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Sunday, October 29, 2017

I Am Too Old To Change

I have been involved in the world of business for well over 40 years. In that time I have heard a line from dozens of people that really annoys me or makes me sad in some cases. It is simply, “I am too old to change.” The world is changing at a faster pace than ever before. Using the “too old to change” excuse strikes as a stalking horse for completely giving up.  I have heard people use it for refusing to lose weight, start an exercise program, stop spending so much, and, of course, not embracing our digital age either personally or professionally.

A particularly poignant example came from someone in the advertising agency business who felt that his days were numbered. He is a deeply experienced creative who has won numerous awards for his TV creative and great print executions. When he wrote to me and said he was too old to change, I laughed out loud. “How old are you, I fired back? 53?” He replied, slightly wounded “51.” I told him that he was much too young and too talented to be throwing in the towel and waiting for the end. “We are all dinosaurs”, I went on, but “even I, far older than you, have shifted gears a great deal in recent years. If I can do it, so can you.”

To me, the important thing is to not pretend to have an overnight conversion. You can, however, be seen as shifting how you spend your time, and getting current over a fairly brief period. It requires quite a bit of reading, perhaps attending a conference or two on your own nickel, and asking questions to younger staffers who may look at you as a person whom the business has passed by.

The habits of a lifetime are deeply embedded in most people. Yet the business landscape, especially, the media world is changing rapidly and no one can sit tight and try to ride it out until retirement. Success is largely a matter of perception. If you say that you cannot do something new, then you surely cannot.

My attitude, perhaps a bit simplistic, is that if you are still breathing, you can change. All of us have seen people who have changed for the worse in many ways, but honestly, I have seem a number that I have seen change for the better as well.

One person whom I know very well says that he is working tooth and nail to restore his relationship with every member of his family. It is tough going and his wife tells him that he can never achieve it given his years of mistakes and former broken promises. I wish him well and sense a greater determination in him than ever before.

As C.S. Lewis wrote, “You are never too old to set another goal or dream a new dream.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

Thursday, October 19, 2017

Demographic Update

For years, I have been pounding the drum telling people that demographics should be the first line of analysis for media placement, marketing, investment and societal issues. I use them everyday and any forecasting that I do is usually tempered by a heavy dose of demographic scrutiny. Last June, the US Census Bureau released some updated figures across several financial measures that I would like to share with you. What I like about the Census Data is not simply the size of the sample. It is that they often provide the median for many things that they measure.

You have all heard the old line that “you can drown in a river with an average depth of six inches.” The average, of course, is the arithmetic mean. I do not find it particularly useful when looking at many demographic characteristics and especially so when it relates to income, net worth or wealth. The median makes far more sense to me. It is the 50th percentile so it takes out the extremes at both the top and the bottom.

So, here are a few Census factoids:

In the U.S. media household net worth is $80,039. Take out equity in their primary residence (if they have one) and it drops to $25,166. So, other words, sans house many American families have $25k or less in assets.

We all check our retirement accounts regularly. The median value of retirement accounts was reported as $58,500 (it has to be higher now with the recent record breaking rally on Wall Street). Still, not a fortune especially if you are over 50. And, some one third of working Americans have a retirement account balance of zero.

Some good news came from the Federal Reserve recently. Median household income hit an all time high by the end of 2016 and was at $59,039. The problem is that it was at $58,665 in 1999. So, when pundits say that the middle class is stalled or disappearing they are not exaggerating. It has been a tough slog back for millions of American families to recover from the Great Recession of 2008-2009.

What about earnings? The Census tells us that just under 45% of U.S. households have an adjusted gross income or taxable income (after exemptions and standard deductions) of under $30,000. Some 80% have a taxable income under $100,000 and approximately 5% over $200,000.

In the U.S., the Federal Reserve tells us that the top 1% of households have 38.6% of the net worth. The bottom 80% have 23.8% of U.S. assets.  Credit Suisse measured it globally and the top 1% control  almost exactly 50% of the world’s wealth. Credit Suisse also projects that the top .7%  worldwide are millionaires in U.S. dollars.

As marketers who are in the higher echelon of both income and net worth, can we truly relate to these data? Our economy has clearly improved, albeit slowly, the last few years, but financial markets have done very well. Yet, only 51.9% of Americans have any holdings in equities. So, the bottom half has benefited not at all from a 23,000 Dow Jones Industrial Average.

I hate to end on a sour note but I cannot resist mentioning a new and, to me scary, milestone regarding the national debt. This year the national debt is crossing the $20 trillion dollar mark. It will be 7% more than our Gross National Product(GNP) this year. So what, you may say, that is just a number. Well, economic historians often place an 80% national debt to GNP ratio to be a danger zone. Yes, we are lower than Greece, Japan and many European nations. It still, however, gives me pause. Will our new tax reform or cuts, if they pass, be revenue neutral? It seems unlikely. And, my friends, what about the unfunded liabilities in Social Security, Medicare and Medicaid?  They are somewhere between $100-200 trillion without reform. How about  one more zinger? If we ever have real interest rates again, not 12%, but let us say, 5%, the annual budget deficit will soar out of control as most of our national debt is now short term at artificially low rates.

So, we face growing wealth inequality and huge debt and how do we market to the struggling 50th percentile and below?

Time for a drink. Cheers!

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

Sunday, October 15, 2017

Can It Go On Forever?

Herbert Stein was Chairman of the Council of Economic Advisors until both President Nixon and Ford (He today may be more famous for being the father of writer, humorist, sometime actor and investor Ben Stein). Urban legend credits Stein with saying, “If something cannot go on forever, it will stop.”

Over the last ten years, two weeks have not gone by where someone has not asked me something close to this: “TV just does work as well as it used to. When will it stop getting so much advertiser money?”  Usually, if it is in person, I break in to my version of a Mona Lisa smile and say simply that I just do not know. If it is in an e-mail, I often conjure up Herb Stein’s alleged quotation.

Years roll by and people foolishly say that this year will be the last of the network upfront market. Yet, each spring the cavalry charge begins anew and smart people place big bets on a declining medium where all of us admit attentiveness to commercial messages is at all time lows. I stay silent. Yes, the bomb is ticking but the fuse is longer than most of us suspected. Or, as Lord Keynes put it, “Markets can stay irrational longer than many can remain solvent.”

Why does TV still get such a large share of advertising funds? Well, to me, it is pretty simple. Social media is exciting but does it move the needle for most products? Mobile may have the most potential but is still in its early stages of development and the message has to be very spare. TV is a safety blanket for marketers. You know it still can move sales but ratings are lower and over-state attentiveness more than ever. It is still the gold standard for many and Nielsen, though tarnished, remains the currency by which the medium is measured and attentiveness be damned.

For years, I have encouraged advertisers to branch out and test other platforms but not abandon TV altogether for many products. Each year, it seems the case for a substantial investment in TV gets weaker. Yet, as the economy rebounds, so do broadcast revenues.

I suppose that the great late American philosopher, Lawrence Peter “Yogi” Berra said it best—“It ain’t over ’til its over.”

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

Wednesday, October 4, 2017

Letting Go

A few years ago, I ran in to a former colleague at a store. It had been perhaps 15 years since I had seen him. We spent a few minutes catching up and then he asked if I ever ran in to Mr.X, whom we had both worked with at the same time. When I told him that I saw him every few years accidentally,  just as we were meeting now, he exploded saying that he hated the bastard and would like to punch his lights out.

I smiled and he did not think it was funny. He went off on a long riff as if it were yesterday of all the horrible things the man had done to him. "He was awful to you, too.  Remember the day he threw you under the bus at the client meeting so he could look good?" I agreed that I remembered it.

He was annoyed that I seemed so calm about it all. I gave him my standard speech about not looking at life through a rear view mirror. He shook his head rather violently. "What are you going to say next, Don? That I should do some expressive writing and get him out of my system or chant and meditate? Get a personality transplant?"

I told him pretty directly that this was hurting him a lot and not the person with whom we both had serious issues. Stealing a well worn line, I told him that he "was swallowing poison and expecting the other guy to die."

This broke the ice and I pulled out another platitude. Life has been good to both of us and we survived and prospered over the last few decades. I went on to say that you cannot live in the past or the future but only in the present. That jerk will not likely be part of our day today or tomorrow so let’s move on.

Letting go is hard to do. We all need to do it. I find that I can forgive and have done so on a number of times but forgetting is a lot harder.  People have also forgiven me. As I get older, I also find that I try to see the issue from the point of view of whomever was my nemesis. Was I wrong? Was he or she going through significant personal turmoil at the time so they lashed out at  those beneath them corporately (That proved to be true several times)?

Living in the present is liberating and, candidly, it is all that we have. If you are holding a long standing grudge, why not give it a try?

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog.

Wednesday, September 27, 2017

Thoughtful Disagreement

Over the last year or so, I have studied Ray Dalio very closely. He is the CEO of Bridgewater Associates. the largest hedge fund in the U.S. I watch his interviews on CNBC, Bloomberg, and Yahoo Finance very closely,  replayed his TED talk on management several times , and have watched any YouTube entries with him in them going back a few years.

He is disarming for a multi-billionaire. In his TED talk, he shows a clip of himself as a guest on “Wall Street Week” in 1982. When the sound bite is over, he says “what an arrogant jerk I was.” Shortly after that, his business almost went under and he had to re-trench. Clearly, he has come back with a vengeance.

One thing that interests me is the way that he runs his enterprise. He encourages what he calls “thoughtful disagreement.” From 24 year old rookie to 62 year old veteran, everyone is allowed and encouraged to state their views even it meaning criticizing the boss. Having viewed an army of yes men and women for 45 years, it is truly something to see and think about. Clearly, he works with a group of uber-intelligent analysts who, after a few years, begin to have independent means. So, they can speak their mind and not have the money worries that many of us have experienced. So, I have often wondered how applicable his approach is to other companies or industries.

Over the years, I conducted hundreds of personnel reviews. Many people told me beforehand that they wanted “constructive criticism”. Maybe I always did it wrong, but whenever, I criticized  a staffer even mildly, people generally became defensive and some visibly angry. The same was true when discussing issues with most, but not all of the top management, I encountered. Some made it clear that it was “my way or the highway” while others said they welcomed dissent but rarely embraced it even when it was mild. So “thoughtful disagreement” rarely saw the light of day in my career.

The same thing is true of discussing politics. I do not think that I ever changed anyone’s mind on a political issue even when the discussion was civil. So, I  usually avoid such issues. Why waste one’s time?

Dalio said business ideas should be discussed in front of your team and undergo a “stress test.” If it passes the test, then you have a good chance of success. My caveat to that is that everyone has to be honest in the discussion and pretty well informed on the issues. It has been rare, in my experience, to see both variables, honesty and well informed, present among all or even many members of the group. On a personal basis, I like to read outside my comfort or belief zone and put my ideas through stress tests all the time. Generally, they hold up pretty well but I have noticed my views on certain issues moderating a bit in recent years.

So, consider this. Bridgewater, led by Dalio, is the largest hedge fund among many. Clearly, they are doing more than a little right.  Do you encourage “thoughtful disagreement” among your team? Would they do it if you tried?

In advertising and marketing, things are changing faster than ever. All of us, if honest, know that we are having a difficult time staying on top of media changes that seem as if they are happening daily. You need to test a lot of little things on new platforms knowing that most will fail. The spirit of an entrepreneur is needed even if you are with a global brand powerhouse. The tiny failures will not even be a financial rounding error to a giant firm. You realize that you cannot stand still. Thoughtful disagreement and lively stress tests might be a great tool  going forward.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog.

Friday, September 22, 2017

Where Are The New Entrepreneurs?

Historically, there has been an old cliche that small business was the growth engine of both the overall U.S. economy and job formation. A cliche, yes, but it was still true. As we write in late 2017, the landscape has changed. Fewer people are starting their own businesses than even a dozen years ago. What is causing this sea change and can it turn around?

The Great Recession of 2008-2009 savaged the U.S. economy and people who were hurt then and saw many others who had businesses go down for the count, appear to be a bit gun shy. So, while, the terrible downturn is still reasonably fresh in people’s minds, the memory of it probably inhibits some from doing a start-up. Here are some other reasons that I have pulled together from several sources plus some of my own personal conjecture:

1) Regulation—conservatives scream a lot about businesses being over-regulated but there is definitely some truth to it. Talk to anyone who has started even a small shop in the last few years and they will, to a person, complain about the heavy licensing and permitting that is needed for even the most modest enterprise. Also, many people who leave a job have non-compete clauses which prevents them from getting back into the same fray for months or even a few years.

2) The Wal-Mart-ization of America—no, this is not a complaint about how the world’s largest retailer underpays its workers and may be skinny on benefits. It is simply that ultra-big companies have scale and small players cannot compete against them in many categories. Add Amazon to the retail mix, and many rural businesses never see the light of day as online shopping continues to escalate.

3) Big companies are showing more entrepreneurial flair than ever. Leading firms such as Google and Facebook have venture departments within their companies that fund and experiment with new arenas. Many would be entrepreneurs embrace the heady atmosphere of being around lots of big brains in a super stimulating environment. The workplace has to be fascinating.

4) Immigration reform—The term entrepreneur was coined by early French economist Jean Baptiste Say and is translated as “adventurer”. I love immigrants—they are hungry, work their butts off, and come to our rocky shores hoping for a better life. By pulling up stakes and coming here, many, almost by definition, have the spirit of an “adventurer.” If we had a sane immigration policy that fast tracked people with skills that we desperately need, you can bet that more new companies would be formed.

5) Most new products fail and most new ventures go bust within three years. Only .4% of firms last 40 years. It is a high risk game. Today, many have become risk averse and it is hard to blame them.

6) As technology improves, there is no question that new jobs are created. Yet, do not forget one important point. A tech company today can get to $1 billion in sales with a relative handful of employees compared to any time in the past.

7) New companies seem to be mushrooming the most in areas that are the usual suspects—Silicon Valley, The Boston Area, Austin, and Brooklyn and Manhattan. As rural areas empty out, there is little growth in business startups there even though living and operational costs may be low.

There is one statistic that has me encouraged. Over the last two years, there has been more small business births than deaths. If this is the beginning of a trend rather than a short term blip on the screen, there may be fine things on the horizon for our country.

Take the advertising business, for example. Few people are starting new advertising agencies these days. Always a highly speculative venture, advertising is changing so fast that starting a full service shop these days from scratch is generally a child’s dream.  However, small boutiques with speciality services are popping up all over. Graphic designers who were doing project work a year or two ago are morphing in to small shops known for fast turnaround, zero pretense and low fees. Experts on mobile are doing well although some of the real stars are getting snapped up by WPP and other giants. There will always be talented and unappreciated men and women who will go out their own. Others may simply have to be their own boss and hang out a shingle.

Watch new business formation carefully. It is an important bellwether for tracking the vibrancy of a free market economy.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog.

Monday, September 18, 2017

Sleepwalking Through Life

I, as many of you, am a big fan of Warren Buffett. Recently, I was watching a You Tube video where the great Oracle of Omaha was speaking to an MBA class. When asked to give advice he gave his normal admonitions about business ethics and responsible investing. In this one, however, he added the advice of “Do not go sleepwalking through life.” I was pleased as it is a theme that I think is vitally important but neglected in pop psychology and often commencement addresses.

Buffett commented that you should find out what you love to do and then make that your career. He suggested doing what you would do if you were not getting a salary and did not need the money. Then, he said he actually did that by offering value investor guru Ben Graham his services for free if Warren could simply work for the master for a while. Graham hired Warren but did not take him up on the working for free offer.

When I was becoming an adult most people were keen to give me advice. Often, they would tell me to not worry about what you were going to do for a living. The line most often used was “you will fall in to something and then make it your career.” Even then, growing up in rural Rhode Island, I knew that had to be limiting. Given my free market proclivities a career in government was unlikely and unappealing. Heavy industry or production had little pull for me and, in finance, I could make a decent living but always be in the minor leagues. Only my father spoke to me sensibly and directly and told me to try a few things and find something that I really liked. It was profoundly good advice.

Hearing Buffett’s words recently, I was struck by how many people I had observed over the years who were truly sleepwalking through life. Things always seemed to be on auto-pilot with them. They had no plans beyond the next paycheck. I found it particularly annoying when I found it happening with the many people who are far more intelligent than I. They watched a great deal of TV, were addicted to sports, but seemed to have little awareness of what was going on around them. Others seemed to fritter away their time with hobbies or make work projects. Yes, many of these things are stress relievers or some persnickety people want to have things just so in their homes. Yet, it takes time and over the years, some of them become breathtakingly boring. Their world has become tiny.

In my advertising career, I was accused of being overly interested in talking with sales reps. My response was simple—“Sales reps see more people in a week than you, Mr. or Ms. Account Person in a year. They know where the marketplace is going if they pay attention at all and, if they pay close attention, they have a great view of trends forming. You do a nice job of servicing our clients marketing needs but sales reps can give us a nice idea of competitive threats”.  Most dismissed me as a neanderthal.

Over the years, I have been a very ambitious reader. I used to mail books to friends and colleagues a great deal but have cut back drastically. The response often was “that is way too long. I will never get through that.” Or, “This is great. I will be on a long flight in three months and, if I remember, I will take it along.” I was trying to help their careers. They did not get it.

Another form of sleepwalking is what used to be known as the “let George do it” syndrome. Some days I feel that I am one of the few people left in America who are concerned about our $21 trillion + national debt and our entitlement overhang of perhaps $200 trillion or more. Mention it and people dismiss me as a crank or more annoyingly say, “Someone will do something and take care of it.” I shoot back, “I am been waiting for over 40 years and regardless of the party in power, not much gets done.”

So, at the risk of sounding like an angry old scold, may I suggest that you get engaged. Do not live an un-examined life. There is a big world out there and you have something to contribute. You might even have more fun than you are having now.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a comment on the blog.