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$787 billion; part of that amount will undoubtedly reach the advertising industry, but how? When? While the recently passed American Recovery and Reinvestment Act might not directly impact the digital advertising industry as a whole, its provisions for large and small businesses should have a profound effect on online marketing in the immediate future.
Obviously, the stimulus package was designed to help everyone, individuals and companies alike. The package particularly favors small businesses, a definite plus for digital advertising. Small Businesses will see an increase in investments and funding due to lower capital gains taxes and easier loans. This alone will lead to a boom in online advertisement spending, simply due to the fact that many small businesses rely on online ads (nearly 50%).
Studies show that companies that increase advertising spending during recession years will be the most successful throughout the recession period, as well as in the years after. Many companies, big and small, will be (and should be) looking at these tough economic times as the moment to get a leg up on their competition, and one of the best ways to accomplish that is through increased advertising efforts. This means that with the added ease of financing the stimulus package will at least balance out, if not outweigh any negative effect the recession has on digital marketing.
While larger companies are not getting the economic help they had hoped for from the new legislation, items such as Bonus Depreciation and Delayed Recognition of Cancelled Debt will help boost their spending power relative to 2008. This probably won’t have nearly the impact that some of the provisions targeted at small businesses, but don’t be surprised if some larger corporations keep their marketing budgets as high or higher than they are now.
The new stimulus bill will assuredly have at least some effect on every company. As these effects ripple through the economy, digital advertising should experience a positive trend from companies trying to take advantage of their recession-weakened competition. How positive and how soon we can expect to observe this trend is impossible to determine; but, thanks to this legislation, 2009 may turn out to be a better year than predicted for the online ad business.
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