A report produced by Efficient Frontier into US search spend towards the end of 2008 showed a slow down in year on year search spend, which, whilst it wasn’t directly put down to economic conditions, it could be construed in such a way.

In contrast to this the latest marketing sherpa stats show that search engine optimisation and PPC are where digital marketers saw the greatest return on investment in Q4 of 2008, thus indicating they would be the major sources of investment in 2009 also.

Nobody knows the impact of a recession on search engine marketing.  After all, it didn’t exist the last time we experienced one!  My personal opinion is that if there are any channels which are set to benefit it will be the measurable and flexible PPC and the “free” and highly profitable SEO.

Yahoo!

Yahoo! announced this week that it is shutting down its content network, a move which was met with nothing more than a shrug by the search engine marketing community, but one which could signal that Yahoo! is looking to cut back on its less profitable areas.

Yahoo shuts down content match in the UK

Microsoft

Rumours are rife that Microsoft are set to announce job cuts in the next week, with some expected on the search side of the business.  This is unsurprising considering the disappointing growth of Live search and the perceived lack of focus in this area, perhaps they are set to rely on the Yahoo! workforce and are giving away something about the merger rumours!?!

Microsoft Job Cuts May Come Next Week

Google

Surprisingly it is Google that appear to be making the most cuts, with the announcement it is cutting 100 recruitment positions (1% of the company) and shutting down 3 engineering offices.  The staff on the engineering side will be given the option to relocate but you would think a large proportion of them will also end up redundant.

Google have also announced the removal of a number of their product offerings and the discontinuation of development of a number of others as they look to focus on the products that earn them direct revenues in these difficult times.  The affected Google products are:

•    Google Video
•    Google Catalogue Search
•    Google Notebook
•    Dodgeball
•    Jaiku
•    Google Mashup Editor

Google to lay off 100 recruitment staff

Google closes a number of products

So what does this say about the confidence of the three biggest suppliers of paid search advertising?  It could be seen as good business sense on their part, sorting the wheat from the chaff so to speak and focussing on profitability in tough economic times.  Moves like this however can only result in Google extending their lead in the race for search engine supremacy.  The optimist in me would like to see Yahoo! or Microsoft being aggressive in a  push steal market share in the downturn, but maybe they are both resigned to the fact the only way forward is to join forces.

2009 is set to be a tough year for us all; some will fall, while others will prosper at their expense.  At the moment it appears even the search engines are jockeying to be in the best position as it appears things are going to get worse before they get any better.

In this example which can see the harsh reality of the infamous credit crunch taking hold through the use of Google trends.   Earlier in 2008 term credit crunch as the US sub-prime market fell to pieces and the UK promptly followed suit. The term credit crunch became increasingly popular but now as the affects of it are beginning to really take hold the depressing sight from Google trends shows that searches for redundancy are on the rise in Q4 as businesses feel the pinch.

Don’t be surprised if the next high flying search term in Q1 2009 is recession, a depressing tale told through search volumes!

The announcement isn’t a huge shock as networks of this type have been becoming less and less popular for a long time now (flexible digital marketing is the future remember!) but the question I am asking is, are Adrevenue the first in a long line of casualties in the current economic climate, or are they the anomaly?  Is this really the start of Web Bust 2.0 or just a blip?

There has been much talk about digital being the go to medium in the impending recession, but in reality, every advertising channel is going to suffer as companies tighten the purse strings.  Blind advertising networks and inflexible digital channels only ever had a limited shelf life as Internet marketers look for accountability and transparency on spend.  Are they the first casualty in what is bound to be a tough year for all forms of media?

What do you think  A one off, or a sign off things to come?

“It’s not surprising that it’s been trending down, but what is surprising is the size of the drop,” says Rajeev Goel, president and co-founder of PubMatic. “What we don’t know yet is whether the trend is due to increasing capacity on the supply side, or to the fact that the economic malaise is beginning to find its way into the online ad industry.”

Well, Im pretty sure I can tell you what has caused it.  Firstly advertisers are tightening their belts, no risks are being taken in such an uncertain time.  And secondly, they are channelling their ad spend into channels with a better return, like paid search and natural search engine optimisation.  A recession is no time for elaborate brand awareness campaigns, it si a time for keeping things tight, keeping profitability solid and riding the storm.  There is a time and a place for online display advertising but unfortunately for publishers, now isn’t it.

The net affect of this is with less advertisers booking space, and those that do driving a hard bargain, publishers are forced to take what they can get, and sell of the remnant inventory cheap.  There will still be exceptions to the rule, but not too many, and most advertisers will be driving a hard bargain for anything they do buy.  Good news for the media buyers (if your clients still have a budget that is!) but not so good for the publishers.