Dark Clouds On The Tech Horizon Redux: Europe Drops, China And India Slow, US And Canada Limp Along

Haven't we seen this show before?  Like last year?  Once again, Europe wrestles with and is again losing against its debt crisis.  Once again, after some promising growth in late 2011, the US economy is showing signs of losing steam.  Once again, China and India are flashing distress signals.  And once again, John Boehner and the Congressional Republicans are threatening to refuse to raise the US debt ceiling unless US Federal spending is cut sharply. 

Last year, the mid-year economic troubles did take their toll on tech purchases in the third and four quarters of 2011, but a last-minute resolution to the US debt ceiling issue, the European Central Bank's aggressive lending to banks so they could buy Italian and Spanish government debt, and some strength in US consumer spending, Germany's surprisingly strong growth, and continued growth in China revived global economic growth in Q4 2011 and into Q1 2012.  Much depends on whether this pattern of slump and revival will recur again in 2012.   My bet  is that we will in fact see the same pattern. 

So, let's look at the economic evidence, and then the tech market evidence. 

  • US economy slows but continues to grow.  In the US, the US Bureau of Economic Analysis on May 31 revised down Q1 2o12 real GDP growth to 1.9% from 2.1% in the preliminary report, and on June 1 the US Bureau of Labor Statistics reported that a disappointing 69,000 increase in payroll employment in May, the second month of sub-100,000 job growth.  On a more positive note, US retailers and auto makers reported good sales growth in May, while gas prices at the pump continued to fall from peaks earlier.   My take is that we will see real GDP growth in the 1.5% to 2% range in the remainder of 2012, down from my earlier assumption of 2% to 2.5% growth. 
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Social And Mobile Redefine The Future Of Search Marketing

Forrester's Western European Search Engine Marketing Forecast 2011 to 2016 is now out and one thing's clear, paid search spend will grow at a slower rate than historical averages as mobile and social become increasingly important to aid multi-channel "discovery."

It's not so much a case of paid search being less relevant, but that search and the process of "getting found" across channels has become more diverse with the advent of social media, growth in mobile search, and shifting budgets to SEO in response to rising cost-per-click (CPC) rates in mature European markets.

The last frontier for paid search? Interestingly, despite huge marketing cutbacks the troubled euro zone markets — Portugal, Italy, Greece, Spain — maintain growth only just below Western European averages as brands in these markets shift budgets to search and focus on acquisition and return on investment.

Overall, interesting times are ahead for the search agency that can develop multi-channel marketing strategies or the more traditional digital agency which shores up it's search and discovery offering. 

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