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In the advertising world, moonlighting while holding down a full time job has been around for decades. Millennials have taken it to a new he...

Sunday, March 10, 2024

Disney, ESPN+, and The Sports Bundle

 In recent weeks, the media world has been buzzing a bit about Bob Iger’s proposed plans for ESPN+. Additionally, Nelson Peltz of Trian is again making a run at Disney shareholders with an attempt to win a few seats on the Disney board of directors.


Over a month ago, Disney chief Bob Iger announced several changes. They include:


1) Disney is finally going to get a stronger position in gaming. This has been widely applauded as Disney does reach a lot of kids. Also, in sports, gambling is widespread so ESPN could benefit there and has credibility.

2) Disney will be a player in a new “skinny bundle” that will allow subscribers to catch major league sports across Disney channels, Fox, and Warner Bros. Discovery. It sounds great but does give me pause. How long will the alliance last; there are egos involved. Can they be Frenemies over the long pull? Will Amazon, Apple, and Alphabet decide to ramp up their sports presence and outbid these established media players for certain properties? 

3) Iger also discussed a limited streaming service for ESPN + that would debut in fall of 2025. It would be a souped -up version of ESPN+ with “much more personalization and customization.” They are projecting a cost of $30 per month. Admittedly, they are many sports fans in the U.S., but how many will be willing to pay $30 for this standalone service? Right now, you can get existing ESPN and other channels for $15/month is some cases.  The projected $30 price tag would be twice a Netflix subscription. If it clicks, it could be extremely lucrative for Disney but $30 appears to me to be over the breaking point for millions of consumers.


Tom Rogers was head of NBC Cable for a decade. He also founded CNBC for which I am very grateful. In a recent interview on CNBC, he weighed in on some possible Disney changes:

https://www.youtube.com/watch?v=px7nslNjdl4


Bob Iger was CEO of Disney from 2005-2020 and was widely respected in business circles. He retired and was succeeded by Bob Chapek who left Disney in Fall of 2022. Iger was called back as CEO in November 2022 and has a contract lasting in to 2026. 

He faces many challenges including the Trian initiative to get board representation and make strong changes. To me, the bigger if not biggest challenge will be to find a multi-faceted executive who can replace him in 2026.


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



Wednesday, February 28, 2024

Is Advertising in The Super Bowl Worth The Cost?

 Okay, some of you may find the topic of this post a bit controversial. Several people asked me to draft it. Also, I polled several marketers and advertising people and asked them whether they think it is still a value in 2024.


First, a bit of background to refresh your memories. This year, 30 seconds of time on the Super Bowl cost approximately $7 million. Interestingly, many of the spots were 60 seconds long meaning the advertiser was shelling out $14 million for one minute. On top of that commitment, production was elaborate and first rate and probably added a couple more million to the tab. Lastly, a number of top-drawer celebrities appeared in many of the executions, and they probably did not work for free. So, in some cases, it is fair to estimate that the tab for the one-minute commercial was $17-18 million.


Was it worth it? For 25 years, we have been discussing how fragmented all types of broadcast, cable and streaming video have become. The Super Bowl was the only place where you could deliver 100+ million advertising opportunities all at once. The time-honored rule in media has been that you “pay more to get more.” So, the Super Bowl gave you a rating not seen since the 1960’s for over the air TV. And, importantly, the Super Bowl may be the only event on TV where people actively watch the commercials intently. So, attentiveness levels to Super Bowl commercials are the highest among all programming. Also, the 2024 Super Bowl was wildly exciting to sports fans and the audience held up through the final second in overtime.


For the reasons stated above, most people who responded to me said that it was definitely worth it—two even described it as a “no-brainer” if you could afford it. A few said it was worth it if it were done in good taste and was humorous.


A few curmudgeons appeared. Bless them. Here are quotes that have been edited a bit and with obscenities deleted:


--"My boss kept pushing for it and we once spent a third of our budget for the year on it. We got some nice press and it might have helped morale a bit in the office but it did not move the sales needle one damn bit.”


--“Our CEO wanted it and he went to the shoot. Sales went up the next two weeks and then dropped back to normal. I visited him before he died, and he still talked about it. Were I a large shareholder, I would not have been thrilled. The guy was on an ego trip.”


--“The brand must have broad appeal—booze, snacks, maybe a Detroit produced vehicle. Otherwise, I do not see how it can pay out.”


--“Why take an eight-figure gamble these days when there are many targeted digital alternatives that can hit portions of your target at a reasonable cost and are trackable? I do not get the appeal anymore.”


This year, Budweiser brought the Clydesdales back which was fun. The Detroit automotive cabal was absent with only BMW and Kia present in the big game. The BMW spot with Christopher Walken was wildly entertaining to me but how many young people can relate to an 81-year-old Oscar winning actor? How many know who he is?


So, the jury is still out. Perhaps it can work for some advertisers in a broad category but, in age of accountability, can many prove that a Super Bowl commitment pays for itself?


I will be watching closely to see if a minute in the 2025 Super Bowl goes for $15 million plus.


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


Tuesday, February 20, 2024

My Favorite Attribute

 Recently, a young adult asked me what quality I looked for the most in a potential business partner or employee. I did have to think about it for even a moment. My answer is what it has always been—Curiosity.


Webster’s defines Curiosity as a desire to know or learn. Since the 1970’s, psychologists have found that being curious is closely related to inquisitive thinking, exploration, and investigation. They also have found that the curious have more perseverance and grit than the average person. On the job, they tend to have deeper engagement, superior performance, and personally, have more meaningful goals than their fellow workers.


This trait of curiosity often generates positive experiences, and, in some cases, what psychologists call “joyous exploration.” The curious among us enjoy confronting novelty and may well take risks that can be financial, social, or even physical.


As a child, I discovered that I had two interests that have stayed with me—history and markets. My parents took the family to Boston when I was five and we covered The Freedom Trail in detail. Soon, I knew not only of the midnight ride of Paul Revere but also all about his two lesser-known fellow riders, Billy Dawes and Samuel Prescott. At seven, my father bought me a subscription to American Heritage. He inscribed each issue with a personal encouraging note. I could not read them well at first but over the next few years, my fascination grew.


At eight, my mother, the daughter of a stockbroker, sat me down and taught me how to read the market tables after I asked her what the numbers meant next to each company. I am certain I was the only 3rd grader in Wickford, Rhode Island who knew what a P/E ratio was. 


All of this stuck with me. In college, my degree was on paper in economics, but it really was in Economic History. My courses included History of Money and Banking, History of Economic Thought, Economic History, and an Independent Study which covered ideas of the great economists from Adam Smith to Milton Friedman. I still devote time almost daily with economic theory.


In my career in advertising/marketing and later as a university lecturer, I was always excited to work with or meet someone who had endless curiosity about the business or subject at hand.


Millions of people spend their lives going through the motions or doing enough to get by or simply survive. If you are curious about a topic, pursue it and you will likely be happy and successful at it. People are surprised when I tell them that I really was not crazy about advertising. What I was enamored with was the media markets and how they fluctuated and presented new opportunities or great bargains in down markets.


Also, please do not confuse curiosity with nosiness. When someone says to me “I am curious about….”, an alarm goes off in my head. They want to gossip or find out something about me or someone else.


Finally, virtually every year, Warren Buffett speaks to an MBA class or two. One piece of advice he gives is: “Do not go sleepwalking through life.” Well, sadly, most people do. The truly curious never do that.


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


Tuesday, January 30, 2024

Forever Renters?


Two weeks ago, I put up a post regarding the merits of renting vs. home ownership and how things appear to be changing for young adults compared to previous generations.


It generated a great deal of mail and phone calls. I suspected some anger from people saying that home ownership was the only way to go. Not really. A few people stated that it was the only way for most people to accumulate any meaningful capital which is what I heard over 40 years ago.


Today, people are marrying later or not at all. The Cape Cod house with the white picket fence around the yard has little appeal to these young adults. Also, the supply of affordable housing does not meet demand so, as prices rise, more young people are excluded from the possibility of home ownership. 


One reader who is wildly successful wrote to tell me that he doubted if he would ever buy a house unless it was a vacation home. He wrote: “I agree completely that if you take your down payment money and invest it you will be better off than buying a home in many cases. To succeed at this, you need to be very DISCIPLINED (caps his). Each year, I max out on my 401k but also take property tax and maintenance money that I would have to spend as a homeowner and invest it. Also, I have flexibility. If I change jobs or want to move, it can be done easily. I am 33 and may marry someday. If we have kids, I will probably buy a house. Otherwise, I will be a forever renter. 



Today, RentCafe estimates that the average rent in the US is $1,700 per month. Of course, an average is often a misleading statistic. In San Francisco, it could be several times that for a fairly modest apartment. In a rural or downtrodden, rent is often under $1,000 for a decent place. Two weeks ago, The New York Times did a spin on the RentCafe data, and showed how much square footage you would get in several markets for $1,700 per month.


Results were interesting. In a select sample of Manhattan zip codes, $1700 gave somewhere between 211-234 square feet. In Memphis, you were able to rent 1850-2000. Oklahoma City and Tulsa were quite renter friendly with the average national renter tariff getting you 1870 to 1970 square feet. As markets, the two Oklahoma entries were the most reasonably priced. 


It seems for many young people that even renting can be a stretch these days. Rents have moved sharply upward as real estate prices have jumped in the last few years, so it is causing some real problems for people under 30. As rents have escalated, some can handle it but are not able to save for a down payment on a home which pushes back their initial purchase by several years. Others cannot handle the rent, period.


Here is one example, perhaps not typical, that I learned after the last post about buying vs. renting. A young man who lives in a small town in Pennsylvania wrote to me and told me of his current struggles. He allowed me to use his comments after we jointly edited what he said and changed a few personal details. Here goes: “I am 26 years old and do not think that I will ever own a house. Three years ago, I graduated from a state college and picked up a job locally. I had $37,000 in student debt. Over the last two years, I have interviewed at businesses in big cities—New York, Philadelphia, Boston and Washington, DC. Before each interview, I visited college acquaintances and checked on living costs (especially apartments). Landlords wanted a few months’ rent in advance or a very large security deposit. One place offered me a job but would not pay moving expenses. Friends said ask your parents for the rental advance and moving expenses. They simply do not have it. I do not pay them rent but do pay for some of the food and the utilities. Now that I am paying back the loans again (after the Covid hiatus), I have little money left. My job is not bad, but it is dead end as is the town where I am now living.”


He also struck me with one comment re the student loans. Friends told him not to worry as the loans will all soon be forgiven. His response was as follows: “You did not know what politicians will do. Also, I signed the damned loan paperwork and understood the terms. I need to be responsible.”


Is my young friend an extreme example. Perhaps a bit. Yet, I remember being told 30 years ago by an ad agency CEO after I gave a presentation at a conference that he wound up only hiring upper middle-class kids. Their parents could subsidize them for a few years by picking up rents or part of them until their son or daughter was no longer earning an entry level salary in New York. 


So, until the real estate market cools off, many will not participate in “The American Dream” of home ownership. Others will be excluded, and some will choose a different lifestyle.


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


Monday, January 15, 2024

Real Estate, Demographics and The Media

 Way back in 1976, I often read William Rickenbacker’s financial commentary in William Buckley’s NATIONAL REVIEW. I agreed with much of what he wrote but was always impressed by the remarkable clarity of his writing style. In a book that he wrote at about the same time, he took on the issue of home ownership.

He wrote—“Rent your house or own it?…….You have to do some pretty sharp figuring to come out ahead, one way or the another." As a young, single renter at the time, I raised this issue with many people. To a person, they all said that he was crazy. Homeownership was the only way someone like you (read loser) could ever have any financial security or build up any wealth. 

Rickenbacker essentially stated that if you invested the $10,000 that you would use for a down payment (for a $40,000 house in ’76) and bought stocks with it, plus allocated $1500 to equities that you would have had to use for maintenance of your dwelling each year, the result would usually match or exceed the appreciation of the house. At the time, the Dow Jones Industrial Average (DJIA) was at 700 and today as I type is perched at 37,592. So, unless your luck was unusually bad, renting could have indeed worked out well especially when you add several decades of dividends to the mix. 

A few years later, I was married, planning a family and bought my first house. Yet, Rickenbacker’s math kept gnawing at me so I suppose that is why residential real estate has always been a relatively small portion of my net worth. 

For baby boomers such as I, purchasing your first home was a right of passage. Some 79.2% of baby boomers were home owners while today 66% of all adults are homeowners. 

Recently, market analyst Meredith Whitney who became famous for forecasting the 2008 real estate debacle, is again weighing in on real estate. She says many things that are hard to argue with given, you guessed it, demographics. Many US adults are marrying much later than in the past, if they marry at all. In fact, she states correctly, that the rate of household formation is the lowest in 160 years (during the Civil War close to 600 thousand young men died so they never formed their own households). Now, the low rate is due to a strong change in lifestyles. 

Another problem that she brings up is household affordability. Some lucky young people were able to obtain mortgages at 3-4% for several years. Now, with more realistic long term interest rates, many young adults are priced out of the market for the time being. Lifestyle wise, many seem to like their turnkey existence and 30 years of mowing the lawn has little appeal. The average age of current first time home buyers is 38 which has to be an all time high.

She raises a regional issue that I believe is absolutely spot on. Some states such as Utah, Texas and a few others will grow and housing permits and construction will continue to move ahead smartly. In some states such as New Jersey, parts of Pennsylvania, California and Illinois will likely lose population and housing prices may weaken.

She also warns of a “Silver Tsunami” in real estate. As more baby boomers (born 1946-1962) become senior citizens they will sell their homes and move to apartments, smaller houses or go to continuing care facilities. This could really hurt real estate values in the future.

While I agree with her demographics and how many millennials may never purchase a single family residence, the Silver Tsunami argument is a bit overstated to me. When many of we early baby boomers hit retirement age, a number of Wall Street forecasters and some demographers forecast that US stocks would plummet as we took our Required Minimum Distributions (RMD’s) from our 401k and 403B plans. It did not happen.

The same thing may hold true for real estate. Many of my fellow geezers want to stay in their homes as long as possible. Yes, some will sell and a number will have to sell. Yet, with 70 being the new 50, a large number will stay in place for longer than has been the case historically.


I am not criticizing Ms. Whitney. She has a fine track record and her opinions always merit serious consideration. The idea that real estate has no place to go but up in the future has been said for decades but today those people appear to be inducing selective amnesia regarding 2008.

Millennials face household affordability and student debt in many cases but also, a different vision of The American Dream relative to any previous generation in America. That will have repercussions in the real estate market of the future.


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


Saturday, December 30, 2023

Americans and Stock Ownership

 As I write, it is December 30, 2023 and financial markets are closed in the United States until January 2, 2024. Those of you who do not check your 401K, IRA, or mutual fund balances frequently are likely to be pleasantly surprised when you see your status when your year end statements arrive in the mail.

While many forecasters felt that we would have a recession in 2023 and that equities (stocks) might tank, neither happened. What happens in 2024 is not clear but I thought this holiday weekend would be a good time to look at just who has a stake in the stock market and how much do they own. The media do not cover this a great deal.

Stock ownership in the U.S. has increased in recent years. Records are a bit fuzzy when you go back a 100 years but it appears that, when the great crash of 1929 occurred, only approximately 10% of U.S. households owned any position in stocks at all. The people who suffered with a dramatic drop in their net worth or were wiped out in margin calls were a relatively small minority. After World War II ownership crept upward  Things really took off in the 1980’s with the introduction of Individual Retirement Accounts (IRA’s) and salary reduction plans (401k’s). Also, index funds with tiny fees and zero commission trading brought more people, especially the young, into the mix. 

Today, the Federal Reserve projects that approximately 61% of US households have some stake in the US stock market. Sounds great. Let’s look at how that ownership is arrayed.

The Top 1% own 53% of the equity value ($19.2 trillion).

The Top 10% owns 88.6% ($28.0 trillion)

The Bottom 50% own .6% ($21 billion)

Over the last 20 years, the big gains have gone to the top 1% and all other groups have declined. This triggers more wealth inequality and raises eyebrows and some left wing voices.

Go back to 1989 and what do we find:


The Top 1% owned 42.9% of the stock value. 

The Top 90-99% owned 39.3% so the Top 10% owned 82.2%

The  Top 50-90% group owned 17.1%.

The Bottom 50% of US shareholders had 1.2%.


Note that the relative ownership of the Bottom 50% has been cut in half from 1.2% of total to .6%

Today, the average household has $52,000 in stocks of which $15,000 is direct ownership of individual companies (non mutual funds). Some 15.2% of Americans own individual stocks. 

Over the years, from time to time, I have mentioned in MR that there will always be some inequality in a free market economy. Some people work harder, some are more intelligent, some are luckier and a few are born on third base. Charlie Munger, a man I admired very much, once said do not worry too much about American inequality as the next bear market will take the 1% down quite a bit. This is a rare case where I part company with the great man.

The 39% of households who have no skin in the game (equities) at present would gain a bit on the Top 1 and 10% in a down market but they have very little in most cases. And, the Top 10% will bounce back as markets always do.

Remember that the reason the 1% in particular have so much to invest is that they do not spend all of their large incomes. They put the savings to work and, over time, it grows. Many of the 39% who own no shares lead a hand to mouth existence and can save nothing or very little. So, the inequality will persist. 

So far, the inequality has not caused an enormous political backlash. At some point, there could be a change in tax policy in the U.S. to attempt to smooth things out a bit. Americans still love the idea of upward mobility or “rags to riches” so there may be less social engineering here than we have seen in other Western democracies. Also, the 1% have good lobbyists and contribute mightily to the political campaigns of candidates in both major parties.

I want to thank MR readers from all over the world who made this my most successful year ever with the blog. May all of us have a happy, healthy and prosperous 2024! I love hearing from you so to contact me you may reach me at doncolemedia@gmail.com or leave a message on the blog.

Thursday, December 14, 2023

The Future of New Product Development

 Over the last couple months, I have had conversations with people who are still active in advertising and several recently retired marketers. To a person, they all commented on how difficult it will be for small players to introduce new products into the marketplace in the years ahead. 


In general, I tend to agree although a careful and thorough reader of the business press often sees somewhat breathless stories of bootstrap entrepreneurs who, against all odds, have succeeded in our current world.


Let us take a minute and get back to basics. Here are a few questions every fledgling entrepreneur needs to ask about his/her new product or service:


1) Does it fill a niche? Serve a genuine need? Solve a problem for consumers? Many fine products are launched but too few want them or see a need for them.


2) How are you going to price it? This is the downfall of many newbies. They come in so high that it does not get enough trial or they come in so low that it cannot pay out for them.


3) Distribution—where it will be sold? Can you get it on the shelf or at Amazon? Does the distribution fit the likely target?


4) Market Research—have you been thorough and paid enough for it to have a viable go to market strategy?


5) Coming out of Market Research, have you defined your target market? Do you have the resources to reach them?


6) Supply chain issues?


7) Financial backing? How long can you lose money before the turnaround?


Yes, a relative handful of new products and services seem to upset all precedent, break all the rules, go viral and are significant successes. This can especially be true in fashion fads. Yet, most of the time, new products fail even with clever marketers with deep pockets calling the shots.


In today’s world, my acquaintances seem to feel that things will get tougher for the under-capitalized newcomers. 


The big and experienced guns have a treasure trove of customer data—known under the umbrella of “Big Data.” So many have a very good idea of whom they can appeal to with a new offering among their existing base and have a fairly tight profile on whom new prospects might be. They do not rely on “gut feel” as they can afford the best information available. 


I have always not been a fan of the hundred plus year refrain of “the rich get rich and the poor get poorer” in market economies but the way of the world in our digital age seems to favor the big and established firms more so than in the past. Legacy media is so fragmented that a newcomer will find response to it tepid and their effort ruinously expensive. It may take several years to develop solid database management and by then, the entrepreneur may likely be bankrupt. 


So, the opinion of my vest pocket group of panel members and largely to me as well is that the big will get bigger as new products are launched. Also, those who buck the odds and succeed will likely get swallowed up by one of the giants in the category. Jeff Bezos has said more than once that some small player will take him and Amazon down someday. Perhaps. More likely he will buy the clever newcomers out and invite the clever players to work under his big tent.


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