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.
While some think the IPO market will slow for the foreseeable future, others believe economic issues will take the spotlight and have a bigger
impact on the ad industry, especially if consumers stop spending.
eXelate CEO Mark Zagorski points to "huge macroeconomic issues" rather than the S&P downgrade as prompting a possible slowdown
in the near term if consumers pull back on spending. "We had a market that had begun to turn around, and I'm sure a collapsing stock market isn't as attractive to investors that might back an IPO, but
the bigger issue will become the economic slump," he said. "People and big companies were just starting to spend more and inch out of their shells."
Ironically, many S&P 500 companies such as Apple continue to sit on mounds of cash.
It's during tight
competitive times that survival of the fittest leads to "faster evolution of intelligent creatures," according to George John, CEO of Rocket Fuel, which provides a real-time ad targeting platform, who
believes a little economic stress will be good for the discipline of marketing.
"There is a lot of cash that needs to be put somewhere, and young fast-growth companies will likely still look
attractive relative to other investment options," he said. "For companies with good business [models] that are not dependent on boom times to grow, the IPO window will continue."