Alex Sherman at CNBC had a good read today on media companies preparing for a recession, why they’ve been hit hard in the last few, and why “this time” it might be better. Their scenario really shows how recessions can be terrible for some businesses and I think it also shows you how to prep a bit. Let me start with an interesting quote that’s buried in tha lower third, because I don’t want you to skip past it:

The key to weathering a recession is having a product that resonates with a specific audience, said Liontree Growth’s Michael. Digital media companies and magazines that have had too wide an aperture haven’t been able to compete during economic lulls because brands haven’t had passionate user bases.

To paraphrase: the key is to offer something to a specific audience. What’s important here is the “specific” bit. Because recessions are all about focus: fuzzy businesses die. We’ll get back to that in a short minute. But first let’s look at what the article has to say about media companies.

fuzzy businesses die

In previous recessions, job losses at media companies have spiked. That’s likely because marketing budgets are one of the first to go and media companies relied very heavily on ads.

What’s different this time around?

Why media companies might do better in this recession

Here is why news papers, online publications, and other digital media companies might do better this time around, according to the article:

  • they already recently did lay-offs. Makes sense: if you’ve reduced your costs recently substantially, then you’re better prepared for another hit
  • they learnt to make money apart from ads: subscriptions, events, e-commerce, etc
  • the industry “consolidated”. That’s gentle way of saying that weak companies got bought or went ouf of business. The remaining companies, so the theory goes, are companies that learnt how to survive even if things are bad. that’s the “cleaning effects” of downturns.

Should you start a media company during a recession?

With all that in mind, is it a smart idea to start a new media company in 2022? That’s basically what the article is asking Justin Smith who’s now starting Semafor … exactly, a new media company. Smith points to a few trends that have been happening:

  • Consumers take more of a stand, and force brands to do so. At the same time, Facebook et al are not exactly handling disinformation campaigns and other moral issues with grace. That means, businesses try to place ads on places where people feel more at home. Particularly smaller media companies can foster that tribe vibe … and attract ad dollars. (Needless to say, Semafor is doing that.)
  • Paying for subscriptions is normal now. Thanks Netflix and Spotify! 10y ago it wasn’t. But now, a media company can use that to survive a recession.

What you can learn from media companies how to get through a recession?

Here are a few take aways:

  • Relying on ads to survive during a recession is a tough sell. This might also mean for you as a business owner that ad prices could go down during a recession … which means ads might become more accessible.
  • Focus, focus, focus. Define exactly what you’re doing for whom, so that these people still need you when times get tough.
  • Trim the fat. Save money where reasonable.