Well, it would appear to be official. Everyone from Alan Greenspan to Parade Magazine is saying we are in a recession. That said, the question that most of our loyal readers are asking is this: “what the hell does the recession mean for CPG products and the internet?”. The answer depends largely on how advertisers and agencies react. Because consumers are already reacting.
I mentioned Parade Magazine for a reason. This weekend, Parade (which has one of the highest readerships of any magazine/newspaper in the country) published their fascinating, annual issue entitled “What People Earn”.
“What People Earn” is an amazing sociological statement on what is going on in this country right now, but I will not get into that here (one tidbit–the $35,000 salary of a teacher is listed next to the $12 million income of Leona Helmsley’s dog). Just in case you do not get Parade Magazine delivered to your home, which I cannot fathom, here is a link to the report.
My opinion is that Parade Magazine is a pretty good reflection of American society as a whole. The people who read Parade buy the majority of CPG products in this country. And, according the Parade reporters, these people are not feeling good right now. They are cutting back on eating out. On traveling. On buying clothes. And according to one respondent, they are switching from buying name brands to buying generics.
Most agency heads are saying that clients are not going to change their spending at this time. I’m not sure I agree. In fact, I know that some clients are already cutting back a bit. However, my belief is that the smart CPG clients will react to the recession by INCREASING their online spend. That’s because everything we have learned points to the fact that online marketing has a much better ROI than traditional media. And unless the TV networks significantly reduce their ad rates (HA!) things will only get worse in the months to come. When dollars are tight, and profits margins are slimmer, ROI should rule. Right now, online should rule.
