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Saturday, April 7, 2018

Advertising Agencies 2028--Part IV

This is part four of a series on the future of advertising agencies. What follows are some of the best comments that I received from the few dozen whom I interviewed or ask for their opinions via e-mail:

An unusually thoughtful youngish media chief who has a reputation for striving to stay on top of changes:

“I was recently with a couple of smart people in the industry, and we were talking about two of the primary dynamics that exist (knowing there are many more than that). On one hand, you have consultancies who can charge premium fees for services but often in a more limited term role. On the other end of the spectrum, you have agencies which are still in the value pricing mode and seeking longer-term relationships. Our thought, was that agencies should evolve to somewhere in the middle. So how do we take the best parts and then how do we weed out the worst? Of course, that is a very simple thing to say. We talk all the time about “solving problems”, but are we set up to solve problems in the best way? Do we talk about it through the eyes of the client?

Lastly, my dad is not in the industry but loves to talk to me about it. He says that even with the rise of automation, there will always be a need for people to think and people to solve problems. So to me, the agencies of the future will need to get back to their roots and focus on what creates the most value for the clients.  The roles that are also found at clients need to go away, and we need to focus on how we compliment them instead”.


A young digital account executive whom I have known for several years and find amusing. He is on fire for the business and commented as follows in two areas:

Freelancing
Due to other economic factors, businesses are cutting hours and benefits. As a result, there will likely be fewer traditional, full-time employees. Instead, I believe agencies will lean heavily on freelance specialists as needed based on ever-changing client and project requirements. When the project is over, the freelancer is done. That’s not to say the same freelancers couldn’t be used time and time again and repeat partnerships are formed between agencies and talent, but from a human capital perspective, the workforce won’t be the same as it is today.

Global teams
Again, partially tied to other business factors. Office space is expensive and talent is dispersed globally. I can see agencies leveraging teams of designers, writers, and developers from hotbeds around the globe to attain the best talent and offset costs. Screen share and virtual meetings will become ever more present than they are today. Agencies will become increasingly specialized.

Even more so than today, rather than specializing in a marketing service that we provide to a wide variety of clients, agencies will provide their services to a very specific industry and will become increasingly ingrained in the trends and strategies within that market. Higher Education for example; many agencies will specialize in higher education and improve at prospecting and lead generation specific to that industry’s user’s needs.


A long time media executive with her feet on the ground and a great sense of humor:

To think about how agencies evolve, I’d first imagine how the sales structure evolves (seeing as that’s where it starts for me!)

- We’re still in the game of delivering content, building audiences, utilizing data (perhaps our new currency vs. today’s NSI data) and monetizing advertising platforms. 

- Our sales force is different.  Fewer sellers, focus is on digital assets (vs. linear cable ad sales).  Maybe we are not focused on selling one market  but have the ability (and capability) to sell multi-market ad campaigns.  There are no geo-fences in the digital world.

- Delivery of commercial content is IP-based, operations at stations (and in cable) consolidated.

- More programmatic opportunities (interactive & linear) also the reason for a reduced sales force.

So the agency:

-  Creative boutique shops will exist, maybe more than we see currently, focused on creating multi-faceted interactive campaigns – video still reigns.  These are the shops that attract the new talent…grads trained on the new next thing (Internet 2.0)?  Bringing ideas on how clients can market their products/services and accurately measure the effectiveness of their ad campaigns.

- Further consolidation of large behemoth groups.  Verticals within agencies exist.  Interactive (digital) departments lead with traditional media departments a thing of the past.  Just as on sales side, fewer planners/buyers.  The survivors are those who know what a digital/multi-screen campaign is and how to best put it together for successful execution.  Accountability to growing the client’s business is measurable and thus, measured.

- The growth of DSPs or Trading Desks at agencies continues as more campaigns are executed programmatically.  (Also a reason for fewer planners/buyers.)

Next, a true gentlemen and sales executive who keeps growing in the business as it keeps shifting says:

“My outlook on the future is that Ad Agencies will likely undergo a cycle of closures, re-organizations and new partnerships.  Today’s environment of discounts and pitches focusing on “we can do it cheaper” and “we’ll handle your account for free” and “we’ll return the media commissions to you” is de-valuing their work, their ability to hire and retain talent, and the value of the media with which they must partner.

Agencies are implying that their own output is cheap by those statements and practices that I have mentioned.  I believe (like every part of our business) that this is a temporary situation, but please don’t ask me to tell you the duration!
We’ve always had lower-priced agency customers, but also agencies that buy high-profile media to achieve the reach and quality audiences that they need.

Don, the world changed and our agency friends and partners are still behaving as if it is the ‘70’s.  Maybe I am giving them too much credit.I work directly with my customers’ CMO’s and marketing teams.  Their store operators and franchisees.  The only agency interaction I have now is with buyers and their supervisors.  Most of that time is spent telling them what their clients wants and needs.  They are amazed that I know so much about their business.  I then asked one Media Director how often she met with her client’s Media Strategists.  Her answer?  You guessed it!  She had never met them.

Agencies may be blind but the company hiring them has some responsibility to incorporate them into their teams, demand engagement and measure results.I am afraid that the kids behind us can never re-make what we’ve experienced because no one is really trying anymore to create success.  They’re all waiting for someone to hand them answers.

Sorry for my rant, you motivated me!”


From a long time media researcher, a different twist:

“If I had to answer in one word: Blockchain.

Any predictive analysis must account for how Blockchain will change the way agencies run.It can potentially even affect how creatives collaborate. I'm not even sure enough is known about it yet. Nor if blockchain is even the revolution that is claimed.
I certainly don't know enough. But I do know the central banks are worried about it”.

You may find the Blockchain comments “out there” but I have known him for over 20 years and find him to be a genuine original thinker. So, I never play him short.

A small market TV general manager asked to weigh in:

“As you know, Nielsen announced days ago that they will not longer measure the Glendive DMA or the Juneau DMA. Big deal, you might say. Well, to us, it means that we will disappear as a DMA within 24-36 months. It does not really matter and the majority of our sales are directs and the local guys do not know how to read a rating book anyway. I do not see us being a programmatic player either. So, what happens? We slowly go out of business. Streaming is catching on big time even out here in the boondocks and our TV station does not work well for clients anymore in many cases. Small agencies and buying services in outlying areas have to die in this environment.”

A senior media research salesperson: “I have had it. When I go in to agencies, the young planners and buyers seem to resent seeing me. I really could help them but there there is little intellectual curiosity about where our data comes from. If I did not have kids in college, I would quit and become a starter on a golf course or something. The agency teams are beyond superficial.”

Conclusions? That will be Part V coming in several days.

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








Thursday, March 29, 2018

Advertising Agencies 2028--Part III

This post is part Three of our series on the future of advertising agencies.

I spoke to both creatives and media people about the future. The comments will be mixed together a bit on purpose.

Creative Director, Mid-Sized Shop—“Over the last decade, both me and my team had a newfound respect for the media folks at our agency. As digital grew, some of our younger people were bursting with ideas and I keep shutting them down and said you can’t do that. After a while they made a beeline to the media team and would ask if they could execute their idea online or in mobile. Sometimes they could and let me know how out of it I was (am). Other times, the media supervisor would say 'no but you could do this which is close to what you want and may work better.' It took me a while but I got the message. Media was no longer the group that got tickets for clients or the boss. They were pros who were engaged in the industry changes. For a while, we had them in to meetings at the early stage of development that we never did before. It was a nice environment.”

Founder, Mid-Sized Shop—“In recent years, I have been monitoring the growth of Integrated Marketing Communications (IMC). It is not just a new term to toss around. IMC is the blending of Advertising, Direct Marketing, Consumer Promotion, Internet, Public Relations, Publicity and Personal Selling. Don, you have told me directly that a big challenge for marketers will be to determine the proper mix of IMC pillars going forward and each company will be different. I refused to accept your suggestion but now see that you were right. Advertising, due to the advertising avoidance that you discuss a lot, is on a downward spiral. Increasingly, it will take up a smaller portion of the marketing dollar pie. So, the role of creative will be diminished in my view. As Amazon and others grow and hit people directly, their ROI has to be much higher than conventional advertising. My creative director shakes her head in anger when I bring the topic up. It will not happen overnight but it will occur.”

Media Director (with new wave title) at Mid-Sized Shop—“For several years, we pretended we were up to speed on digital. We had some success but eventually our largest client got wise and shifted to programmatic buying with a major player. Their results are light years ahead of ours. We could not compete and conventional media works for us against older demographics but not against the under 40 set. We have had a nice run. I see no way out of it for us.”

Creative Chief, Small Shop—“I am glad that I am getting old. Advertising’s role has to diminish going forward. The Big Data boys at Amazon, Alphabet, Alibaba, Facebook and a few others can reach people with the right message at the right price. It has been great fun but we are in the bottom of the 7th.”

CEO, Small Shop—“Don, I do not dispute what you and others have been saying about the future. The big issue to me is how do we keep the creative and media teams motivated over the next five to seven years. My game plan is to morph in to a consulting firm but the smart ones will have to see what is going on.”

Media Director, Small Shop—“I have a woman on staff who is what you once described as a ‘bust your chops’ negotiator. She is a legend in our small DMA and lives the business. She still gets her pound of flesh (and then some :) ) but her best deals no longer work very well. She is in her late 40’s and refreshingly honest. Last week, she asked me what could she do for the next 20 years? She knows the game is about up. What do I say to her?”


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



Saturday, March 24, 2018

Advertising Agencies 2028--Part II

This post is Part II in the MR series on the future of Advertising Agencies. It covers interviews with marketers of all sizes from Fortune 500 marketing directors, to franchisees of major chains, to small to mid-sized retailers.  I hesitate to post this entry as I love ad agencies but none of my sources wanted me to pull THEIR punches.

Here goes:

Fortune 500 Marketing Director—“As you know, I am getting old and have a lot behind me. I remember vividly how, when our agency visited us for a major presentation, it was a big deal. We leaned on them for thinking not just with creative and media execution but also for packaging, new product development and even site location. The agencies that I have dealt with over the last decade have not kept pace with changes. We turned over a lot of our needs directly to Alphabet (Google). Their reps are on top of everything and their analytics are top drawer and keep getting better. The agency that we still have talks of “breakthrough creative ideas” as if it were the 1980’s. We do less and less with them every year. Past agencies did wonderful white papers on the future and had an attack plan for us. These guys are 100% reactive but have zero seminal thinking. It is a shame. In their defense, they can no longer afford the all-stars but they simply do not dig in and learn our business or study the changing environment closely enough. We give them less each year and will likely shift to a boutique or two  and perhaps keep the media buying service which they recommended to us.”

Mid-sized company marketing chief (privately held)—“The agency does not take our threats seriously and their younger staffers are rude. Here is a great story: The grandson of our founder, who leaves us alone but still owns 15% of the company heard that we had a new agency and wanted to meet the team. He fashions himself a private investor and dabbles in deals and is a fair sized player in local philanthropy. He is a true gentleman and sometimes we bring him in for special sessions or dinners with new accounts. He showed up for the meeting with the new shop and said he had a brief history of the company to share with us and the new ad guys. It was wonderful and charming. Perhaps 12 power-point slides plus one 30 second commercial. He showed old print ads, the theme line we used for decades and we, at the company, were enthralled. After about 10 minutes a sniveling little pissant from the agency said, “We are pressed for time. Could you just give us the headlines?” I was never so angry. My CEO slammed me back in my chair and told our large shareholder and friend to continue, please. The younger members of the agency team shifted uncomfortably and within two minutes were texting. Something is wrong, really wrong. These kids have no manners and no desire to learn who we are or where we came from. Our largest shareholder was hurt and it was needless. We hung on to the new shop for a few months and then fired them. Now we use free lancers for creative and lean on the big players for digital work.”

Big Franchisee of major player--“We analyze our sales data very carefully. Our agency keeps asking to take over our sales data. We said no. Finally, their young account supervisor (after two double scotches) told us they needed our proprietary data so they could build their own model to use for other clients and new business. We hired a couple of quantitative nerds who are just what we need. I was appalled at what the agency was up to. Our targeted promotions get better and better results and we do not use conventional media much anymore.”

Small Retailer (under 10 stores)—“My son forced me to hire some young men and women to monitor our on line work. What a great investment! We are not slaves to the Pareto principle (80-20 rule) any more. Our whiz kids have found niche markets for us. There are 3% of our clients who are about 12% of our sales. Amazing. We buy specific sites programmatically and our profits keep inching up. Our agency could never do this for us. I mentioned this to the agency CEO and he said I was missing the boat. I smiled. Actually, the train has left the station and this well-intentioned man does not realize that the business has passed him by.”

Mid-Cap Company (Publicly Traded)—“Agencies do not realize that we need them for very little these days. They say that they have a fierce on line team but we go direct now and save big and get better and infinitely faster results.”

Mid Sized Company Marketer—“I am a bit like you, Don. I try to read everything. My account team never reads the articles that I send to them. I found a great article in WIRED and sent it to the team. At the next session, I asked them for their opinion. The room got quiet. The young lady who is the account supervisor said, “ I am verbal person. Could you tell me about it? I said no. I left copies for everyone and came back a half hour later. Okay, I said. Let’s discuss this. Two said they had been on the phone with other clients and one said she was on line reading what the Kardashians were doing. One person had read it and made notes and we went back and for a while. Two starting texting after a moment or two. When I called their boss he basically said they were the best he could find. Well, I am determined to find better. The lack of manners and lack of professionalism is astounding.”

Fortune 500 COO—“You know that I worked at two agencies for more than a decade. These guys keep telling me their team is the best. The best at what? I see very little that impresses me. To me and my senior team, the communications world is moving toward mobile. How do you communicate in such an environment? How do you bring out a new product? Can an upstart break through with little money? Agencies could provide some answers or at least strong opinions. We are hiring internally and getting real pros”.

40 year marketer, brash, real character—“Don, what cliche do you want me to trot out? Put a fork in agencies, they are done. Watch as they rearrange the deck chairs on the Titanic. Gone! Kaput! Seriously, it is hard to deal with the rapid changes but few have done a good job of it. I love advertising but these guys have dropped the ball in the end-zone (whoops! Another cliche!)”

More to come in a few days.

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

Tuesday, March 20, 2018

Advertising Agencies 2028--Part I

A few months ago, I was asked by two people to put up a post on the future of advertising agencies. I sent out feelers to dozens of people ranging from former agency CEO’s, current agency owners, creative talent, media directors (among other titles), Fortune 500 marketers, mid sized retailers, experienced media reps and a few media researchers. The response was rather large and I was contacted by some people whom I did not know but were eager to weigh in on the issue. So, I have sifted through a great deal of material and will time release the responses over the course of a few posts.

It has often been said that perspective requires distance. One does not read a book by rubbing it up against one’s eyes. So, I went to two old pros who have run ad agencies of various sizes outside of New York. Both maintain a lively interest regarding what is going on at agencies and in the media world. Here are their comments on advertising agencies in 2028:

Executive #1—Don by 2028… Advertising agencies will be technology specialists… Media will be mostly programmatic computer buying… Research and marketing will be done by clients in-house exclusively… Clients will handle their own social media… There will still be a need for creative work… But that will be conceptual… Execution will be handled by production companies or in-house. There won’t be near as many big agencies . Smaller agencies might proliferate and serve the needs of those clients who are too small or too young to have their own in-house capabilities. But as soon as a client gets enough scale… Everything possible comes in-house. The agencies that remain will be primarily project based… That that is not too far away from today

Executive #2—What’s next?

The world always wants to know what’s next. People make a lot of money trying to forecast and more often than not get it wrong.

Sometimes the future will be more of the same but with a very slight spin.

2028 marketing will be the same. On two fronts:

    •    Faster and cheaper
    •    Artificial Intelligence.

The smart marketers will use the evolving devices that allow them to ‘speak’ to their customers one on one. 

A smart marketer knows a product has a better chance when the benefits a customer wants are presented face to face. Me talking to you is the ideal way to make a sale.

Every day new methods evolve.

The advertising future is all the devices we have now will continue to seek the one on one connection.

Every year it gets easier and the current constant is; the techniques used in TV and radio production work. They are simply miniaturized.

Advertisers need to work on smaller, shorter and quicker. It’s not the medium it’s the technique.

The newest entry in tomorrow’s advertising communication is how fast consumers accept the fact that the selling face is not human.

AI .. Artificial intelligence is fast over taking the need for human contact but no one knows – yet – how fast the real humans will accept it.

In the next 10 years the messages will shift from exclusively selling to a balance of selling and proof of good citizenship.

Advertiser will spend large amounts trying to prove they are human and work with humans giving time and money to humans.

The future is better more targeted messaging and faster response. It’s trite but true: instant gratification takes to long.

The behemoth agencies are working to shrink while maintaining the illusion of size.  Small agencies need to do the work the big guys can’t.

Quicker, smarter, cheaper.

TV is not dying. Radio is not dying. Magazines and direct mail are not dying.  What is happening is they are evolving to even better one on one messengers.

Shifting gears, here are responses from a few current agency chiefs:

Mid-Sized agency owner—"everyone wants to talk about technology changes and they are very real. To a certain degree, we can deal with them or at least for the moment. The larger problem to me is the caliber of people whom we attract. Some 40 years ago when I entered the game, advertising often was a magnet for the best and the brightest. No more. We cannot afford to pay for the best anymore. They are all scooped up by the big companies, especially the FAANGS. If I have someone who is motivated and has a great future, they leave after 18 months or so. I cannot grow our business fast enough to keep them and they are wasted here, to be honest. Also, and this is harsh,  the people I do hire often have no class. If they go to dinner with a client without me, they get drunk. One guy was hitting on women who worked client side. He told me that I had no right to interfere with his personal life. I let him know that when he walked in to a client’s office, he represented ME. He quit soon after that —good riddance.”

"Also, there is little interest among many about what is going on in the business outside of our offices. Last year, on the first day, I outlined things for a young trainee. I told him that I would get him a free subscription to ADVERTISING AGE. He laughed and said, “Save your money, boss. I will never read it.” Can you imagine? Obviously, he did not last long but, sadly, he was not the worst of our recent crop of bad hires.” 

Small agency principal (15-20 employees)—“Our base for decades has been local retailers, car dealers and banks. Amazon and the general retail apocalypse is killing some Main Street businesses that we have had for two generations. My car dealers tell me that in 10 years they will be largely service operations with people buying direct in many cases. And the banks. Cash cows for agencies for 100 years. Now, they are disappearing as the money center banks or super-regionals gobble them up. I know our days are numbered. Last year, I ramped up my matching contribution to our 401k plan. My CFO said I was crazy but I know we do not have many more years. Some people have been with me for more than 20 years. They have not saved much and they will not have pensions. In two years, I may take some of my personal money and sweeten the 401k even more. These people made me rich and I want to help them as best I can. It has been a fun ride but the game is almost over.”

Agency owner (approximately 30 employees)—“our people do not know how to behave. When the client is talking many are on their devices and chattering among themselves. One of our senior people got defensive when a young intern at a large non-profit asked him an excellent technical question about an online effort we were doing. Our management rep asked her where she went to school. “I go to RISD (Rhode Island School of Design)”, she said. “Never heard of it”, my associate said. I jumped in and said it was probably one of the three best design schools in the U.S. He kept pushing her and she maintained her poise and cool but continued to probe. It turns out that she was the granddaughter of the founder of the non-profit and will be joining the board in a few years and may likely run it someday. We lost the business and deserved to lose it. She can bring in a team that will work cheaper and be far more cutting edge than us regarding new technologies.”

“My team does not read. I sent out articles and ask them to read them a few days before staff meetings. Some never do. They smile and say that they did not have time. Our business is in trouble. If I fire all these lightweights, I am not sure that I can upgrade the team quickly. It is so frustrating.”

Much more to come. Expect Part II in about 72 hours.

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


















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

Thanks,

Don

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