There has been more evidence of the dreaded R word hitting the digital world in the past few days as previously untouchable companies face the harsh reality of a less profitable future. The irony is that these companies are seeing the pinch in the way of less than huge profits, where as smaller businesses are seeing the impact come in the form of zero profit and the prospect of going out of business. It goes to show however, that the difficult economic times are hitting companies in every sector, including Internet marketing, and of every size.
Google Feeling the Pinch?
Today, Google is set to post its Q1 figures and experts are predicting a sequential drop in revenue for the first time in Google’s history as a public company. And with 3 rounds of redundancies already in the first quarter of 2009, some cracks are starting to show in Google’s bullet proof exterior. The reality of the situation is that Google will still post huge profits and huge revenue and its biggest concern is appeasing investors and maintaining share price, there isn’t much danger of them going out of business any time soon. It does show however the severity of the situation however that it is hitting even the biggest and most profitable of Internet companies.
Ebay Going Back to its Core
Another Internet giant, Ebay, has announced measures this week which suggest they too, are conscious more difficult times may be ahead and they need to focus on their core business. After selling social content discovery website Stumble Upon back to its founders they have also announced they are planning to take Skype public in 2010 due to a realisation of its “limited synergies with Ebay and Paypal”. Ebay bought Stumble Upon just 2 years ago and Skype in 2008, and despite both posting impressive growth Ebay has since decided neither is a close enough fit to their core business. Both these purchases are evidence of a more frivolous time when large Internet companies had deeper pockets and could make $75M purchases (the price paid for Stumble Upon) without worrying too much about how it would fit in with their business. Now the honeymoon period is over, companies are looking harder at their businesses and spotting the need to streamline and maintain a focus on core activities.
Time to Rip up the Script
With Internet giants such as these cutting back, what chance is there for the smaller business? How does the small website owner survive in difficult times? I think it has been proven in the past that those with a solid business model who react to the changing market quickly, will survive. Sure things will become more difficult and margins will be squeezed, but those who remain agile should be able to ride the storm. Companies need to rip up the playbook of 2007-2008 and make sure their strategy for 2009 is in fitting with what the market demands. Make sure you are meeting a market demand and providing something more, or significantly better than, your competition. Be prepared to change in line with the market, stay agile, and keep in touch with customer demands. Hopefully then, you should be able to survive the difficult times and possibly even come out the other side in a stronger position. There will be casualties, no doubt about it, but for the companies which can stay strong and adapt, there could also be huge opportunities.