Tuesday, April 14, 2009

What would Google do: Wield scalpels or axes?

Last week, I posted online about ad spending's overall flat 4Q08 performance and sung the fanboi theme of "search is where it's at." (here)

This week, Google will post 1Q results and some analysts...Imran Kahn of JP Morgan to be specific... are suggesting that Google may actually show its first ever decline (here). Should that come to pass, the hopeful will explain it away and the hopeless will say "I told you so".

So What?

Suspending our disbelief in analysts for a moment (their 'success' in forecasting the current economic circumstances being, um, a data point), let's ask the pop culture question:

What would Google do?

Well, what they've been doing. Since before the first quarter of 2009, they've cut some workers, full time and part and hired others...they've cut some programs, like Google Notebook, Jaiku and Dodgeball (here) and started others. They are preparing themselves to remain viable in challenging times by formally evaluating what works and what doesn't...who works and who doesn't. Of course, they've done this all along...that's one reason so many Google gadgets have existed perpetually in beta.

Soon, we'll see if Imran Kahn is guessing...rather, we'll see if his guess about Google's earnings is right. Either way, Google will do what it's always done: use the precision scalpel of ongoing, formal evaluation to determine what must be excised and what must be retained and encouraged to grow. That's a sensible strategy for every quarter...during good times and all the others.


What would agencies do? Zenith Optimedia is forecasting global ad spending to fall in 2009 by the most in 29 years (here). Particularly in the US, which is forecast to feel an 8.7% drop across the board this year, the tough times in the ad business may continue.

And though Zenith forecasts a 1.5% increase in 2010 globally (they would be considered, well, hopeful), a 1.5% increase after an 8.7% decrease still leaves you down from the original number by 7.4% (as we all know, percentages are not additive).

Will agencies employ scalpels or axes? Scalpel's and axes work in different ways of course. What they share in common is that their effectiveness as a tool depends entirely on the skill of the people choosing to employ them.

Keeping skilled people...those most skilled at adapting to and driving innovation in environments of further, yet-unanticipated change...will be hard, especially if it's not a formalized part of the existing evaluation model.

Pushing this lame analogy beyond the breaking point, the random axe of employment is ultimately harder, though, because cost cutting's effectiveness always ends at zero. An agency that successfully navigates this decision set will set itself in the best possible place for success on the other side of whatever pound of flesh the 2009 ad market demands.

I suspect that many of these successful agencies already behave a lot more like Google, and a lot less like what one generically thinks of as an agency.

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