Sunday, November 22, 2015

The Network TV Security Blanket

Earlier this year, tracking services indicated that television as an advertising medium had declined in real terms for one quarter. This sparked a few headlines and some gloom and doom comments. Yet looking at the last few years, as newspaper, magazines and, to a lesser degree radio have faltered, TV has held is own in terms of dollar share of total advertising expenditures as internet and mobile spending has increased smartly.

For nearly a decade many pundits have been talking about the death of TV as an advertising medium. It definitely has not happened. I have felt that it inevitably will decline but that the fall off will take a very long time. Recently, I surveyed a number of agency people across the country as well as a handful of advertisers and their comments only reinforced my belief.

Each year, several people ask me whether this coming year will be the final bow for the network TV upfront marketplace. I always say no but, when pressed, refuse to forecast when it will become obsolete. People who put precision around such events remind me of the economic Cassandras who pen books entitled with catchy titles such as HOW TO BEAT THE CRASH THAT IS SURELY COMING. Every generation someone gets the timing right but much of that has to be luck.

Is advertiser supported TV in trouble? Yes and no. It is definitely changing and no longer packs the communications wallop that it had not that long ago. Here is a motley mix of comments that I received from agency professionals, a few retired media executives, some active and very anonymous broadcast sales executives, a digital media director, and a local cable trailblazer.

--Retired Network Sales Executive--“Of course, we are in a steady and permanent decline. Hell, even I am a Netflix junkie these days. My former colleagues are a scrappy bunch and they will be standing longer than many realize. They are doing a nice job of bringing new advertisers on air. Some of the tech guys should know better as they do not need us all that much.”

--Agency Media Strategist--“You once asked me how things were going in my shop as we evolved in to digital. I was annoyed with you but there is a “knife fight” (your term) going on each year among the network buyers and the planning team. We keep pulling network TV back in our initial plans and adding more digital. Clearly, we are winning but the haves, the old line negotiators, are not rolling over. We spend too much in all forms of TV but directionally things are getting better.”

--Agency Media Chief--“My big problem is a few of our biggest clients. Network TV is a security blanket to them. Off the record, we still do too much. I am trying to have my team wean them away from it. Several years have gone by and we are making progress. To me, network TV is not going to dry up and blow away. It is getting downscale and a lot older. That argument seems to work with our more traditional clients.”

--Sales Manager, Local Market (Network Affiliate)--“it comes down to two things, Don. We are taking clients that we never would have considered 10 years ago and are proud to get them. Also, we are licking our chops about the upcoming political season. This would never have happened years ago. And, as you and I have discussed the last decade, TV does not work nearly as well anymore. Our local news is awful but is still a station cash cow. Go figure.”

--Digital Media Director--“I try to move people along into more digital options. We are always recommending tests. I have avoided wars with the broadcast players at my agency and traditional clients. The smart old ones see what is happening and are riding it out until retirement. A lot of money is being wasted but it used to be worse.”

--Local cable sales star--“We are doing more and more with zoned buys and strong promotions. The little retailers love it and we have made TV affordable for them. It is a lot more work but we will prolong the life of our version of TV longer than most are betting.”

--Local TV sales chief--“Whenever I have a bad day, I tell myself, it could be worse. You  could be selling newspaper or radio (laughs). We have lost the under 30 crowd except for a few sporting events. Game over? No way. But, we cannot turn this ship around no matter what New York says.”

So, US TV is still a big force in advertising. Its influence is sagging and smart young people are going to work elsewhere according to my sources. Video usage will continue to grow but advertising avoidance should move in lockstep with it.

If you would like to contact Don Cole directly, you may reach him at doncolemedia

Thursday, November 12, 2015

The Disease of Short-Termism

In recent years, American business has increasingly ceased to look at the long term benefits of a strong and consistent approach to marketing and to advertising. When you ask people about it, most simply shrug. Those who talk to me about it are in one of two camps:

1) Things are changing so quickly with all the new platforms and media opportunities that people do not know what to do so they pull in their horns a bit too much.
2) The simple truth is that Wall Street runs America and not Main Street. Publicly traded companies will do anything to avoid missing Wall Street earnings estimates so many things suffer, particularly marketing and also, not insignificantly, honest accounting.

It might surprise many of you who know me that I tend to lean toward camp #2.

I have a long standing habit that amuses my wife but other people find to be more than mildly eccentric--I devour annual reports of companies from all over the globe. As I have gotten better at analyzing them, I notice that, increasingly, seemingly reputable companies are engaging in what I would categorize as accounting shenanigans. A CPA wrote to me recently, “I was up for a contract with a company somewhat larger than my usual client. The presentation went well and the prospect seem comfortable with my both me and my team. Then she asked, “How imaginative are you guys at managing earnings for your clients.” “I responded that we used every legitimate loophole to lower taxes but we never managed earnings. We were (politely) shown the door.”

A tax lawyer with international experience tells me that multi-nationals have a tough and bewildering job paying taxes in dozens of nations. He even added that the IRS often does not have the expertise to sort it all out. Given currency fluctuations and local taxes, the temptation is often great to move funds around or account for them in different years to avoid a “roller-coaster effect” of up and down earnings.

Years ago, I read an editorial from then Wall Street Journal editor Robert Bartley. One line will stay with me forever. He wrote, “True profits are represented by cash--a fact--rather than reported profit--an opinion.” One does not find such candor or clear thinking much these days.

Games are always being played. In recent years, more and more companies are doing huge buybacks of their stock. By decreasing the number of shares outstanding, earnings tend to rise. Even Warren Buffett admitted considering it for Berkshire Hathaway during the dark days of 2008-2009 but he found other ways to deploy his huge capital which he felt promised a better return. When your stock is clocked 50% yet earnings are holding up and the future looks solid, buying back shares in a great idea. Yet, CEO’s almost always believe that their shares are undervalued. I have seen a very prominent company continue to buy back its shares from a price of 110 down to 70. Surely, it may be a good buy at 70 but it definitely was not at 110. And, a few companies are even borrowing at today’s historically low interest rates to buy back some of their shares.

In 1974, I read a book by Robert Townsend, former president of Avis Rent A Car entitled UP THE ORGANIZATION (1970).  It was a wonderful primer for someone just entering the business world. He had a mini-chapter in it where he talked about telling the press when you thought you stock was priced too high. I am a business news junkie. NEVER have I ever seen or heard or anyone acting on Townsend’s suggestion. Not once in over 40 years!

So businesses answer to Wall Street and are worried almost exclusively about the next 90 days rather than the long term health of their brands. I remember vividly owning Kellogg’s share in the early 1980’s. Earnings were stagnant one year and the CEO wrote to us saying that with many new product introductions marketing expenses would be unusually large for the coming year and would effect earnings. I see nothing like that today. Not even close.

Okay, what does this have to do with advertising and media? A lot.

An agency chief wrote to me to say that he provided a five year plan to his biggest client showing how they should increase spending across many platforms for the next 24 months and then ease up as two of their brands could become “cash cows” for the company. The client smiled and said no five year plans. They call up and want quick promotions or some carpet bombing couponing effort in print, online, and mobile but no one, client side, is in to the long term establishment of company brands. He put it nicely when he said, “These guys are all smiles and nod vigorously when we talk of brand-building but they never open their wallets when the time comes.”

A marketing director whom I respect says, “ You have to understand the reality. My CEO gets compensated for good stock performance. So, he buys back shares when he has excess cash. Sometimes his timing is good, sometimes not. And, he is manic about quarterly earnings. His long term is 90 days. He is not a bad guy or a crook. All he does is reflect the culture of the times which is dominated by Wall Street.”

If you think this is bad, talk to senior executives at media companies. A few comments from some old pros:

--“It is a cliche but still true. Many companies cut the ad budget when there is the first sign of trouble. They get away with it, FOR A WHILE. Earnings float along okay and then bam. They have to buy market share back. It is hard for us to plan.”

--“I have a very seasoned sales team. They warn me when clients are cutting back with no rational reason. My CEO does not care and give me the old chestnut about our debt service. We scramble like hell to get new clients on board. And, if people knew how inexpensive and effective lots of social media is, we would be finished.”

So, will things change? Will Wall Street loosen its grip? Will earnings be straightforward again? Will companies stop giving guidance to analysts and or will they refuse to turn somersaults to hit their numbers?

I would say that it is unlikely. A century ago, Upton Sinclair, the great journalist, put it well--“It is difficult to get a man to understand something when his salary depends on not understanding it.”

If you would like to contact Don Cole directly, you may post a comment on the blog or reach him at

Tuesday, October 27, 2015

The Customer Equity-Mindset

About 17 years ago, I was meeting with a client. As we talked, he answered several questions from customers and very quickly sorted out problems that staffers brought to him on the fly. I complimented him on how he moved through his day as he asked me a barrage of media questions and I told him that I was especially impressed with the way he fielded questions and complaints from customers.

“Don, it is simple,” he said. “I have a Customer-Equity Mindset.” With that, I began to laugh and he did, too. “That is a pretty fancy term”, I said. “What is it exactly?” He answered--“Customer Equity is the present value of anticipated lifetime revenues that current and prospective customers generate, minus, of course, the costs to retain and acquire those customers.” Reduced to uncontrollable laughter but intrigued, I asked where he heard that. With a big smile he told me that it was from a HARVARD BUSINESS REVIEW article that he had read a year ago. He remains the only fast food maven that I have ever met who not only read but memorized segments of the HARVARD BUSINESS REVIEW. The conversation that we had regarding it has stuck with me vividly all these years.

What my client explained was that by adopting a Customer Equity Mindset his whole approach to business changed and his success soared.  His interpretation went like this: “Customers are the source of my firm’s revenues. Also, they drive my expenses and investments in plant and equipment. So, every time I increase Customer Equity I increase the value of my company.”

How to do it? Simple stuff but always worth repeating: Keep your customers especially the good ones longer. Grow revenue from present customers, and work to acquire new customers who can ad value, improve customer retention procedures and LISTEN to everyone especially the complainers. If you do that you can improve products, services and goodwill.

He actually did training about a Customer-Equity Mindset. His 17 year olds behind the counter were drilled on the nuts and bolts of it. He told me that if one could make it permeate throughout the organization, sales had to go up and you would hang on to existing customers. He loved new customers but always made sure he did not lose many especially when a new competitor threatened. What he was fostering is what others have called “Loyalty Based Management.” There was great trust built with employees and with his customer base.

In the rush to get to this quarter’s or years profits, many ad agencies and broadcasters seem to neglect this issue. And the siren’s call of new business, while vital to any enterprise, should not overshadow your existing base.

My client was not a dreamer. He took a concept and made it his corporate mantra. Do you really have a Customer-Equity Mindset?

If you would like to contact Don Cole directly, you may reach him at

Saturday, October 17, 2015

Sleepless Ad Agency Staffers

Several weeks ago, I sent an e-mail to both selected Media Realism readers and ad agency contacts asking them the age old question, “What keeps you up at night?”  Some of the responses were light hearted and included: “My teenage sons, my nasty boss, and my idiot clients.” Interestingly, no one said, “Nothing” makes them sleep deprived. Surprisingly, one person sent me an e-mail that I found particularly poignant. With his permission, I will share parts of it with you.

“When you met me 25 years ago, I thought that I was going to be the next David Ogilvy (you probably thought I was obnoxious). I was going to write brilliant long copy with spectacular headlines and my spreads would appear in the best magazines. You warned me even then (bravo to you), that things were changing. Obviously, things did not turn out as I expected.”

“I am now in my early 50’s and will be facing two big college tuition bills very soon. To put it simply, I am frightened. I feel that I am slowly fading into irrelevance. Some of my colleagues are finished as they have shown an unwillingness to adapt. I am not one of them but I am a realist. When I read that by 2020, many advertisers will be putting the plurality of their advertising into mobile, it gives me pause. That may never happen but what if it does? What do you need an aging writer who earns six figures for when the mobile message is truncated and is there solely to elicit direct response? I have had a great run despite some disappointments but do I realistically have 10 more years?”

“Technology is great but is rapidly washing away our old processes, modes of work and even some markets. I do not feel that advertising is doomed but it will require an entire new skill set by practitioners and very soon. Tech may overtake creativity and Big Data will drive sales far more than conventional media.”

When I showed these edited comments to others, some say my friend is an alarmist. A few said that he articulated their sentiments quite precisely. These people came from media, creative, account management and agency ownership.

Perhaps, British writer Samuel Johnson (1719-1784) put it best with the acid comment: “Nothing concentrates one’s mind like a date with the hangman’s noose".

As always, I would love to hear your opinions on this topic.

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

Saturday, October 10, 2015

An Ad Man For All Seasons?

It is hard to believe but it has been approximately seven full years since America was hit with an economic downturn that we now refer to as “The Great Recession.” The downdraft tested many companies, people, and portfolios. Recently, I talked to a seasoned ad man about the recession and its affect on ad agencies.

He went through the usual delineation of issues that many struggled through but then said that he knew a number of agency chiefs who could survive easily through anything. As we talked, I had to disagree. Survive yes, but prosper and grow all the time was something that I am quite unfamiliar with in this business.

To me, business professor Don Hambrick of Penn State nailed it when he wrote, “An executive who is well suited to leading a firm during one period may be ill suited for the next period.” Many chiefs can look effective when the wind is at their backs. Can they adapt to more challenging circumstances?

Ambassador Joseph Kennedy is widely credited with coining the now proverb, “When the going gets tough, the tough get going.” I have witnessed agency leaders who seemed bored or a bit disengaged during good or middling times, yet rise to the occasion when their shop has its back to the wall. Suddenly, they make tough decisions, stay hands on and drum up significant new business in very trying environments.

Some analysts go even further and say that some firms grow at times because they seem to be near perfect fits to the current marketplace. Management and staff are not exceptional but rather are at the right place at the right time. Remember when the internet first started to gain real traction as an advertising medium? Some shops had big gains as they had keyed on the emerging platforms early on. A few years later some early mobile players had similar success. Were they that good or was it simply that in the valley of the blind men, the one eyed man is King and the competition was playing catch up?

Please do not misunderstand me. I am not saying that these people were mediocre. Sometimes success is due to many factors not the least of which is a bit of luck. Granted, there are some people who are excellent forecasters and seem to see what is happening a bit earlier than the rest of the pack. Some 90+%, however, see the trend after it is clearly in place.

Life, business, and the free market are all full of bumps in the road. Leaders react to them differently. Few, if any, perform well through all of them.

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

Thursday, October 1, 2015

Is All Research Cooked?

Several weeks ago, I began work on this post. I sent feelers out to a number of people asking if they thought research reports in broadcast and advertising were often manipulated. As I finished a draft of the post and was waiting for a few more responses from my panel members, the Volkswagen scandal broke. So, I deliberately delayed putting this post up until the smoke had cleared a bit.

Mark Twain set the tone for questioning research when he said in the 19th century: “There are three kinds of lies--lies, damned lies and statistics.” Most people say that a clever analyst or executive can spin data in such a way that even poor performance can look much better than it really is.

Responses to my query often had the tone that, “Yes, you can always find a way to lie with statistics.” Now, some of that is not as heinous as you might think. Most of us have been or are in situations where you have to put your best foot forward when research goes against you. A magazine may have a declining audience and circulation but the average income of the remaining readers may have risen smartly. Or, a cable channel that is not growing finds that it does well against certain demographic groups that are highly attractive to advertisers. Where the wheels come off is where people want the research to mirror their pre-existing notions of their brand or media property.

Decades ago, I was an earnest young media analyst who was sent alone to a fairly important client to give a state of the media world presentation. We had no power-points  in those days but I did have a slick deck of acetates and after several rehearsals I faced the music with Mr. Big. The presentation went well and the clients asked many questions and there were frequent nods and smiles as I worked my way through the material. The boss, the marketing chief, told me that he would like to keep slides #2, #17, #31 and the final one. I said of course but wouldn’t you rather take the entire deck. He smiled, said no, and told me that I had a done a very thorough job. Later I found out that he had recommended a course of action to his president and used my four slides to back it up. Of course, by selecting those four slides, and only those four, he had rigged the deck in favor of what he wanted to execute for his brand.

Another time, a year or so later, a client asked me the purpose of research. I said what I still say today--”The purpose of all research is to reduce uncertainty. There is always risk with a new brand and we can never eliminate it but solid research is an important hedge as you begin to market a brand that you are betting millions on.” He seemed to agree and then asked the same question to a contemporary of mine who was the research director of the company. The young fellow said, “Research is the search for truth, sir.” The boss started laughing so hard that he spit his coffee out on the conference table. “That’s rich, son,” was his reply as the young fellow scurried for napkins to clean up the mess.

A year later, the young guy had lost his innocence. I sat in on a research presentation from an outside company. When he was done, the marketing chief thanked the presenter who left. He asked me what I thought and I related how some of it mirrored what was going in media at the time. The young fellow said, “Boss, what do you want me to say in your executive summary to the board?” Somehow, the search for truth was no longer a goal. Both of the players have died so I do not feel horrible telling the story for the first time. Yet, the nagging issue is how much of this type of behavior goes on?

Some of my kitchen cabinet weighed in:

“I don’t think everyone is lying. But, all of us at times try to position things favorably either about our brands or what communications tools to use. It is VERY hard not to have some baggage with you.”

“The big companies are the worst. Remember, 30-40 years ago when the tobacco companies would commission studies saying that smoking was not bad for you? And, I am sure as more evidence comes out about corn syrup that food and cola companies will commission research that will mysteriously exonerate them.”

“When I worked in radio, even if we got killed in an Arbitron ratings sweep, we could always find a few ways to spin the numbers to make the station appear to be first in a few things. Were we crooked? Not really."

A few people wrote that they wonder why some marketing chief and CEO’s even bother to do research. Some get furious looking at customer verbatims about poor service and say, “Impossible. Our customers all love us.” Their attitude often strikes me as “don’t confuse me with facts, my mind is made up.”

When is research the straightest? Some tell me it is when one company is considering buying another. They look carefully for accounting tricks, maybe do customer research, and are brutally honest about how good the company’s product(s) are relative to competition. Once the purchase is made, suddenly key people want to protect themselves or push a specific agenda regardless of what the research is telling them.

So, is all research cooked? No, but much of it is shaded or manipulated a bit.

If you would like to contact Don Cole directly, you may reach him at

Tuesday, September 22, 2015

Stockholm Syndrome at Ad Agencies?

Recently, someone whom I know casually wrote to me and asked me to draft a post on the presence of Stockholm Syndrome at Advertising Agencies. I wanted to dismiss the idea as absurd but I sent out a few feelers and was more than a bit surprised at the reactions that I received.

To recap for those who have not heard the term in a while, Stockholm Syndrome is generally defined as “a psychological phenomenon in which hostages express sympathy and have positive feelings toward their captors, sometimes to the point of defending and identifying with their captors.”

Reviewing the working definition, I again thought that the concept was ridiculous when applied to ad shops. After all, employees at ad agencies are not captives. People can quit, move to another agency, another state, or leave the industry. My mail, however, said otherwise.

Here are a few comments from people whom I value and trust:

“The problem definitely exists and I am certain that it is present in a number of American  businesses. In recent years, I have seem a number of people who are overworked and underpaid defend their superior even when their treatment has been rough or belittling. Today, more people seem to be happy to remain employed and put up with a lot of grief and actually defend the supervisor or executive who treats them badly.”

“Don, the Great Recession was frightening and many of us are scarred by it. When we saw some shops closing and friends getting fired left and right, it was a severe blow. You know how I was always in the CEO’s face lobbying for more money? In 2008-2009, I kept my head down and worked like crazy. When some of the staff would go out for beers, I got annoyed when they attacked our chief. I made some comments to defend him and then stopped going. There was no raise for five years although he did give small bonuses to us starting in 2011. We were thrilled! Now, I ask for a raise each year but I am far more low key than before. The boss is a sarcastic bastard and sometimes is mean. Yet I defend him sometimes and so do others on the team.”

“We have several people on board who seem to have the scent of Stockholm Syndrome. They are treated I think very unfairly but they never mention the thought of leaving. It disturbs me. They are not stars but are very serviceable employees. I think that they are being exploited. The way she speaks to them is really shabby.”

“Some of my peers are indeed captives. They work in a city where there is no where else to go. We almost went under during the big downturn and our recovery has been slow. One guy will have a hard time selling his house and the other is afraid to move from his hometown. I will be gone in a few months if my plans gel. Honestly, I did not see this issue clearly until I made the decision to leave. I was defending my jerk of a boss to my wife for a couple of years. No more.”

“Stockholm Syndrome! Give me a break! The weak economy and the rapid shift to digital has hurt a lot of us at small and mid-sized shops but there have always been people who put up with a lot just to keep their jobs. My son was reading Dickens for school and we discussed the character Uriah Heep  in David Copperfield who always said how humble he was. He was just a yes man and so are the people who some say have Stockholm Syndrome. These people are afraid and know that they have not kept up with the changes and neither has their agency. Many are not that young. The boss is nervous too and takes it out on defenseless staffers who cannot and will not fight back verbally.”

“I think Stockholm Syndrome is an exaggeration. BUT, as things improve I think some executives are taking advantage of people’s fears. My CEO and CFO were talking the other day and I overheard them laughing saying that, “The poor fool hasn’t asked for a raise in 8 years.” I was not meant to hear the comment but I was deeply disturbed.”

What do you think? Is this phenomenon true everywhere or is it more prevalent in 2015 advertising agencies.

If you would like to contact Don Cole directly, you may reach him at