Does Ad Tech Explain The Recession Recovery?

– Contributed content –

(Burst, Pexels.com)

26 Aug. 2020. You would have thought that it would take years to recover from a global pandemic. After all, we’ve never seen anything like it in living memory. And the initial fall in output was genuinely terrifying – worse than what happened during the Great Depression, and in a shorter time.

Then, starting with the May BLS jobs report, things started improving. The stock market went into a bull run. The number of people unemployed fell dramatically. And the entire economic machine seemed to emerge from dormancy, like a rodent after winter.

At the start of the crisis, economists told us that we would see a lost decade. But when you look at the economy’s data, you soon see that’s not what’s happening – at least, not yet. Things have sprung back incredibly quickly to the point where we may have a genuine v-shaped recovery on our hands. Output is heading back up to pre-crisis levels. And things look like they might return to normal pretty quickly.

Is technology the reason for the rapid recovery? 

It begs the question, therefore, why the recovery in output has been so fast. Think about it. Data tells us that the economy shrank by about 30 percent in the second quarter – the worst contraction on record. And yet here we are in the latter half of the year talking about growth perhaps returning to single digits by the end of the year. It doesn’t seem possible.

When you look at crises of the past, you see that recovery took a long time. Switching a business back on wasn’t as easy as flipping a switch. It took time – and many were lost.

But that’s not what’s happening here. Technology seems to be allowing the factors of production to slosh about at will, without much friction. And that means that the moment demand returns so too does the supply.

Just look at what happened in China during Q1 2020. Supply chains creaked to a halt, and commentators argued that the complex relationships and contractual agreements could be put back together overnight. And yet, that’s precisely what happened. Things got moving again quickly.

The role of ad tech in the recovery 

Ad tech is playing an essential role in helping the economy adjust. Firms that once operated brick-and-mortar stores can learn how to make QR code links to plaster on their physical premises, even if they’re not open. They can use these for pretty much anything, including forwarding customers to landing pages, files, websites, or social media platforms.

The advertising industry has been through a rough patch. But part of its role now is reeducating people about the dangers of coronavirus. It’s teaching people how the economy’s structure has changed and how they need to adapt to it.

The entire ad infrastructure also makes it incredibly easy to keep demand high. Users can simply click a link and then arrive on a page selling the items that they want to buy. Again, there’s virtually no friction on the demand side, with or without the virus.

*     *     *