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Too Many Industries Rely on Advertising

Advertising is deep-rooted in America’s culture of consumerism. In every direction there is another company trying to sell us on something. Whole companies are built up and valued almost solely on the revenue generated from advertising. Google and Facebook, both worth hundreds of billions of dollars, generate a vast majority of their revenue from advertisements. Companies are built using unprofitable business models with the hope that after they build an audience they can begin to advertise. Data sciences for ad targeting, market places to bid on online ad space, movie production funding, the list is long and far-reaching. There seems to be an endless stream of cash coming from the marketing business, but what happens when that money slows.


The businesses that are reliant on other company’s marketing budgets will be the first to feel the effects of a slowdown in our economy. By monitoring the health of companies deeply dependent on ad revenue we can monitor the health of companies dependent on the consumer. When ad revenue begins to slow and there are no obvious failures within the company, there must be some underlying problem. Either the click rate on ads is lower or companies are not willing to pay the same price for the ad space. Both of these general scenarios are triggered by a slowdown in consumer spending. Using this method may be more of an art than a science, but it is a possible way to identify a potential pullback in the market.

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