet seen any universal downtrend. This may not be long in coming though and it might be anticipated that there will be some impact on non-essential purchase niches over the coming months. Those who are marketing in niches for more essential items may be less impacted by a coming recession.

3. Consumers will be looking for value.
When money is easy then differentials in price for the same product may not be that critical sometimes. People may not spend a long time to save a dollar or two because their budgets are not squeezed. But move to a situation where money is tight and price becomes a very critical issue for a consumer. Marketing around value and price may in such a situation be a more critical strategy. When times are good people may pay a premium for Quality. When times are hard those same people may look to strike a firmer balance between quality and price. Internet marketers need to consider this in the way that they pitch their offers to potential consumers.

4. PPC will do well - at first
PPC programs like AdSense appear at first sight to offer a much more resilient source of income than Affiliate programs when money is tight. With PPC the publisher is rewarded simply for a visitor expressing interest in a product by clicking through. But the economic squeeze will impact on advertisers as much as it does consumers. Companies will face pressures in their advertising budgets and may begin to opt for Pay Per Action rather than Pay Per Click. This could reduce the demand for AdWords placements and suppress PPC rates. It will be interesting to see if this trend emerges or if advertisers see AdWords as an effective and cheap marketing tool in hard times.

5. Those who stick it out will eventually do well.
There will be casualties in the coming months. Internet businesses which have extended themselves and are making little or no profit may not survive for long. Those businesses which do survive are likely to be much leaner. fitter and focused though as we emerge from a coming recession. They will be well placed to take advantage of a future economic upturn.

The lesson in all this for Internet publishers, AdSense users and affiliate marketers is that you will not escape from a coming recession unscathed. there will be impacts on your business and some may have to re-think their business focus. It will become even more important to focus on what the customer needs and wants and to be aware that this may have changed. It will be important to be nimble and to be able to change what you offer and the way you offer it. This will mean focusing even more on creating a shared dialogue with consumers.

Above all else it will mean having the patience and determination to ride out a difficult time and see your business through to the other side.

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