Wednesday, September 17, 2008

Where is Money Going?

The Dow fell today 450 points or 4.6%, the S&P 500 fell 57 points or 4.7%, and the NASDAQ fell 109 points or 5%.

Morgan Stanley fell 24% and Goldman, the bluest chip financial firm in the world, fell 14%. GOOG feel $28+, or 6.42%, Yahoo! fell

Where is the world putting its money - gold, up close to $80 dollars today.

The attached widget tracks the price of gold - the price of gold is like the proverbial canary in the coal mine. The faster it goes up the greater the worry regarding inflation and fiscal/economic health.

Again, I find it fascinating that the Bay Area remains largely insulated from the downturn impacting the world's money centers - NYC and London, in particular.

The next few months will help us understand if on-line budgets prove counter-cyclical - Google's next earnings report will be instructive. To date, I can only turn to anecdotal evidence which suggests that on-line spend remains robust, with a particular strength in performance-based spend. Of course, budgets are set months in advance and it may take time for the current economic malaise to ripple through.

As 2009 budgets firm up, we will see if the performance benefits of on-line advertising protect the sector from a downturn. The current growth rates project 20% y-o-y upticks in on-line spend. For start-ups, the overall growth rate certainly matters, but more importantly advertiser appetite for experimenting with new mediums and technologies matters more. The on-line market's growth can slow but IF advertisers' appetites for trialing new ad channels remains robust newer markets will grow faster than the overall market.

Two data points to watch closely - total on-line ad market spend and mix/reallocation within the total spend. For start-ups to grow, the overall allocation and the allocation to experiment with new technologies and forms of advertising will matter a great deal.

1 comment:

  1. inflation is the real threat here. gold, and foreign currencies, are the way to go. anyone who wants to preserve their wealth should get out of US dollars ASAP.