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Is a recession good for the social web?

Summary: It's logical that if we are heading into a recession (I'm not convinced), ad-spending will likely take a hit. Whether or not online spend will be cut at the same rate as off-line media spend, is yet to be seen, but nonetheless budgets will be cut.

Steve O'Hear

By Steve O'Hear for The Social Web |

It's logical that if we are heading into a recession (I'm not convinced), ad-spending will likely take a hit. Whether or not online spend will be cut at the same rate as off-line media spend, is yet to be seen, but nonetheless budgets will be cut.

And yet, Josh Bernoff (over at Groundswell) puts forward an interesting hypothesis: Social Applications will thrive during a recession, giving a better return of investment to marketeers than traditional "awareness" advertising.

Advertising is mostly designed to raise awareness of a brand or product in the hope of persuading consumers to go out spend on those products and brands. During a downturn, consumers are likely to keep their wallets in their pockets, much more cautious and therefore resistant to awareness messaging. Hence the cutback.

In contrast, social marketing through harnessing and building social applications might be more effective since it's based on 'word of mouth' i.e. recommendations by friends or trusted sources.

... social applications are about consideration, not awareness. Blogs, word of mouth, social networks . . . they're about people connecting with other people. You may resist advertising if your finances are tight, but if your bud tells you that new movie is really worth seeing or that the Gap has the cutest new tops, that's more persuasive than advertising. Basically, in a recession, the consideration phase is more important than awareness -- and that's where advertising flops and social applications succeed.

Additionally, investing in the social web is much cheaper (as little as free) than purchasing ads. Bernoff does provide one caveat: make sure your results are measurable.

If your social application doesn't have a measurable output, you'd better get one. But if it does -- if it generates leads, or conversions, or buzz, or something useful -- then you can prove it's working. beinggirl.com is four times as effective as TV ads, Procter & Gamble told us. That won't get cut in a recession.

What do you think? Will the Social Web thrive in a downturn?

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7 comments
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  • Will Social Media Thrive in Recession

    Hi Steve,

    I think you bring up a number of good points that backup the theory about how social media could thrive during a recession. Does this mean that marketers should spend all of their time on the applications that specialize in this. I am thinking of Facebook in particular. I know the targeted advertising failed, but how much of a gold-mine would that be with this theory? Curious to know your thoughts.

    John
    jwhitcomb@...
    Reply Vote

    • Not targeted ads

      When talking about social marketing, I wasn't really talking about targeted ads in the traditional sense but more social applications: think Facebook apps that make it easy to become a co-marketeer for your favorite product or brand. Remember the Bob Dylan FB app? Or embedding a movie clip etc. Anything that makes it possible to get consumers talking about your product (and endorsing it) to their social network. Hence the "consideration" not "awareness" tag.
      Steve O'Hear
      Reply Vote

  • RE: Is a recession good for the social web?

    I think a recession would have a marginally negative effect on social web advertising spending. In bad times, firms tend to pare down and focus on their core areas. At least in my experience, most firms still view social advertising as a cool experiment rather than as a core part of their advertising strategy. Perhaps if there was better ROI data for social web advertising to go on things would be different, but...
    mr_siin@...
    Reply Vote

  • RE: Is a recession good for the social web?

    I think the social web will absolutely thrive in a recession. Less money means people will be going out less, theoretically, so they'd be likely to be spending more time on their pages networking with others, blogging, etc. IMO!
    ~Pamylla
    pamalu2@...
    Reply Vote

    • RE:

      I agree with you on the natural progression to go out less during a recession. But what about spending money online? Do you think that the social networking will naturally lead to spending?
      ahh1102@...
      Reply Vote

  • RE: Is a recession good for the social web?

    The effect of a recession on the social web is hard to hypothesize about. One of the great drawbacks of online shopping is shipping fees and being unsure of merchandise that you cannot see, feel, etc. In a recession, I don't think people are going to want to be so risky with their money. Of course, the idea of personal recommendations from one's virtual friends may indeed have an upswing effect. I think in difficult times, people often look for entertainment as opposed to merchandise. There are countless venues for that from music to movies to downloadable audio books and so forth.
    ahh1102@...
    Reply Vote

  • RE: Is a recession good for the social web?

    Thank you for the article. It adds to my personal view/hope by professionals! It will aid in the growth of a group of us who have banned our individuaol businesses together!
    ted.uvme@...
    Reply Vote
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