Friday, August 29, 2014

Beyond TV Commercial Avoidance


For the last few years, every several months I have posted something about the topic of TV commercial avoidance. Essentially, the argument goes like this: TV is not working as effectively as an advertising medium as it did a decade ago.  Reasons appear to be that nearly half of viewers have a time shifting device and tend to skip commercials during replays, a huge group (varies by demographic) is using another device while viewing (laptop, smartphone, or tablet) and misses many or most commercials, and  video options such as Netflix and Hulu or Hulu+ eliminate many TV spots. I still get push back from some creatives at agencies and a few broadcasters who say that if one creates a better commercial people will flock to it. To me, this is a child’s dream in the world of 2014. May I suggest that you leave it to the children?

I think that over the last few years that I have said enough about commercial avoidance. It is here to stay and will only increase given usage patterns and the addiction to mobile devices especially among the young. So, the realists out there at advertisers, agencies and broadcasters need to accept it but not give up on their medium. The new goal of the ad industry should be to get people to PAUSE on TV spots. Yes, the avoidance or ad skipping will always be there. You have to accept that. Focus on using technology to make TV work better for you. Right now, most TV advertisers simply send viewers to a brand website or Facebook page. Many, if not most, are generic and do not really relate to the specific commercial or campaign they just witnessed.

With mobile being the growth medium of the next decade (more on that in upcoming posts), advertisers need to use their TV spots to engage with it. The key is what many have dubbed “mobile activation.” Instead of sending a TV viewer to a sterile brand website, put some creative calls to action in your mobile efforts linked to responses from your TV work. Also, some now have a text at the bottom of the TV screen that offer coupons or special offers that you can activate with your phone. You will find over time that mobile activation can target consumers much better in terms of likelihood to buy and also find those who respond quickly.  Others are putting their long form You Tube videos on mobile which people can see when they respond to the TV spot.

The technology will keep getting stronger and the opportunities are boundless. Clearly, TV is weaker than it has been in past years. So, stop fretting over commercial avoidance or denying it and use TV and mobile as complimentary vehicles.

Much more to come on mobile.

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



Monday, August 18, 2014

Inconsistent Consumer Behavior


In economics, you often see statements such as “assume the consumer acts rationally.” This is the underpinning of many articles and predictive models. If you observe behavior of consumers you will find that they do not often appear rational. Often people seem to be of two minds and say one thing and do another. A growing area of economic study is Behavioral Economics which accepts that people do not always act rationally with consumer decisions. The field is perhaps best described as where psychology and economics meet.

Here are a few examples that I have observed of inconsistent behavior:

1) Way back in 1971, I was finishing college and spent a summer handing out state motor vehicle inspections among other tasks at a service station. We were the largest venue in the county for inspections so some days were busy as I filled out the forms and handled billing. A woman dropped off her car one morning and said, “Do whatever is necessary to pass the inspection. Call me if anything else is wrong.” The mechanic went through the state checklist and the car was in fairly good shape. A turn signal was out plus it needed a PCV valve. When the lady came to pick up the car after work, I showed her the invoice and she exploded. “What is this PCV valve for $4.95? I did not ask for that.” I explained that it was a pollution control device and was required by state law. She slammed her purse on the desk but paid the freight and left in a huff. As she pulled away, I laughed out loud when I saw her bumper sticker which read, “We support a pollution solution.”  Fast forward 40 years. I am finishing a lecture about Public Relations fumbles and I use the BP Oil spill in the Gulf of Mexico as a case study for poor handling of a problem during early days of the crisis. A young fellow raised his hand and gave a long speech about how evil oil companies were. I smiled and said that someone must have liked them as several hundred million people around the world enjoyed using their products. He shook his head and said, “Everyone hates everything about them. They are thieves.”  That seemed like an opportune time to wrap up the class. It was evening and several of the youngsters, including the oil expert, walked with me to the parking garage. When I reached my car, the angry man said, “Prof, what is a man like you driving a tin can like that thing.” I told him that I actually owned two Priuses  and, that after several years, I was still getting 47-50 miles per gallon on each. He shook his head and headed up one floor above to get his car while I continued to chat with a few of his classmates. Two minutes later, my young friend came by in a 4 wheel drive pickup truck. He lowered the window and shouted out, “I get 12 miles to the gallon,” laughed, and drove off into the night.
   
    For years, I have seen people preach against climate change, pollution, or oil company excess yet live their lives quite differently.

2) Often people tell me that they hate the big box retailers and wish the days of the small local businesses would come back. Some say that they avoid Wal-Mart and Target. I asked one such person whether a certain book might be available at a local bookseller. “Are you crazy, Don? Get it on Amazon. It will be cheaper, you can beat the sales tax, and will be at your door in a few days.” What these people do not seem to understand is that every time they use Amazon, they undermine small local businesses who cannot buy in bulk and compete with Amazon. Additionally, Amazon even hurts Wal-Mart and Target.
 3) “I hate Wal-Mart”--if you travel even occasionally in progressive circles, it is the height of fashion to trash Wal-Mart, the world’s largest retailer. They are all that is evil  in American business in the minds of many people. They do not pay entry level people well, resist unions, and have problematic health care coverage for their associates. How did they get so big? It is pretty simple--they gave people what they wanted at a very attractive price. If people truly do not like Wal-Mart, the way to hurt them is to simply stop shopping there. It amuses me that some towns brag about how they have kept Wal-Mart out of their communities. Wait for the weekend, however, and the roads are clogged to the town a few miles away that has a Wal-Mart. Today, Wal-Mart is struggling as the truly downscale find it expensive and some have moved on to the Dollar Stores. Others are doing more shopping on Amazon and fellow on-line travelers and this is hurting Wal-Mart at the upper end of their demographic appeal. People may want Wal-Mart employees to be paid more and have better insurance but, at the same time, they also want the very low prices that it currently offers. Many do not understand that they cannot have both.

These are just three examples of the inconsistency or hypocrisy of many American consumers. If you are a marketer, be careful. Consumers do not always act rationally so  watch what they do instead of what they might say.

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

Friday, August 8, 2014

Revolution Now!


Several decades ago I was an earnest young undergraduate student majoring in Economics. My favorite courses were History of Economic Thought and Economic History. One branch of economics that fascinated me was Austrian Economics. No, it was not the study of the small middle European country but the school of thought did originate in Vienna. Essentially, the Austrian school favored a pure free market approach with as little governmental intervention as possible. Their 20th century leaders were Ludwig von Mises and nobel laureate F.A. Hayek, both educated in Vienna. In America, a more strident disciple emerged named Murray Rothbard who called himself an Anarcho-Capitalist.

What intrigued me was that they saw economic theory as largely QUALITATIVE. They dismissed mathematical models on the basis that human beings and the general market were too complicated. With several billion people out there, all with different hopes and dreams, likes and dislikes, how can a model of an economy work and allocate resources properly? Also, planned economies such as socialist oriented command economies were doomed to failure. Mises called economics the study of human action and thus modeling was just not viable given behavioral issues.

Well, they were certainly write about socialism as capitalism won the battle by the 1990’s. In my career, I often thought of the Austrians when it came to media and marketing issues. People did scads of research yet most new products failed (and still do). Network programmers go through many levels of review and shoot pilot films yet approximately 70% of shows do not get renewed for a second season even though consumer testing is often extensive prior to the premiere. Each year, and 2014 was no exception, marketers and their agencies placed huge billion dollar bets in the upfront TV marketplace even though virtually all will admit that it is a (slowly) dying medium.

If you watch things carefully as many of you do, it is obvious that much of this failure is going to be lessened and soon due to our emerging era of Big Data. In the last week, several people wrote to me about the speed of change and what it meant. Two standouts were:

1) A senior media executive wrote “I had just been part of an “Addressable to the home” advertising experiment.  A client’s mailing list was matched with an MSO subscriber list resulting in a matched target group. The viewing data from that list was aggregated from actual STB data.  New ratings were created based on the value of those networks viewed and schedules were placed”.
2) A long time agency media maven said “Google and Apple along with Facebook are most likely the largest data gathering companies in the world. And, they are doing so to better target future revenue...with the greatest share from advertising. Google just recently purchased NEST, a programmable thermostat company. They are doing this so they can gather more info about your habits inside the home, as well as when you are reaching out to your home via your mobile device. This data ultimately will help them to sell more advertising”

There is no question that pin-point messaging is upon us. This has to improve marketing performance as clients as desperate for authentic accountability from their agencies and the media. There is definitely an element of “big brother” here and there will be some short term security risks with hackers breaking in to sensitive databases that can literally tell marketers where a prospect is.

Long term, however, there will be no more comments such as the time honored, “I know that half of my advertising is waste--I just do not know which half.”

All of this spells trouble for what is left of mass media. And, attentiveness, even in high priced and high profile sports, is declining. A young media supervisor wrote to me recently saying that no one appeared to watch a single commercial during a party he attended where his alma mater while trying for a bowl bid. “Everyone was on their smartphone looking up better statistics than ESPN could provide. I even noticed this at baseball games this summer where it seemed thousands were on their Smartphones in the stadium. We are wedded to our devices even at live events.”

As usual, change will not happen overnight. The rate of change, however, has clearly sped up. The old guard of 50-65 year olds who think that the status quo will stay in place for several more years are living in a dream world. Big data is coming, faster than we thought even a year ago, and it appears that nothing can derail it.

Finally, if we can forecast Consumer Behavior with Big Data, maybe economic forecasting will get a lot sharper and my beloved Austrian economics will be proven wrong about 21st century modeling.

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

Sunday, August 3, 2014

Are Apple and Google Media Companies?


Last week, I had a very lively e-mail exchange with a very seasoned broadcast executive. At one point, he asked me what organizations would be the leading media companies 10 years from now. My answer will not surprise you. I said that forecasting was always risky but “the two tech giants, Apple and Google, seem to be the prohibitive favorites.” His response floored me. “Don, those are not media companies. Google is an aggregator and a utility and Apple is a high tech device maker.” Trying to be understanding, I gently asked, “Did you mean which companies would be on top among the legacy media companies such as Disney, Comcast or Fox?” “No, I mean overall,” he responded.

Back and forth we went. My argument was that I can understand how you could look at Google as a utility just as some see cable TV as one. Yet, when over 90% of your revenue comes from advertising as it does with Google, it has to be considered as a media company.

To dismiss Apple as a “high tech device maker” was also questionable to me. Yes, they continue to score with their high end i-phone and their refreshed i-pad plus Apple TV is looming out there and appears ready to pounce.  The i-watch may debut in October and i-TV is also likely in 2015. The old boy (14 years younger than I!), was buying none of it. He did, however, permit me to quote him in this post.

Look to the future a bit, my friends. To me, both of these tech behemoths are natural platforms for a post-broadcast world. For the moment, Google organizes and manages content but does not produce much. That could change. They bought YouTube way back in October, 2006 and have yet to fully exploit its global potential. They could use it as a platform for a global TV network and advertising powerhouse if they wished. If they lost a few hundred million on the venture, they would barely notice.

Apple has a great eco-system for the future. A friend, who is a creative chief, told me his goal for 2015-16 is to work on more apps than ads. Rumors abound that Apple TV may soon be running all their apps on it. If mobile is the future of advertising as I believe it well may be, then Apple has the wind at its back.

Also, what about acquisitions? Both of these giants have untold billions of dollars in cash. Apple has used some to buy back shares and pay a dividend. Google is playing it closer to the vest although both companies have billions overseas that they cannot repatriate without strong tax consequences. Even then, either could snap up very large legacy media companies with existing cash. Why don’t they? They probably do not see the value in them as the media and advertising worlds continue to evolve.

So, what do you think? Who will emerge as the leaders a decade from now? Are these giants media companies or not?

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

Thursday, July 24, 2014

Technology Will Triumph!


Every day it seems I receive “gloom and doom” direct mail pieces or e-mails from a wide variety of 21st century Cassandras. Oil will hit $200 a barrel by Christmas, the stock market will drop by 70%, World War III is imminent, the dollar will cease to be the world’s reserve currency (by next month), pollution will overtake us shortly, and mass starvation is right around the corner are some of the messages that I have received in recent months.

I generally toss the direct mail missiles into the shredder and delete the e-mails. Why do I keep getting them? It appears that someone with a profile somewhat similar to mine is responding.

Let’s face it. We live in a troubled world. Geo-political tensions abound, ignorance and injustice are widespread, leadership across the globe is suspect and many economies are fragile and debt grows and too much money appears to be printed. It is easy to see how the gloom and doom crowd draws response. Yet, to me, they forget one big thing--Technology.

No, technology will not help us find world peace but it will ease many problems in the years ahead. Just look at a few industries and see what is going on:

1) Energy--until 18 months ago, it looked as if we may be running out of oil across the world or at least oil that could be tapped consistently and safely. That is changing fast. The domestic oil boom is helping our balance of payments and creating good jobs. Technology is making a dirty business safer and less impactful on climate change. The Canadian oil sands were often attacked for their water usage. Now, new technologies allow the companies to recycle almost all of the water. Even coal may look better. A few companies are experimenting with CO2 capture systems in coal fired electricity generation, sending the CO2 to natural gas fracking sites where the CO2 will be propelled into reservoir rock and gas can be tapped. Lots will happen in natural gas and solar and wind power will not stand still either. A windmill today generates, on average, 100 times the power of one produced in 1980. People used to say that geology would trump demographics in energy production and long term shortages would occur. Today, many are stating that technology will trump geology and cleaner and abundant energy is on the way to us.
2) Medicine--when I look back on my life it is stunning to consider the advances that have occurred the last few decades. All of know people who are alive due to procedures and gains in medical technology that did not exist until recently.
3) Agriculture--this is going to be a boom area. It has to! With a billion more people coming on board our little planet in the next 15 years, we will need to feed them. Better fertilizers, use of water, and farmer training should translate to better crop yields.
4) Water--approximately half of the people on earth are currently hospitalized due to drinking bad water. Non-chemical purification techniques along with mineralization technologies with provide water that is clean and tastes great, too. The amazing health benefits will more than pay for an upgrading of infrastructure needs around the world.                                    
5) Media--our field will continue to evolve. The big area will be in what we now call mobile and specifically in applications. Our lives are made easier every day by mobile apps that help us shop, not get lost, send messages, research almost anything, and always stay in touch if we wish. Today, many advertisers boast of pin-point targeting. Well, they ain’t seen nothing yet. Imagine marketing 10 years from now when you can slash wasted audience from current levels and customize messaging far better than you can dream in 2014. The game will change but advertising and communication efficiency will soar.

So, do not get discouraged. Read the gloom and doomers; sometimes they say things that come true and the good ones make you think. Remember, always, however, that the human spirit will always be there and technology will move relentlessly toward a better life.

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

Tuesday, July 15, 2014

Is America Finished?


Nearly half of Media Realism readers tend to be from outside the United States. Over the last five years, I have heard from readers in over 125 countries. I love to read the mail and respond to a great deal of it. Last week, I received a note from someone who lives in an emerging Asian country and comments directly to me several times a year. With his permission, I quote him verbatim: “I really enjoy reading Media Realism. You bring up topics that I do not see anywhere else. But, you need to stop posting so much on US centric issues. You and I both know that the United States is finished.”

He may know it but I certainly do not.  I will be devoting this post to stating that we could be on the verge of an exciting United States turnaround.

If you confronted many Americans with the comment “the United States is finished” you would often get an indignant response. People would conjure up Ronald Reagan’s famous speech where he talked of the shining city on the hill and America’s rendezvous with destiny. When Reagan made those comments back in 1980, it was pitch-perfect. The malaise of the Carter years had Americans discouraged. The upbeat candidate talked of our potential and tapped in to a yearning for imagination, innovation, and greatness. He won by a landslide and did it again in 1984 with a wonderful ad campaign highlighted by the “It’s morning in America” execution. Thirty years later, things are different. Our problems are deeper and institutions such as Congress are far more suspect than they were then. So, we need more than an inspirational message and leader. I believe we may have it.

Several things appear to me to be coming together. They are:

1) The Energy Advantage--Observers have often said that the 20th century was the American century and that was helped by low energy costs. Also, as a result, Americans became addicted to cheap energy, particularly oil.  Things got a bit tougher as Americans were importing up to $250 billion dollars a year in oil largely from the Middle East, Venezuela, and Nigeria, which were areas of the world not particularly friendly to US interests. In recent years, thanks to new technologies, we are now producing more oil domestically than we have in 30 years. Steadily, the balance of payments regarding energy is turning around and much of the money that leaves the U.S. goes to our friendly neighbor, Canada. New technological gains have allowed us to tap in to our vast holdings of natural gas and production is so strong that costs are very low (one-fourth of Western Europe and one-fifth of Japan). This energy renaissance is creating thousands of good paying ($70-100k) blue collar jobs which have been sadly missing in our economy over the last decade.  
2) The other benefit to the domestic energy boom is that it is helping our moribund manufacturing base.  We have all heard of offshoring where American companies moved operations offshore to take advantage of lower wages and lower taxes than they faced at home. Now, a trend is beginning that is known as “reshoring” where manufacturing is coming back to our shores. Some 15 years ago, a Chinese factory worker might get 90 cents per hour. Now, the average rate is over nine dollars per hour. With energy costs less in the U.S. and transportation a fraction of what it would cost to transfer finished goods to the U.S. markets, companies are often deciding it is easier and more economical to manufacture at home. This can be a big help to the unemployed in America. The only fly in the ointment is will the jobs be very low paying?  To stay at parity with Asian outposts, will domestic manufacturers keep wages down really low? One of the big problems of our slow motion recovery is that many of the new jobs created each month tend to be hovering around minimum wage.  (Also, and I know that I am a distinct minority on this issue, but I worry a bit about natural gas as our one fits all solution to environmental and economic issues. In his 2012 State of the Union address, President Obama said the following: “We have a supply of natural gas that can last America nearly one hundred years.” Relax. I am not going to attack the president or even the Department of Energy. What I will say is that I have been following natural resources and their equities for 42 years. From my early days of reading Canadian trade journal THE NORTHERN MINER to annual reports and press releases today, I am always amused by the somewhat breathless projections of natural resource experts. The unsolicited e-mails are even funnier. A sample of recent entries sound like-- “Bigger than the Bakken. America’s newest and largest energy field” or “A Gold Strike So Large It will catapult this junior to one of North America’s top 10 producers.” You get the idea. If the trend continues of companies shifting to natural gas to heat their plants and run their fleets plus utilities shifting to gas from dirty coal for their electricity generation (a good thing!), will we have enough gas for 100 years? Companies are furiously lobbying to get permission to export liquified natural gas to Asia and Europe. I thought that I was the only person worried about this until Charlie Munger, Vice Chairman of Berkshire Hathaway, voiced the same concern. Others say that exports will never be more than 10% of US production.). So natural gas, is for the moment, a game changer. It can help lower CO2 emissions as it burns cleaner than oil or coal and is quite plentiful. Some say it will be the bridge that will lead us to renewables in a few decades. Clearly, low cost gas will help manufacturing here. The gas boom is creating thousands of good paying jobs and makes home grown manufacturing more globally competitive.
3) Americans are still the world’s best marketers and, I would add, salespeople. We seem to tap in to what people want. Also, American Pop Culture travels well (see Media Realism, “The Triumph of American Pop Culture”, May 31, 2011) and the newly minted middle class around the world love American products. Author Daniel Gross has dubbed some products “Inports.” These are products produced by American companies overseas using local or non-American ingredients or components. So, Starbucks is exploding overseas. From the coffee to the cups to the pastries everything is produced outside the U.S. Profits, however, are repatriated home hence his term Inport.
4) People are finally seeing the importance of improving our infrastructure. Landing at grungy Kennedy airport some weeks back, I was struck by what a foreign tourist’s first impression of America might be compared to the efficient and state of the art airports that they came from at home. I vividly remember as a child President Eisenhower lobbying for the national highway system. It was positioned as a “defense highway system” so in case of foreign attack, thousands could escape an attack area quickly via the new superhighways. Well, the Soviets never bombed us but the infrastructure improvement was very real. Salespeople could cover hundreds of miles more in their territory. Contractors and tradesmen were not limited to their home cities any more and people in remote rural areas could get things shipped by truck almost as quickly as those in major cities. Would Wal-Mart have grown so large without the interstate highway system? The highways gave us an international leg up and increased business volume all over America. The Panama Canal is now getting a multi-billion dollar facelift and larger ships will be passing through it soon. Can all American ports handle the larger vessels or will they simply go to China or other nations who can accommodate them? Our state roads and bridges vary wildly in quality from place to place. Some are funded with gasoline taxes so we should not hold our breath regarding a quick fix there. Infrastructure is one place where government and business need to work together. If they will, it can sharpen our competitive edge significantly.
5) Tax and entitlement reform--you may say good luck on this one. I was excited when the Simpson-Bowles reforms were presented. If we could get a resolution on Social Security and Medicare that would protect our safety net for generations to come, businesses and individuals could plan better for the future. This would help us. We need a simpler, fairer tax code that does not punish success but squashes crony capitalism.

The first three points that I have outlined are happening and will make American stronger in the years to come. If we can resolve the issues around #4 and #5 then I am very confident that America’s best days are yet to come.

For a quick and easy read on the myth of America’s decline, may I suggest BETTER, FASTER, STRONGER by columnist Daniel Gross (Free Press, 2012)?

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

Monday, July 7, 2014

Storytelling vs. Statistics


Some months back, I gave a presentation to a fair sized audience of budding young professionals. The boss did not attend but sent an observer who sat in the back of the room and watched my dog and pony show very closely. I thought it went well and, as I was leaving, the management plant thanked me and said, “You are a wonderful storyteller. That is 90% of presenting.” As a guest, I merely said thank you but gently added that my stories all were linked to facts that I had presented in a few statistical charts in my show and tell.  She shook her head, smiled, and left. Later her boss told me what a success the session had been.

All of this is a preamble to something that I have observed over the last decade or so. An increasing number of people are making bad business decisions because storytelling seems to have overshadowed statistics or, dare I say, facts in decision-making.  Perhaps I am an exception. I have always considered myself something of a data junkie. Never have I resented tedious number crunching to get to the guts of a financial transaction, a media buy, or a forecast for a concept, a business, or even a country. And, if you know me at all, you realize that demographics often drive the bus.

Why do most new businesses fail? Why do most new products fail even from established marketers? To me, it is not lack of effort on the job or inept management. Much of it is a failure to look at the readily available facts or statistics that are in plain sight or can be researched for a bit of money.  A stunning number of people rely on storytelling as their compass. Their friends like it, they saw someone have success with it in another market or nation and they then make an enormous leap of faith based on hearsay or very limited amount of facts.

Your mind can play tricks on you if you become addicted to storytelling. More than once, I have passed out articles or books on a particular subject to colleagues or clients. And, several times people immediately handed them back saying, “Don, I will never read it. Just give me the headlines. I learn everything by talking to people.”

Well. I am a big advocate of business people talking to their customers and prospects and LISTENING. However, I have seen people bet millions on products or services where the timing is clearly wrong, or their chosen location cannot sustain a new player due to weakening demographics or a poor economy. Few of us want to tell a sincere person, especially a friend, that their idea really stinks.  So, if you merely talk to people, you are missing a lot and may be setting yourself up for failure.

Storytelling is important. It beats a ponderous power-point time after time in terms of audience attentiveness. Yet, the stories, to me, need to be tied to some statistical realities.

Finally, remember that con men are all great storytellers. Think about it.

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