Five Reasons To Plan For Slower Growth
After the net party that was Q4, hold on for a more sobering Q1 in ad spending. Why? Janet Ryan offers five very good reasons.
After the net party that was Q4, hold on for a more sobering Q1 in ad spending. Why? Janet Ryan offers five very good reasons.
The glowing reports keep rolling in on the frenzy that was Holiday Season ’98 great news by any measure!
E-Commerce was way, way up. Ad spending surpassed all expectations. Web traffic grew exponentially. New Internet-enabled PC sold like hotcakes. Any way you look at it, Q4 ’98 was very, very good for the Internet business.
But it’s 1999 now, and as every media-experienced ad sales person knows, Q1 ad sales rarely live up to the expectations set by the previous Q4. This has not been true yet in Internet advertising, as our young industry has been on such a rapid growth curve that every quarter has shown an up tick. And it’s possible that 1999 will continue to grow at rates that exceed growth rates to date.
Possible. But the smart ad sales manager doesn’t bank on it.
Expect a drop off in Q1 — in percentage growth rates, if not in absolute dollars generated.
Gloom and doom?
Not at all. We’re big believers in the Internet advertising business, and expect it to continue to thrive for years to come. But just as many observers question the high valuations Wall Street has granted Internet businesses, we question the wisdom of expecting continual, double-digit growth in ad spending. It would be foolhardy to expect either to climb indefinitely.
To the sales executive who has to answer for revenue, a dose of reality in setting expectations can prevent a lot of heartburn down the road.
To the top executives and board members who push back when your sales manager submits what looks to be a “lowball budget,” this column is for you.
Herewith, the top five reasons to plan for slower growth in Q1:
This does not mean to expect the worst. It is not a prophesy of an industry in trouble.
It does mean that as we creep closer and closer to the ranks of mainstream advertising media, we would be wise to prepare for some of the realities that impact those industries. And anticipating a slowing of growth now is far better than having to answer for it when expectations were set too high.