Will a consumer recession hurt Silicon Valley?

Summary:Yes.I've been writing about Silicon Valley turning into "Media Valley.


I've been writing about Silicon Valley turning into "Media Valley." Nikkei business magazine, Japan's top business magazine even featured my take on "Media Valley" earlier this year with a prominent interview.

Many of Silicon Valley's biggest and fastest growing companies are media companies. Google, for example, isn't a technology company. It is a technology enabled media company it publishes pages of content with advertising around it.

Google and many other Silicon Valley companies are increasingly best defined as media companies and they depend on advertising. Consumer oriented advertising is a huge business and GOOG et al depend heavily on that business.

A consumer recession will hurt the advertising business. It always does.

The question is whether online consumer advertising is growing faster than the slowdown in overall consumer advertising.

I can answer that question only anecdotally. My anecdotes come from my recent articles about Google AdSense:

Reasons Why Media and Bloggers Should Not Run Google AdSense - Just Say No!

Is GOOG Shafting Its AdSense Partners?

Many people have written to me saying that lately, their AdSense payments have been slashed by huge percentages. Now, this could be Google adjusting its payouts. But it could also be a sign of massive cuts in advertising. And that trend is being buried in GOOG's financial results because of the growth (or churn) in its AdWords business.

I think we could very well be seeing the signs of the consumer recession. And there are a lot of "advertising supported" businesses in Silicon Valley these days. It could get very nasty.

Topics: Google


In May 2004, Tom Foremski became the first journalist to leave a major newspaper, the Financial Times, to become a full-time journalist blogger. He writes the popular news blog Silicon Valley Watcher--reporting on the business of Silicon Valley. Tom arrived in San Francisco in 1984, and has covered US technology markets for leading comput... Full Bio

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