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Tuesday, February 27, 2018

Follow-up on Side-Giggers

A few days ago I put up a post on Side-Giggers and why it is important for most of us to have something to fall back on in these changing times. It generated some mail but two of my panel members asked that I do a brief post adding to it. Here are their comments:

1) “Don, everyone can not have a side hustle. For many people, it is all they can do to get through the day. If you are young and healthy and not burdened with responsibilities, then a side-gig is terrific. As you have told me, only 13-14% of Americans ever become entrepreneurs and most fail. Some people are just not cut out for it. A single mom has enough on her hands. A side hustle? I don’t think so. An old fart like you? I don’t know where you get the energy. I sure don’t have it.”

2) “One point that you may not have thought of in an otherwise solid post is that Side-Giggers often save businesses. How do I know? Easy. They have saved mine. There is no way that I could have stayed in business the last five years without freelancers coming in to help on an as needed basis. I could not have afforded to pay their benefits if they were full time but using them, only as needed, has saved my bacon. Also, what they do is not perfect. Often, our core group has to re-work much of their material. Still, it has paid off for us. I have talked to a few people who after a drink or two or if I know them well, will admit the same thing. Our firms only exist because we bring in the Side-Giggers for brief, sometimes short intense bursts. Why bring this up? No one will likely ever do a research study on this. It is not something that most people will admit.”

I thank my friends for their candor.

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

Friday, February 23, 2018

Side-Giggers And The Future

In the advertising world, moonlighting while holding down a full time job has been around for decades. Millennials have taken it to a new height and often refer to moonlighting as a side-gig or a side hustle. A few weeks ago, I put up a post entitled “Advertising Agencies and the Gig Economy” (Media Realism, February 4, 2018). It generated quite a bit of mail. Many said they liked freelancing although to a person they said it made for a somewhat precarious financial existence as one never knew when the next gig was coming. Several responses were a bit different and essentially generated this post. They talked about side-gigs while keeping their conventional jobs.

Here are the most interesting and thoughtful comments that I received, edited and reprinted with the permission of each respondent:

--“You know me and you know that I am not a conspiracy theorist. It just seems that across all businesses people 55-60 years old are very vulnerable. I know of one company where the mature players were all transferred to a small division and then, two years later, the division was shut down. Coincidence? I don’t think so but it would be next to impossible to prove in court. Meanwhile, the company saves a bundle in health insurance premiums.  I told a few friends when they were moved to develop a side-gig of some kind. It could be a hobby they have enjoyed or a crack at old fashioned moonlighting. Then, when the axe fell, they would have some modest bridge to fall back on until 401k withdrawals were not penalized and then social security kicked in as well later. Two people took my advice and they both said it saved them financially and emotionally.”

—“Don, you have known me forever and know that I have never voted for a Democrat. BUT, flaky Bernie Sanders make a spectacular point in his 2016 stump speech that largely went unnoticed by the mainstream media. He said that there were probably several million Americans who stayed at jobs that they did not like only because of good health care coverage. As a result, many who could have been successful entrepreneurs were stymied and stayed working in jobs that they considered mundane. Friends tell me that I am nuts to say this but, as you know, I have a son who is seriously ill and has run up six figure medical bills over the last decade. I have an entrepreneurial itch but can never exercise it. Bernie’s idea about free college tuition and a confiscatory tax policy are way out there, but he hit the nail on the head with lack of universal health care weakening innovation.”

—“We live in uncertain times. What a tired cliche. Well, we do. The days of the “organizational man” from the 50’s and 60’s is dead. Your company can get bought out and, if you work in advertising, your company may disappear in a few years unless your top management is unusually nimble. I have a side-gig which is great fun and makes me a few thousand a year which I put into a Roth IRA. It is possible that I may make it to retirement but I am hedging my bets. The recent bull market in stocks has allowed me to take some money off the table. I now have three years in living expenses in cash for the first time in my life. I think I do better at my day job now because I am not afraid. No matter what happens over the next few years, I will be far better prepared than most and the side hustle is great fun.”

—“Everyone needs a side-hustle in today’s world. Everyone. This is the most exciting time to live and work in history but you cannot let things slide. Also, a side-hustle expands your contact base significantly and you can make new friends at any age. My boss has one and he knows mine as we have worked together for 20 years. Our new ownership does not know and we plan to keep it that way.”

—“I have two friends who were made redundant recently (reader in UK). They both had side-gigs and now are surviving with free lance work from their new businesses. One is struggling while the other projects that she will be making more 18 months from now than at her old position. I am getting my feet wet myself now. It is fun and I think that I am a more interesting person as a result. Also, at 52, I am now excellent at time management which was always an Achilles heel with me.

—“I am a side-gigger and my boss knows about it. There is one rule which you must obey if you go that route. Spend 100% of your time in the office doing your 9-5 job. No exceptions. I may send a text or make a phone call at lunch outside of the office but it is clear that I am not using company time, equipment or pencils for my side-hustle. A colleague was fired as she would do conference calls in our office with her moonlighting clients. It is just stupid. Render to Caesar what is Caesar’s.”

Are you a side-gigger? You can be an artist, a life coach, a marketing consultant, an adjunct professor, or a stand up comic. The possibilities are endless. It may be the best financial and life hedge that you can make in the years ahead.

Separately, I am working on a detailed post set for release in about 10 days regarding advertising agencies. What will they be like in 2028? Will they survive in present form? So far I have heard from 22 people on the MR panel along with a wide variety of media, marketing, advertising and corporate professionals. If you would like to weigh in, I would love to hear from you. Drop me an e-mail at doncolemedia@gmail.com



Friday, February 16, 2018

The Gaping Hole In The Robotic Plot

By now, I safely assume that all of you have at least a nodding acquaintance with the steady movement of the US economy toward both one driven by robots and logarithms and a cashless society to boot. Some of the futuristic forecasts are exciting and are upon us. Amazon Go will be a new chain of stores that is opening up where you enter, fill your basket with groceries and then leave with no checkout. All you need is an Amazon Account, apply for the free Amazon Go App, and have a recent generation iPhone or Android phone and an electronic statement is sent to you on your phone shortly after you leave the store.

The big news, of course, go beyond the customer convenience with the Amazon Go Store. Carrington Capital Group projects that over the next 10-15 years some 7.5 million clerical jobs in retail (cashiers being the largest group) will be eliminated as automation invades retail in a profound way and the “retail apocalypse” hits its stride. So, it will be very convenient for virtually everyone reading this post. We will also enjoy self drive cars, our companies will likely have self drive delivery trucks, and self drive Lyft and Ubers have to be on the horizon as well. In urban areas, many of you will have a Smart Fridge that will reorder staples for you automatically. The benefit to companies is huge. If you can cut costs, you have to benefit. Insurance, wages, social security and health care costs will plummet for many companies. Sounds almost too good to be true, doesn’t it. Well, for many of us it will be a reality.

Not so for everyone, however. For the underclass, this brave and exciting new world will likely be out of reach. While those of us in good financial shape will love the convenience and perhaps cost savings, millions may have their noses pressed to the glass but will be excluded. Consider the following statistics: Some 7% of US citizens are totally unbanked (I could not get a projection for the unregistered US residents). Approximately 29% do not have a credit card and in the course of a year, a stunning 19.9% of Americans use a check cashing service, buy money orders, take at least one payday loan or have a transaction at a pawn shop. That group will not be using Amazon Go. Nor will the 17% who are functionally illiterate (cannot read beyond a 5th grade level).

Fees are much higher if you are downscale. Ever bounce a check? Probably not. If you did, it used to be $25. Now the fee is $33. Lawyer and writer Daniel Hatcher, a Baltimore based law professor writes that “If they are lucky enough to have a job, they have to pay to cash their check, then they have to get money orders to pay their bills. It is fee after fee after fee.” Why the low rate of being unbanked? The data is fuzzy but some companies refuse to cut paychecks to employees. One CFO I read about takes new employees to a nearby bank on their first day, gets them a checking account and is able to direct deposit their first pay. The problem is many do not know how to handle it and bounce checks early on and due to the high fees are back at the payday lenders again. (For a lengthy description of the uphill battle the underclass faces read “The High Price of Being Poor” from the Annie E. Casey foundation—available for free online).

Also, what happens to those millions of people who worked in jobs that will be replaced? Historically, when technology eliminated jobs the economy created more than those that were lost. Will that happen again? It seems unlikely. People with a high school degree or less are in trouble. A few million cashiers will see their jobs evaporate. There are 1.8 million truck drivers in the U.S. Fortunately, their median age is 49 so by the time the crunch  hits, they will be at or close to retirement in most cases. And, there will always be a few drivers left. Wal-Mart is testing going cashier-less in some locations according to media accounts. That is great but what about the 29% who do not have a credit card? They are a large market with buying power.

Some marketers are trying to take this market while others are shunning it. In their defense, banks probably lose significant money on accounts that never have a significant balance. In a free market, necessity is the mother of invention. Wal-Mart and some drug chains now offer low cost wiring of money for workers so they can send money home to places as far away as Latin America. I have been told that some upscale individuals give their cleaning crews grocery store gift cards. They are as good as cash and safer to carry than currency. The IRS may not like it and some people will work for years not getting full social security credit if they stay in the states, but it is an imaginative way to skirt the banking system.

This exciting new era will be upon us very soon. Three days ago, I had an experience that prompted me to draft this post. I was at a major supermarket chain buying two items. As I was about to leave, an employee guided me to the self checkout aisle. Within 45 seconds, I had my credit card receipt and was good to go. A fellow at the station next to me was about 50 and roughly dressed. He asked an employee for help and she answered harshly telling him to read the instructions on the screen. He froze. I asked if he needed help and quickly guided him through the process. Then the machine would not accept his tattered $20 bill. I traded him for a crisp double sawbuck that I had just obtained from an ATM perhaps 15 minutes before. He thanked me and said, “I ain’t a reader, sir.”
I tried to smile. As I made my way to the car, I wondered what our future economy held for him and how mine was likely to be sunshine and gold.

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

Sunday, February 4, 2018

Advertising Agencies and The Gig Economy

For most of us, not a week goes by when we do not talk with someone or hire someone who is engaged in the “gig economy.” It could be a freelancer at our shop, an airbnb host/hostess, an Uber/Lyft driver or an itinerant handyman. Estimates are that some one third of the workforce will soon be freelancers of some sort  and demographers have projected that it could top 50% in 15 years. Sara Horowitz, Executive Director of the Freelancers Union has stated that “Freelancing is the new normal.” It has other names, too. The 1099 economy, the micro-gig, the Uber economy and independent contractor also pop up a great deal as well when describing this growing trend.

Several years ago, I put up a post entitled “The Zombies Among Us” (see MR 6/30/10). I received a rash of angry mail from ad agency principals saying that they had full bodied teams and rarely, if ever, use freelancers. Today, I would say that it is highly unlikely that I see such angry e-mails. The advertising world has been changing rapidly along with the rest of the economy.

It is close to impossible to quantify the extent of the gig economy in the advertising agency world. Directionally, it seems to be much stronger than in other businesses. Freelancing was always popular with creatives who did a lot of moonlighting while holding down a 9-5 position at a reputable shop. In speaking and emailing with a dozen or so current players, it seems to be a dominant feature across the board in shops of all sizes.  Here are some verbatim comments (carefully edited) of some current freelancers:

—“I love being a freelancer. No more politics, no more meetings. At first, it was scary, as I had a few gigs set up and my income soared for about seven weeks. Then I faced two months of silence. I tried to network like crazy but nothing happened. I became an Uber driver!  Now, my work is more steady but I drive when things get quiet. I am not proud. I love being my own boss. The key is to stay in touch with contacts and give very good service when you get a gig. Also, you need to learn how to manage your money. One month a feast,  but the next could easily and often is a famine.”

—“I will never work at an agency again. Along with some friends, I got whacked near the end of the Great Recession. So, I had no choice. I was 47 with a kid about to enter college. The first year was nerve-racking but my husband kept his job and now I make more than I would have had I survived the purge(s) at my old shop. The independence is great.”

—A young millennial—“I only worked three years at a shop before I escaped to the 1099 world. Not only will I never work at an agency, I hope never to work at a company again. All my friends at agencies are miserable. They work long hours, the pay is low and the clients are all bastards. When people tell me that I have no security, I laugh. Since when was working at an agency, secure? The highs are higher now and the lows are bad but temporary. My level of contacts is big. I did work for nine agencies last year and 12 companies. This is not what I expected but I am happy.”

—A young graphic designer—“My work now is with companies and non-profits. Agencies keep trying to Nickel and Dime me. They ask several of us to do a “jump ball” and bid for a job. It appears that the job is often assigned to the low ball bidder (yes, we talk to one another!) The companies are hiring smart young pros who know digital better than all but a few mega-shops. They know what they want, do not spin my wheels, and appreciate my work. Pay quickly, too.”

—“I retired (really) a few years ago. A friend asked me to help on two new business pitches and I loved being back in the game if only for a few days at a time. Now, I do it several times per year. My digital expertise is very limited so I know I will have to quit soon but I am loving it.”

—“Five years ago, I was fired from an agency and went through a bad divorce. I was offered a job at a shop back East but knew, if I took it, I would rarely see my kids again. So, I went freelance. The first year was brutal. Between assignments, I was morose and ate and drank too much. Now, I am the “go to” person for several companies. Also, I go the gym daily and never miss any activity for my kids. My ex told me that if I were the person years ago, that I am now, we would never have separated. Being a freelancer has made me grow up. Getting fired was the best thing that has happened to me in years!”

—“Two agencies that gave me a few gigs offered me a full time job. Not going to happen.”

—Mid-sized shop owner—“I have tried but morale sucks at my shop. The only time people are happy is when I do free drinks Friday night at a local watering hole. Our free lancers are a breath of fresh air. They have high energy, are fearless, and have little baggage when they come in to see me. Some of our internal creatives resent them. They do not understand that they are helping them.”

Media and research freelancers have been active for years. They are far more out in the open than most creative players as the soul of ad agencies tends to still revolve around the creative product.

So, the Gig or Uber economy sounds too good to be true. Well, it has its detractors. The most articulate is Steven Hill who wrote RAW DEAL (St. Martin’s Press, 2015). In this somewhat angry book, he spends an entire chapter questioning the ethics of  airbnb and then, in the next, goes after Uber. Some of his criticism is justified. There have been cases where apartment houses in San Francisco and a few other places have displaced tenants and turned their buildings into airbnb’s. My experience with airbnb’s has been mixed with quality of the accommodations but we have talked to people who can now afford to stay in their homes despite high real estate taxes, remodel them, or take care of their children in great neighborhoods with only one parent present. Uber has been a stop gap for many as the art director above who is a driver between advertising assignments. Hill calls freelancing the “share the crumbs economy” and says companies like it as they do not have to pay benefits to employees. That is certainly true but he downplays how it is working for so many people who are not classic entrepreneurs.

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

Monday, January 22, 2018

Marketing In Emerging Markets

Americans have a certain arrogance when it comes to marketing. Over the past few decades, as growth has been stronger percentage wise in emerging markets relative to North America, some surprisingly large United States based powerhouses have struggled for success as they invaded new territories. Somehow, many feel that if the marketing, pricing, advertising or even the product itself worked well in the US and Canada, it should be a hit in vastly different cultures as well. What they failed to realize is that if you want to succeed across the globe you need the localize your company’s branding.

By now, most of you know that McDonald’s has done a fine job with cultural customization. In France, there are little bottles of vin ordinaire available, spaghetti is served in some Chinese locations, and in certain Indian provinces McDonald’s serves no beef! Heinz has over 80 varieties of ketchup available all carefully tuned to local tastes from very sweet to sour. Naming and logos can be a problem, too. Nike’s flaming air logo on their air trainers product were a hit in Arab countries AFTER they realized their logo look far too similar to an Arabic term for Allah. Tide goes by seven different names around the globe as the name would have different connotations in many languages.

So, rule #1 is to be flexible and listen to the locals. The big advertising holding companies have a huge advantage here as they have offices in well over 100 countries and can guide North American marketers as they enter local turf. The media mix can be drastically different, too. Newspapers are still strong in many parts of the world and, despite the rapid growth of Netflix, television often works as well as it did in the US a few decades ago. Your commercial may have to change drastically, however.

A big area that people really need to wrap their heads around is the product itself. The poster child of a case study would be the eventual success that Oreo is having in China. The Oreo is the largest cookie brand in the world and has been around since 1912. When then Kraft Foods (now Mondelez) entered China in 1996, they had to be licking their chops about going in to a market with over a billion potential customers and a rapidly growing middle class. By the end of 2005, they were thinking of pulling the plug as their market share was a paltry 3% of the “biscuit” category.

So, back to the drawing board. Some research indicated that the Oreo was too sweet for the Chinese palate, it was priced too high for the mainstream consumer and the cookie was too large. So, they reformulated with an offering that was smaller, less expensive and they had a wafer style alternative that was popular with the Chinese. And, they had new flavors such as strawberry and green tea which resonated with the Chinese consumer. By 2012, they were #1 with a 15% market share. This worked so well that they continue to customize Oreo flavors as they roll out around the world. THE ECONOMIST reported that Mondelez has dulce de leche Oreos in Argentina and orange ice cream Oreos in Indonesia. For the last several years, Oreos have been a billion dollar brand in emerging markets alone and the growth continues.

The success is centered around localization. American brands and pop culture do travel well but often only in a way that locals find easy to accept.

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

Tuesday, January 16, 2018

From Mass Marketing to Segmentation to Micro-Marketing

Things in the marketing world are moving faster than ever. The changes of the last 10 years have caused significant shifts in companies marketing and especially advertising mix. Amazingly, to me, there are still a number of players who cling not simply to old terms but actually an old mindset that is way out of step for 2018.

Recently, someone told me that his firm remained very firmly a mass marketer. I started laughing and with usual Don Cole diplomacy told him that I did not know that his company sold toilet paper (one would hope that usage would cover all market segments!). He seemed wounded and the conversation ended pretty abruptly. I was surprised as mass marketing seemed to begin in earnest with the national reach of railroads and the Sears Roebuck catalog in the 19th century. Radio and then TV made mass marketing even more popular. Yet 10 years ago, at a conference, I heard a P&G executive talk only about segmentation even for flagship brand Tide. For 60 years, Tide has been America’s #1 detergent and now it is the global king. The shrewd P&G marketer did not consider Tide, Crest, or Gillette to be mass market brands. Every one of their 30+ billion dollars brands was carefully targeted. To him, mass marketing was dead.

Early in my career in New York, segmentation was the big buzzword. Yet it was not a new thing in 1974. I vividly recall in graduate school at Boston College putting together a brief paper about General Motors chief Alfred P. Sloan. In 1924, Sloan stated that “GM has a car for every purse and purpose.” Way back then, more than 90 years ago, Sloan was in to segmentation with his Cadillac, Oldsmobile, Buick, Pontiac and Chevrolet brands each reaching a different socio-economic group. Forty years after Sloan, Segmentation began to really get some meat on the bones, as theorist William Lazar added “lifestyles” to the marketing dynamic. The broad thesis started with demographics—gender, age, income, education, race, occupation and household size. Layered on to that was geography—urban, rural, climate and region and then psychographics—attitude, values, lifestyle and cultural opinions. Looking at prospects this way helped define whether a segment was worth the effort (I am convinced this is a major reason why most new businesses and products fail as people do not look at segments potential harshly enough). If a few segments pop and you can afford it, you speak to each segment in a different way.

Over the last 10 years as internet marketing has blossomed two other entries are changing the face of consumer sales—big data and some amazing algorithms. As we spend more online, be it with Amazon or individual retailers, more and more detailed and EMPIRICAL information is being gathered about us as individuals. Additionally, the big players do 21st century modeling which can forecast better than ever before about whom else among their customer base may like the product(s) that we just purchased. As invasive as this seems to us baby boomers, I assure you that most millennials could care. They want convenience—NOW! So, marketers know your sweet spot. Consider shoe leader, Zappos (owned by Amazon). They can smoke out the budding Imelda Marcos clones among us and offer them shoe “deals” almost daily. They can track your last purchases and know when you are due for a new pair of athletic shoes. All of this has to be rough on advertising. Why spent a lot with buckshot approach (mass market) or even to a segment when you know the volumetrics of your current base so well? As a friend said to me, “today’s marketers know more about me than the IRS, CIA, NSA, and my girlfriend combined.”

 A very wise economist I knew long ago told me that “bad ideas never really die in economics.” Try socialism or wage and price controls or protectionism. In a way, the same is true of marketing. Mass marketing is not dead yet although its utility is so limited that it cannot go it alone. Segmentation is still useful in many ways but that is being replaced with micro-marketing on a pinpoint basis.

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

Monday, January 8, 2018

The Savings Rate and The Two-Tiered Economy

In 1789, the US government, as we know it, was formed. George Washington became our first president and the Congress and Supreme Court had their initial sessions. That same year, government officials first began to collect financial data. Their methods had to be simplistic compared to today but it is fascinating to look at historical information from both governmental and private sources. One statistic that I also tend to zero in on is the savings rate in a nation. Historically, in the U.S., the rate tended to hover around 10% for the first 190 years of our our republic. According to economic historians, many people faced both employment and economic uncertainty so it was wise to always have something stashed away for a rainy day. If the figures were accurate, that might go a long way to explaining the great economic expansion that our nation had for several generations.

Starting in the mid-1960’s and into the 1970’s, the savings rate began to fall. People borrowed a lot more for homes and vehicles and the credit card became ubiquitous in many American households. With the exception of the 1974-1975 period when we faced inflation, recession and Nixon’s resignation, the savings rate never saw 10% again. By 2006-2007, some private estimates had the savings rate at zero! Think about that all of you who maximize your 401k’s each year. If your savings rate is 10-15%, a large number of people had to be maxing out their credit cards or lines of credit to get the average to come in around zero. When the Great Recession clobbered the economy in 2008-2009, the savings rate bounced back to 5-7%. Remember, this was when the unemployment rate jumped from 4.8-11.8% so many could not save at all.

As our slow expansion proceeded in recent years, new Federal Reserve figures peg the savings rate at 2.9%, the lowest official figure since 2007. At first blush, it sounds great in the sense that people are feeling confident, secure about their jobs and are spending more. Yet, other reports of late contradict that. Moody’s reports that 2.3% of automobiles are being repossessed. Also, some 3.6% of credit cards are past due without even a minimum payment. Most ominously, the Mortgage Bankers Association has reported that 9.4% of FHA loans are now in default which is a large jump from last quarter’s 7.94%. Bloomberg Business wrote that most of these defaulted home loans are NOT from Texas and Florida which suffered mightily from hurricane damage. When I first saw the FHA stats, I assumed the adverse weather was the culprit. Not so!

What is going on? As is often the case, to me it is simple demographics. Some 51% of US either own equities via 401K or other deferred compensation plan or have some form of private holdings. As the Dow Jones continues to break records, people feel wealthier and optimistic. At the same time, some 49% of Americans have no equity positions and are struggling to get by to a large degree. That is where the late payments, delinquencies and defaults are largely coming from these days.

Marketers need to be alert. Things may be great for you, your family and your friends. The rising tide has not lifted all boats. Depending on your business and target audience, things may not be nearly as stable as they appear.

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