What the Macro-economic contraction means for young online media firms

The best piece advice I have received from a friend working in media private equity was this:

“If you have the model and the means to get through an economic contraction with growth, don’t sell now…  keep your head down, execute and grow. On the other side of the contraction, your business will be worth MUCH more”

Also, Jason Calacanis, a serial successful entrepreneur opined recently (paraphrased) on TWIT that the best time to make a move in this market is during a contraction because you have less competition. If you are executing, you’ll grab more market share, you will be a more valuable property, and attract better talent. Jason speaks from experience…he has started businesses in downturns.

The trends look good for online media: there is a flight to more measurable and agile online media because online media consumption time is increasing its share of the (finite) user media consumption pie. Also, the dollars that leave radio, TV and Print will move into the online space to gain on the 20% user consumption time of online media.

Smart marketers are slowly levering up the ~7% of thier budgets in online media to get closer to matching the 20% number. They also know that the trackabilty and ROI equation works in their favor, as they can deliver faster, more direct and meaningful results with online media (especially as performance-based pricing becomes more popular).

In the end the “wheat will be seperated from the chafe”, but the firms with focus and resources to capitalize on the opportunity a contraction presents will come through a downturn stronger and more resilient.


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