• by Michael Kubin , June 6, 2001

My first job out of school was in media, during the recession of 1973. I have lived through at least three other recessions, maybe four. These are the top ten things I've learned:

1. - Ad spending is a great bellwether for a slowing economy. Also for a growing economy. Coal miners keep a caged canary in the mine, because it is the first to die in case there is a toxic gas leak. Ad spending is the canary of the economy; you can set your watch (or in this case your calendar) by it. Watch for a drop in ad spending, and six months later the economy is in slowdown mode. Ad spending is also a bellwether of a growing economy, but the lead time is shorter.

2. - The recession always looks worst right at the beginning. The U.S. economy has withstood dozens of recessions, but only one depression. In other words, things looked like they were going to fall off a cliff many times, but they actually only took the dive once. Nevertheless, we always fear the worst. Every recession always starts out looking the 'the big one.'

3. - Recession affects the various media in inverse proportion to their reach. In other words, the big guys get hurt relatively less than the little guys. The broadest-reach medium, television, continues to suck up ad dollars through any economic cycle. The little guys get hurt much more. Have you spoken to a radio rep lately? These days they're like the Maytag repairmen. And it gets worse the smaller the medium gets.

4. - The weakest players in each medium get hit first, longest, and hardest. Each medium has it top dogs and little runts. Recessions are hardest on the runts: they have least appeal to media buyers (who are trained to look for bargains from the big guys) and they don't have the staying power to stick out the bad times. These are the companies they wind up getting sold or merged into oblivion.

5. - Direct response does very very well. In bad times marketers want to minimize their risks, and nothing does that better than direct response. With loose inventory and low costs, every medium begins to take on disproportionate amounts of direct response advertisers.

6. - The media create cross-promotional opportunities. Desperate times call for desperate means, so a slowing economy is a catalyst for all sorts of cross promotions among various media that wouldn't give each other the time of day if they didn't have to. Packages consisting of combinations of radio with print and Internet advertising are more the rule than the exception.

7. - Senior managers feel it's their duty to lay off people. One of the scariest things about recessions is that management gets license to boot people out of their companies. Even if there's no great economic reason to do so, slow economies offer a great opportunity to trim dead wood. In some cases not even relatives are safe.

8. - Salespeople are the last to get laid off. A company has to be truly running on fumes before they kill their source of revenues: salespeople. Even though the pressure to perform generally increases, salespeople enjoy relative job security during tough times.

9. - There's always some one media person bragging about how they're going to do well despite the recession. Bravado shows up frequently during slow economies: someone's always bragging about how they are not going to let a herd mentality ruin their company's sales figures. Their ensuing track record generally proves that these folks took a bullet just the same as everyone else did.

10. - Someone always says that advertising during a recession is a great way to build market share. It makes perfect sense, doesn't it? Advertise heavily while your competitors don't, and you will gain share. Unfortunately this is advice that is rarely if ever followed, mostly because there are relatively few marketing managers with the kind of courage this decision demands. But it does remain a good idea.

Hope this helps. The best I've been hearing is that we've 'turned the corner' and business will begin to build by fourth quarter 2001 through first quarter 2002.

- Michael Kubin is co-CEO of Evaliant, formerly Leading Web Advertisers, one of the web's most powerful sources for online ad data.