Effects of high interest rate on advertising (part 2)
                     Effects of high interest rate on advertising (part 2)
Watson F
Writes on Ad serving, involved with ad hosting and 
AdSpeed ad server solutions.
We just experienced an unprecedented pandemic and we are still 
working through its consequences. Because inflation is going through 
the roof everywhere, governments around the world are tightening the 
money supply. The good time is basically over for easy money. It is much 
more expensive to raise capital now. Both companies and consumers 
are very concerned about their money going forward. We will continue 
to discuss issues with a high interest rate environment.
Industry disparity
While everyone is feeling the pinch in the current financial climate, 
there are some who are certainly feeling it more than others. There are 
things that you cannot stop buying, even if their price increases and 
those are consumer staples. On the other hand, there are things that 
you don’t need to buy if you don’t have the extra money and those are 
consumer discretionary. While not totally out of the woods, companies 
that make and sell essentials, such as food, clothing, household supplies, 
etc. are in a better spot than those who sell high-ticket items. 
Consumers aren’t really in a rush to buy those pricier items because 
they are worried about their future. Those industries will need to adjust 
their third-party ad serving strategy accordingly in order to survive 
during this business cycle.
Optimization and retention is key
When money is tight and you don’t have a lot to spend because of high 
interest rates, your ads need to really perform which means high quality 
and ability to convert into sales. Anything else is essentially a waste of 
money. Publishers need to find an adserver with an ad optimization 
feature. Advertisers need to optimize ads in order to retain clients 
because it is much more expensive to acquire new clients than keeping 
existing ones.
Cash is king
It is never good for any company to be saddled with a ton of debt or operate on 
credit, but it’s even truer now. It is important that the people making the financial 
decisions keep this in mind, as those who forget that might not be around in the 
future. Companies with cash will have more power while cash-strapped 
companies will have to make very tough decisions on what they can spend with 
their limited budget. When you do not have cash and need the money to pay 
employees, to pay rent, or to buy supplies, it will be very stressful or even 
impossible because capital will be expensive and hard to get. Therefore, all 
spending, including spending on ad serving, needs to be kept in line as much as 
possible during uncertain times. Do not overspend or splurge on anything. Try to 
raise cash and keep a healthy level of cash reserve when possible. Even if high 
inflation rates make your cash less valuable over time, it is a much safer bet that 
you need for the time being. The companies that survive and get out to the other 
side are the healthy ones and they can take advantage of extra talents and fewer 
competition.
About Adspeed
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