>>Wouldn't they, too, keep advertising in the U.S., i.e., on AOL,
>>but curtail their expenses in Asia?
>>Why would a company scale back in healthy markets if it were
>>having trouble in other markets?
First, 'Asian exposure' is a two-way street. It's not just companies
that sell in Asia but those subject to *domestic* pressure from
cheaper imports from Asia. e.g. autos, apparel, etc.
In both cases, and especially the latter, the real impact is need
to cut back expenses to save margins. That means lots of things,
*including advertising* -- not to mention employees (a la the early
examples of Boeing, Kodak and Levi Strauss).
And I should add that going online is highly discretionary for the
80% of homes not online, and for most of those that are.
Unemployment tends to crimp discretionary spending. Not to mention that D&B today reported record number of personal bankruptcies in 1997, and that consumer installment debt is a record levels. Wouldn't take a whole lot to begin a cascade.
Sounds crazy amidst the current record low levels of employment.
But nothing is forever, and there are turning points.
I sure wouldn't buy an Internet stock that's valued upon presumption
that the climate for going online and for advertising will be even better in 1999-00 than it has been so far. |
