Comment by flappyeagle
5 days ago
Conclusion is wrong here. There’s plenty of bid for the ad inventory. Google and meta are extremely resilient to this kind of thing
5 days ago
Conclusion is wrong here. There’s plenty of bid for the ad inventory. Google and meta are extremely resilient to this kind of thing
I can't see how can add industry be resilient to recession. Maybe if you switch to selling ads for government propaganda?
So generally speaking, advertising is not resilient to downturn.
In 2008, there was an expectation of revenue loss. But because Google "direct advertising" directly affects sales... it was more like "sales" than traditional "marketing" in this respect.
In 2025, it may be different. We shall see.
I don't think much online ad revenue is related to physical products. The margin available for ad spend on physical goods is much slimmer. But... it's hard to predict 3rd order effects.
Advertising on the whole is not recession proof[1], although in the last two dips Google showed growth in ad revenue[2], and Meta was relatively stable[3].
The first thing that gets cut is 'new channels' and experiments (read: channels that have bad measurable ROI). Pinterest, X, Snap.
After that it's the most 'wasteful' brand spending/high cost per reach broadcast media that gets cut. Cinema, local TV, and increasingly nationwide TV.
Then when the economy comes back to growth there's a broader recalibration of budgets.
Because Google search has a very simple, easy to understand impact on sales they actually grew faster in recessions. Then when the recession ends brands don't see any reason to cut that spending.
1 - https://www.ibisworld.com/us/bed/total-advertising-expenditu... 2- https://www.statista.com/statistics/266249/advertising-reven... 3 - https://www.statista.com/statistics/268604/annual-revenue-of...
Google search (and online direct marketing broadly) have pretty direct impact on sales. It's true that they held up well, relative to "traditional advertising" in recent downturn.
However... there are a lot of money losing campaigns out there. A lot of that relates to economic buoyancy. Startups showing growth for the next round. But also established companies getting into new sectors, defending market share, etc.
We are still, I think, in a "greed mode" economy. Fear hasn't really shown it's face yet. If that switch flips... I suspect meta/alphabet will be impacted this time.
It's really hard to tell though.
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Not sure experiences from the covid recession tell us anything. That was a very short sharp shock followed by massive bailouts and stimulus for companies and individuals. The figures for that time period are not useful as comparators.
Even when this kind of thing is a global recession and the end of US supremacy?
If they stick with the tariffs we’ll see I guess though it seems likely Trump will have to back down.