What Rising Oil Costs Mean For Advertising

I have to be honest--I'm scared of the rising prices for oil. They are raising the costs for gas, which is making it more expensive for me to fill up my car. That cost is beginning to affect my decisions regarding the places I go and how often I'm driving.

(If you live in any city other than New York City, you probably drive a car, and you know what I'm saying). Beyond just the rising costs to put gas in my car, it costs more to heat my home in the winter--and even though it's summer now and there have been a rash of heat waves in the Bay Area as well as in other areas of the U.S., this affects the way I view winter.

There's been talk of a recession and its effect on advertising, but I don't think the recession is nearly as influential as the basic costs for transportation and heat. These are fundamental costs for all Americans, and as they rise, the wallets and pocketbooks of the American consumer get tighter.

In a standard recession, a brand should spend to increase market share in the hope that once the downturn ends, it will ride the wave of increased consumer spending. This is different than a recession because the recovery from a recession is reliant on having more cash in the hands of consumers so they spend it on the economy. But in this case, they are spending that money at the gas pump rather than on other types of goods and services.



Of course, I'm oversimplifying this issue, but this is a fact of life. First and foremost, I'm a consumer. I'm a marketer second, and in order for me to be good at my job, I need to find a way to satisfy the needs of my consumer side first. Consumers think in simple terms because not everyone can read The Wall Street Journal and process the information held in those hallowed pages. Therefore, I tend to oversimplify things. Sue me.

The reason I bring this up is because I see that there is an immediate impact on our business. I think traditional advertising is going to suffer in the coming year, and I think online display is going to suffer. By suffer, I mean that we might actually see a flat spend from year to year, rather than the growth that many people project. The numbers for Q1 showed an increase, but the rumors are that Q2 is slow and Q3 might be slow as well.

If we see growth, it's less than projected--which is still good, but not as good as the proliferation of new general, un-targeted ad networks would have you believe. I think direct-response marketers will always be direct-response marketers, but brand marketers are going to have trouble approving budgets for online display.

I foresee that non-paid tools will become more important because if we get down to the brass tacks of the issue, many important brands are being built by focusing on community and focusing on viral distribution and search, either paid or non-paid. I believe marketers are getting better at finding ways to reach the consumer through non-paid placements, and these placements can be more effective than online display.

Of course, many syndicated research sources say that I'm wrong, and I hope that I am, but I don't think so. If the price of oil continues to increase, we risk further tightening of the consumer's purse strings. I am not sure how this issue can be fixed without finding new ways to power our lives, and I am pretty sure that we can't find a solution to that problem in the next 90 days.

My advice to marketers and agencies is to become efficient with your time and start learning all you can about the non-paid marketing tools online. These tools may become your best friends in the coming months.

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