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Business

Is a recession good 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.
Written by Steve O'Hear, Contributor

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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