News and camera crews line the curb outside Wall Street to cover the financial meltdown, but ad industry execs want to remain positive after Standard & Poor’s cut the United States’ perfect AAA credit rating last week, reflecting a faltering economic outlook and Washington’s inability to work through challenges.
WordStream Founder and CTO Larry Kim points to what he calls a “disconnect” between his company’s sales performance supporting small businesses, and today’s stock market crash and doomsday predictions. Even on Monday, he said the company continues to sign up new advertising customers in record numbers.
“I haven’t heard from anyone saying they’re less interested in growing their businesses in light of the S&P downgrade, and search is still the cost-effective and targeted marketing vehicle it was a month ago,” he said. “So overall, while this S&P downgrade is making huge headlines and stocks are getting killed, I think it’s still more or less business as usual in terms of search engine marketing ad spend for the average SMB.”
On Monday, stocks continued their slide from Friday, sending Google from the $562.98 per share open to $556.29 at around 11 a.m. PST. Diversity in businesses could help Microsoft’s stock take a less-severe drop. By midday, the company had sunk to $24.73 per share, just under its $25.02 open. Banking and commodities were the most sensitive to the change.
Market gyrations are a sequel of what DataPop CEO Jason Lehmbeck experienced the year he co-founded the company. “The 2008 financial crisis created a bunch of uncertainty across the ad landscape, but direct-response advertising, especially paid search, saw a surge in spend as marketers looked for safer bets,” he said. Lehmbeck anticipates marketers will continue to seek search as a safe haven. In fact, he’s already seeing an uptick in demand.
“I don’t expect much of a dent in ad spending,” said Rob Griffin, EVP and global director of product development at Havas Digital. “If anything, I’d bet the IPO pace would slow down a bit.”
Numerous companies went public this year, such as social network LinkedIn, Yandex, and Responsys, and many more filed for an IPO, such as casual game maker Zynga.