Ad spending crashed 3.7% during the second quarter of 2007, perhaps suggesting that there's a crisis in this "other" form of real estate.
After all, the physical qualities of advertising can be considered real estate, right?
- They are layouts with dimensions, just like floorplans
- Each ad space appears in a location of some form or another, just like the address of a home or business
- There's a marketplace that assigns value to it, based on the broad tenets of supply and demand
- For that matter, when we talk about ads, we often refer to it as real estate anyway
Well, some of that real estate was foreclosed and stayed vacant during the 2Q08. Others had to slash prices in order to get occupants. Media companies faced the challenges of developers and builders.
And ad agencies, analog and digital, fought the good fight as any self-respecting brokers would do: they came up with evermore inventive reasons and ways to make the real estate attractive to would-be buyers.
Uh oh. If you follow the analogy far enough, that means there's been an advertising bubble, and that the bubble has burst because the owners/buyers don't have the confidence or ability to buy the stuff anymore.
The whole shebang sort of defies logic.
Skipping out of the analogy for a moment, it seems rational to expect that businesses need to work harder in tough economic times. Every sale is precious, and companies need to redouble their efforts to make meaningful, relevant differences to their customers.
So now would be the absolutely dumbest time to cut back on outbound advertising, right?
It would be a obvious "win the battle, lose the war" strategy (cutting back on selling to people when they're buying less should equal fewer sales, which would be far more damaging than whatever benefit you got from hoarding those ad dollars).
OK, now back to the analogy: what if the value of that ad real estate had been inflated by irrational and unsustainable buyer expectations? Maybe companies were too willing to buy the promises of beautiful new construction and smart brokers, supported by the make-believe metrics of branding that effectively promise buy this and it will make you happy.
What if this nonsense was generally covered-up by rising or flush consumer purchases. Perhaps the ads didn’t really impact things one way or another, so cutting them is actually the smartest thing companies could do?
Like I just said. Uh oh.
It's also interesting that the voices we hear that presume to deconstruct this crisis are the very sellers who helped create the bubble. New media construction continues, like the Wall Street Journal's latest forays into glossy magazines and conversational tools. The brokers keep coming up with sexier, more convoluted reasons to buy.
Their pitch is that the answer to the ad/real estate bubble is to buy more ads.
Imagine if the dialogue about the geophysical real estate crisis were being so controlled? We'd laugh the bums off the public stage.
I guess this "other" real estate bust is different?