Posted by: Marshall Sponder | February 7, 2008

Social Media is Recession Proof – Forrester Research.

According to a new study by Forrester Research and written up in AdWeek Social Media will weather a recession nicely.

“…. According to the Forrester Research report, marketer moves into areas like word of mouth, blogging and social networking will withstand tightened budgets. In contrast, marketers are likely to decrease spending in traditional media and even online vehicles geared to building brand awareness.”

I was just thinking about in New York Magazine titled The Stench of ’89 that details how New York was affected by the recession that followed the Stock Market Crash of 1987:

“…The moral of the story appears to be that Wall Street money got us into hot water and Wall Street money got us out. And that raises New York’s most pressing question for the rest of 2008 and beyond: Will this time be better or worse than last time?”

“…shorten the time horizon to six months, or even a year, and few experts predict much of anything good. It’s going to take at least that long, the consensus seems to be, for the sub-prime-mortgage mess to be absorbed and filtered out by the system. Beyond that, no self-respecting pundit could really say what will happen. Which is not to say that many won’t try.”

Which is to say that we should focus more on products and services that are recession proof; my take is this recession will be much worse and longer than the last few.

In fact Josh Bernhoff, over at Forrester, weighed in recently on how effective Social Media Spending will be during this recession in a post titledWhy Social Applications Will Thrive In A Recession:

“…Things are different this time.

  • It’s not a tech bubble. The last recession was caused by the dot-com bubble and the terrorist attacks. There was a lot of ignorant money out there chasing illusory opportunity, and companies had over invested in technology. This time, the precipitating event is a housing bubble, and technology spending is not irrational.
  • Awareness ads will lose effectiveness. Advertising (or as we often call it, “shouting”) is mostly about generating awareness and reinforcing brands. In a recession, ordinary consumers like you and me aren’t as willing to spend. Sure, we’ll be aware of the product, but that doesn’t make so much difference when you’re worried about your future. Advertising is expensive and is a lot easier to cut than headcount. Many are predicting ad spending will hold up; I’m not so sure.
  • But social applications are about consideration, not awareness. Blogs, word of mouth, social networks . . . they’re about people connecting with other people. You may resist advertising if your finances are tight, but if your bud tells you that new movie is really worth seeing or that the Gap has the cutest new tops, that’s more persuasive than advertising. Basically, in a recession, the consideration phase is more important than awareness — and that’s where advertising flops and social applications succeed.
  • It’s cheap. Social applications can be nearly free (think blogs,, facebook pages) and even more sophisticated communities are typically $30K to $200K — a lot cheaper than a significant sized ad campaign. After our last post, all the responses were positive. One interactive marketer from a highly cyclical company told us this:

“Budgets are tight in light of the economic conditions as you surmise, but [the budget for social applications] has not been impacted. We are still keen to move forward with our trial and have support….at this point anyway. Interactive in general has been more protected than other comms areas and saw an increase.”

  • It’s measurable. If your social application doesn’t have a measurable output, you’d better get one. But if it does — if it generates leads, or conversions, or buzz, or something useful — then you can prove it’s working. is four times as effective as TV ads, Proctor & Gamble told us. That won’t get cut in a recession.

Telling is the observation that advertising is often like shouting and used for Brand Awareness – but won’t generate as much profit. Meanwhile, Social Media, being mostly free, does generate awareness and more, without as much, or any expense, and it’s also measurable, now.


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