Panic seems to have taken hold in our industry. Over the last two weeks, I have received a few dozen e-mails or calls from people whom I know. They ask me point blank--"Are we in a depression rather than a recession."
Before we answer, let's step back a moment and define terms and take a long look at U.S. economic history. In one sense, recession is a fairly new term. In the 19th century and up to the Great Depression of the 1930's, financial downturns were often referred to as Panics or Depressions. The two most famous were the Panic of 1837 which lasted five years and the Long Depression which was a horrendous downturn that spanned from 1873-1896. There were mini-depressions within the Long Depression with the most painful lasting continuously from 1873-1878. The Great Depression of the 1930's was really a downturn from late 1929-1933 and a later downward spike in 1937-1938. Stocks fell 89% from 1929-1933 and were halved again in the 1937-38 crunch. By Christmas, 1933, unemployment was 25%. Some claim only ramped up production in World War II pulled us out of it.
Since then, our downturns have been fewer and milder and are always referred to by the media as "recessions'. No one wants to use the term depression as it conjures up the 1930's which were horrendous. What is a recession? The classic definition is a decline in the Gross National Product that lasts for at least two consecutive quarters. Often, we have been out of recessions by the time we identify conclusively one having taken place. Today, we know for sure that we are in one and it has not bottomed out yet.
For those who think we are headed for another Great Depression or are already there, please keep in mind the following: We now have FDIC insurance on bank deposits and unemployment insurance, two key programs that were not available in the early years of the 1930's. They will put a brake on things. Also, we were on the gold standard in the early 1930's and government by law could not print money at will. Today, governments can, and they have few qualms about doing it to reinflate the economy. This will cause inflation, perhaps serious inflation a few years down the road, but people would likely be working still.
What is a depression? While opinions vary, many economists state it is a continuous decline in economic activity, or Gross National Product (GNP), that lasts for 36 months or more. By that standard, we would still need to be shrinking until January, 2011. Others peg it to an unemployment level of 11.0% or more. We are currently at 7.6% nationally and we did reach 10.8% in the recession of 1981-1982.
How does this relate to our world of media? It is hard to say. If the present trend continues for another 15-18 months, then we would likely be in a media depression. Newspapers may already be there but, as mentioned in a post last month, that medium has structural problems regardless of the state of the economy. Spot TV and radio are in a similar but less precarious position.
So, we all need to ride this out. Both Harry Truman and Ronald Reagan have been attributed the quotation: "A recession is when your neighbor is out of work. A depression is when you are out of work." As the media and agencies downsize in the months to come, it will be hard not to be discouraged or even frightened. And, the backdrop of rapid change in the media landscape itself takes an unsettling situation and makes it worse.
But, what you need to do is keep going. Take a deep breath when you hear the latest economic news or look at your 401k statement. This is a difficult time but definitely not the worst economic challenge that our country or advertising industry has seen.
I assure you, my friends, the future has not been cancelled.
If you would like to conact Don Cole directly, you can reach him at doncolemedia@gmail.com
Monday, February 23, 2009
Tuesday, February 17, 2009
Nothing Can Replace Television and It Almost Has!
Until I returned permanently to Baltimore six weeks ago, I have been traveling 200,000 miles per year annually for decades. I visited with local TV stations, cable interconnects, magazines, clients, client prospects, and all sorts of new media sales teams. Today, I still talk and e-mail with hundreds in the media and visit some face to face.
What I see and hear stuns me. The broadcast media, as a group, are in almost complete denial about what is going on in our world of media. When the relentless march of broadcast fragmentation is brought up, local station people respond with "have you seen our local news. It is extraordinary." I have and it is not.
Ask industry people about how DVR's are changing the effectiveness of TV as an advertising medium and the more mature (in age only) say something to the effect that they hope they will be retired before the effects are truly felt in the marketplace. What kind of answer is that?
We recognize that no one likes change. However, sitting back and pretending that it does not exist is not only a non-solution, it is a danger to the future of our industry.
Today, more than ever, this is a time for truth. From our perspective, here is the reality of where we are:
1) the Internet is not "the" solution. A surprising number of people who should know better feel that on line activity will simply take the place of TV over time. Yes, it will help and continue to grow as an advertising medium, but, there is nothing out there that will ever replace the dynamic mass selling medium that television has been. (we will discuss streaming video in an upcoming post)
2) Today's consumers are now in control and they are not going back to being passive viewers again. Life "on-demand' appeals to people. DVR's, blogs, You tube, Hulu.com, The Slingbox, streaming video, new cable platforms, and many other possibilities have permanently upset the TV landscape. Watch how a young adult uses media--are you positioning your campaigns to reach young people well or at all for that matter?
3) It will be harder and much more expensive to bring out new brands and products. Time tested tactics such as "roadblocks" or vertical strikes in primetime are now virtually impossible. Buy 80 channels deep and you still cannot replicate the reach a conventional TV buy provided not that many years ago. And what of the cost?
4) Because of #3, the entrenched players are in a very good position over the next 10 years. Watch for lots of line extensions
coming from big players in package goods and many other disciplines. Nestle, Coca-Cola, Pepsi, Heinz, and Kellogg along with the major soap companies will be unusually well positioned both domestically and abroad.
5) As mentioned, way too many (but not all) local broadcasters are in denial. To say that they are re-arranging the deck chairs on the Titantic gives them too much credit. Winning the night with a three rating is good in that a win is a win. But it is still a three rating. What are the other 97% of the DMA doing?
There is also a terrible danger with the presence of legacy mentalities out there. People sit in meetings and nod vigorously when I say that TV is losing its luster as a sales medium. But, moments later they say something to the effect that the solution to TV's slow death is simply adding more weight. Add more weight? They will still miss the people that they are missing now! All additional weight will do is add significant frequency to the same folks they reach now who are heavy TV viewers and not always the most desirable prospects.
Another huge problem is that most new media options will not work. In recent years and today, I try to give prospective clients a laundry list of media tests in new business presentations. The audience is more than polite; they are truly attentive. But, invariably, someone in the room will say "Tell us which ones will work and we will do those."
Well. We are recommending tests in these sessions. And, by definition, we do not know which will work. We expect and hope to be surprised and hit a 500 foot home run with some of them or, more realistically, one of them. The truth is that most will fail and fail quickly and badly.
There is a wonderful scene in both the stage and film versions of "1776." The fiery John Adams is watching fellow delegates to the Continental Congress pick apart and try to soften Thomas Jefferson's Declaration of Independence. Finally, in exasperation, he rises and says "Gentlemen, this is a revolution. We have to offend someone."
Many of us with a bit of grey hair have had the privilege of working in an industry that was exciting and fun but somewhat predictable. Those days are over but even those who see it clearly are afraid to acknowledge it publicly. We desperately need a bit of the spirit of John Adams if we are to become founding fathers of the next generation of media professionals.
This is arguably the most exciting time to work in advertising and media since 1953 when TV really hit its stride as an advertising medium. Change is unsettling but no one can hold back the ongoing tidal wave. Embrace the change, challenge, if necessary offend the status quo, or the revolution will soon make you irrelevant.
If you would like to contact Don Cole directly, e-mail him at doncolemedia@gmail.com
What I see and hear stuns me. The broadcast media, as a group, are in almost complete denial about what is going on in our world of media. When the relentless march of broadcast fragmentation is brought up, local station people respond with "have you seen our local news. It is extraordinary." I have and it is not.
Ask industry people about how DVR's are changing the effectiveness of TV as an advertising medium and the more mature (in age only) say something to the effect that they hope they will be retired before the effects are truly felt in the marketplace. What kind of answer is that?
We recognize that no one likes change. However, sitting back and pretending that it does not exist is not only a non-solution, it is a danger to the future of our industry.
Today, more than ever, this is a time for truth. From our perspective, here is the reality of where we are:
1) the Internet is not "the" solution. A surprising number of people who should know better feel that on line activity will simply take the place of TV over time. Yes, it will help and continue to grow as an advertising medium, but, there is nothing out there that will ever replace the dynamic mass selling medium that television has been. (we will discuss streaming video in an upcoming post)
2) Today's consumers are now in control and they are not going back to being passive viewers again. Life "on-demand' appeals to people. DVR's, blogs, You tube, Hulu.com, The Slingbox, streaming video, new cable platforms, and many other possibilities have permanently upset the TV landscape. Watch how a young adult uses media--are you positioning your campaigns to reach young people well or at all for that matter?
3) It will be harder and much more expensive to bring out new brands and products. Time tested tactics such as "roadblocks" or vertical strikes in primetime are now virtually impossible. Buy 80 channels deep and you still cannot replicate the reach a conventional TV buy provided not that many years ago. And what of the cost?
4) Because of #3, the entrenched players are in a very good position over the next 10 years. Watch for lots of line extensions
coming from big players in package goods and many other disciplines. Nestle, Coca-Cola, Pepsi, Heinz, and Kellogg along with the major soap companies will be unusually well positioned both domestically and abroad.
5) As mentioned, way too many (but not all) local broadcasters are in denial. To say that they are re-arranging the deck chairs on the Titantic gives them too much credit. Winning the night with a three rating is good in that a win is a win. But it is still a three rating. What are the other 97% of the DMA doing?
There is also a terrible danger with the presence of legacy mentalities out there. People sit in meetings and nod vigorously when I say that TV is losing its luster as a sales medium. But, moments later they say something to the effect that the solution to TV's slow death is simply adding more weight. Add more weight? They will still miss the people that they are missing now! All additional weight will do is add significant frequency to the same folks they reach now who are heavy TV viewers and not always the most desirable prospects.
Another huge problem is that most new media options will not work. In recent years and today, I try to give prospective clients a laundry list of media tests in new business presentations. The audience is more than polite; they are truly attentive. But, invariably, someone in the room will say "Tell us which ones will work and we will do those."
Well. We are recommending tests in these sessions. And, by definition, we do not know which will work. We expect and hope to be surprised and hit a 500 foot home run with some of them or, more realistically, one of them. The truth is that most will fail and fail quickly and badly.
There is a wonderful scene in both the stage and film versions of "1776." The fiery John Adams is watching fellow delegates to the Continental Congress pick apart and try to soften Thomas Jefferson's Declaration of Independence. Finally, in exasperation, he rises and says "Gentlemen, this is a revolution. We have to offend someone."
Many of us with a bit of grey hair have had the privilege of working in an industry that was exciting and fun but somewhat predictable. Those days are over but even those who see it clearly are afraid to acknowledge it publicly. We desperately need a bit of the spirit of John Adams if we are to become founding fathers of the next generation of media professionals.
This is arguably the most exciting time to work in advertising and media since 1953 when TV really hit its stride as an advertising medium. Change is unsettling but no one can hold back the ongoing tidal wave. Embrace the change, challenge, if necessary offend the status quo, or the revolution will soon make you irrelevant.
If you would like to contact Don Cole directly, e-mail him at doncolemedia@gmail.com
Sunday, February 15, 2009
Outdoor--The Last Mass Medium
Every two years, legendary investor Warren Buffett and his Vice Chairman at Berkshire Hathaway, Charlie Munger, invite a select group of financiers and business executives to a retreat to discuss the economy and value investing. At every meeting over the last couple of decades he also has an exercise that he does with all participants. A recent book on Buffett describes it as follows: "Buffett posed the Desert Island Challenge. If you were stranded on a desert island for ten years, he asked, in which stock would you invest in."
"The trick was to find a company with the strongest franchise, one least subject to the corroding forces of competition and time--Munger's idea of a great business." (Quotes from page 331 of "The Snowball--Warren Buffett and the Business of Life" by Alice Schroeder, Bantam Dell, 2008. Highly recommended!)
Taking a hint from the great Buffett, I went to my panel across the nation and asked the Don Cole version of the Desert Island Challenge. If you were planning a national media campaign for a well heeled advertiser, what medium do you think would be least effected by all the changes going on in the media envirionment in the next 10 years?
( A quick aside about my panel. They are a group of approximately 20 professionals whom I value and trust. Many are sales people across different media, a few at agencies and buying services and a couple of highly seasoned media researchers. There is signficant geographic dispersion to the panel as well. Every month or so, I throw out a question as I am preparing a post. All replies are treated with strict confidence and NO ONE will ever have his/her name mentioned.)
Response to the Desert Island Challenge was excellent. What was particularly gratifying is that the panel members did not gravitate to the medium that they are selling or where they place most of their dollars in the case of agency/buying service players.
There was a brief but intriquing response that listed college sports as a stable player over the next decade. The reasons were not media driven but more sociological in nature as the panelist wrote of its role in many US households.
But the dominant response and the one I also chose was Outdoor. Think about it for a moment. It has been very stable for generations and only now is getting interesting with the emergence of digital boards in many locations. One panelist who is even greener than I environmentally said "I would love to see the outdoor space shared with something useful, like attaching solar panels or wind turbines to the boards." An excellent idea to blunt criticism if localities decide that outdoor is environmentally insensitive.
To me, from a media perspective, Outdoor should change the least for one simple reason--it is the last mass medium. With fragmentation effecting everything else, Outdoor is the classic "old man river" medium in that it just keeps rolling along!
Am I saying that outdoor should become the dominant player in most media plans? Of course not. It will still likely be a support medium in many instances. But it will be able to deliver an audience that is larger and broader based than anything else as the years roll by. If you have a simple message, it should probably play a larger role going forward in many plans than it does today.
About two years ago, a GSM at a large market TV station invited me to give my media forecast presentation that looks five years ahead to his sales staff and other station personnel. He was fearless as my comments about spot TV were very blunt and he was not the least bit defensive. Afterwards, his two best salespeople came up to me, thanked me, and asked if they should look for a job selling outdoor. Half seriously, I said that they might want to consider it. Today, I would say definitely.
If you would like to connect Don Cole directly, e-mail him at doncolemedia@gmail.com
"The trick was to find a company with the strongest franchise, one least subject to the corroding forces of competition and time--Munger's idea of a great business." (Quotes from page 331 of "The Snowball--Warren Buffett and the Business of Life" by Alice Schroeder, Bantam Dell, 2008. Highly recommended!)
Taking a hint from the great Buffett, I went to my panel across the nation and asked the Don Cole version of the Desert Island Challenge. If you were planning a national media campaign for a well heeled advertiser, what medium do you think would be least effected by all the changes going on in the media envirionment in the next 10 years?
( A quick aside about my panel. They are a group of approximately 20 professionals whom I value and trust. Many are sales people across different media, a few at agencies and buying services and a couple of highly seasoned media researchers. There is signficant geographic dispersion to the panel as well. Every month or so, I throw out a question as I am preparing a post. All replies are treated with strict confidence and NO ONE will ever have his/her name mentioned.)
Response to the Desert Island Challenge was excellent. What was particularly gratifying is that the panel members did not gravitate to the medium that they are selling or where they place most of their dollars in the case of agency/buying service players.
There was a brief but intriquing response that listed college sports as a stable player over the next decade. The reasons were not media driven but more sociological in nature as the panelist wrote of its role in many US households.
But the dominant response and the one I also chose was Outdoor. Think about it for a moment. It has been very stable for generations and only now is getting interesting with the emergence of digital boards in many locations. One panelist who is even greener than I environmentally said "I would love to see the outdoor space shared with something useful, like attaching solar panels or wind turbines to the boards." An excellent idea to blunt criticism if localities decide that outdoor is environmentally insensitive.
To me, from a media perspective, Outdoor should change the least for one simple reason--it is the last mass medium. With fragmentation effecting everything else, Outdoor is the classic "old man river" medium in that it just keeps rolling along!
Am I saying that outdoor should become the dominant player in most media plans? Of course not. It will still likely be a support medium in many instances. But it will be able to deliver an audience that is larger and broader based than anything else as the years roll by. If you have a simple message, it should probably play a larger role going forward in many plans than it does today.
About two years ago, a GSM at a large market TV station invited me to give my media forecast presentation that looks five years ahead to his sales staff and other station personnel. He was fearless as my comments about spot TV were very blunt and he was not the least bit defensive. Afterwards, his two best salespeople came up to me, thanked me, and asked if they should look for a job selling outdoor. Half seriously, I said that they might want to consider it. Today, I would say definitely.
If you would like to connect Don Cole directly, e-mail him at doncolemedia@gmail.com
Monday, February 2, 2009
Local TV News--Use Carefully
For my entire career local TV news has been a mainstay of spot TV buys that my team has made. In recent years, I encouraged staffers to cut back in its use in media plans for most products. Its future seems a bit questionable to me as a broad based advertising vehicle and I would like to discuss it in depth in this post.
Local news for decades was a great source of pride for television stations. Competition was fierce and great care was taken to put together anchor teams and sports and weather talent that could appeal to a large cross section of the home DMA. They wanted to appear as good corporate citizens, responsible journalists and fulfill then FCC requirements about public affairs and community involvement. And, it was where much of the station's profits came from as well.
Two major things happened which hurt local news--first cable and then the Internet.
As cable got some traction, young men in particular and sports fans of all stripes realized that ESPN Sportcenter gave them all they wanted and more at 11pm (EST). If there was a big local game they could switch back to a local affiliate at 20 past the hour and catch hometown coverage as well. The Weather Channel did its bit by providing local "at the 8's" which allowed people to get an accurate weather forecast almost at will.
The at-will feature came with Internet growth. Sports, particularly minor sports, were given thorough coverage 24/7. You never had to wait a moment for results. ESPN shined here with all kinds of chat rooms and special features and, of course, streaming video in recent times. Weather was available from several excellent sources online.
Another issue that is hard to quantify is the content of the news. People got sick of the drumbeat of murders, fires, child abuctions, and overall sensationalism of the local product. Also, did you need four stations providing the news often simultaneously? There is only so much going in Podunk and so much beautiful weather in San Diego.
So who is the core of the local news audience? Early news is usually a 50+ vehicle skewing female and, if you do special tabulations via Nielsen, you will find that it is, in many DMA's, downscale, ethnic, and old. After all, if you are watching news at 5 or 5:30 pm the odds are not great that you have a fast track career. You should still be in the office then or perhaps, on Friday night, starting your commute.
Why does early news show up as 15% of some broadcast buys. It appears that many planners and broadcast buyers are lazy. Nielsen says it still may deliver a 2 rating against Adults 18-49 so it helps bring buys in . During a trip to the midwest last year, I sampled early news (5pm) in my hotel room prior to dinner with a station sales manager. I noticed spots for both Jaquar and Mercedes-Benz. My initial response was "what the hell is going on?" Early news cannot be a good vehicle for either brand in virtually any DMA. It appeared a buyer got very lazy or was totally inept and did not think beyond age and gender and bought the news even though 98% of the audience watching at that hour could not possibly afford either advertised vehicle.
It amazes me that local cable sales have not picked up on this issue a lot more. If you are selling detergent, toothpaste (but more denture adhesive!), or certain foods or health products, then early news is fine and often efficient. But cable has a fistful of channels that surely can provide a better demographic for many products and services than you see in early news in almost any market.
Late news was a stalking horse for Prime years ago both in audience size and demography. Not so any longer! And the Local People Meter (LPM) data have driven that point home even more strongly with long time late news goliaths suddenly slain when a new and improved measurement technique came to down. While more appealing than early news, it is simply not what it used to be as a media vehicle.
My point here is that all TV is suffering and is less effective than it once was due to rating distintegration on over the air channels, digital growth, and, of course, DVR growth. But leaving a heavy news component in many buys smacks of the late 1970's not the first decade of the 21st century. When it comes to news, CAVEAT EMPTOR!
To contact Don Cole directly, e-mail him at doncolemedia@gmail.com
Local news for decades was a great source of pride for television stations. Competition was fierce and great care was taken to put together anchor teams and sports and weather talent that could appeal to a large cross section of the home DMA. They wanted to appear as good corporate citizens, responsible journalists and fulfill then FCC requirements about public affairs and community involvement. And, it was where much of the station's profits came from as well.
Two major things happened which hurt local news--first cable and then the Internet.
As cable got some traction, young men in particular and sports fans of all stripes realized that ESPN Sportcenter gave them all they wanted and more at 11pm (EST). If there was a big local game they could switch back to a local affiliate at 20 past the hour and catch hometown coverage as well. The Weather Channel did its bit by providing local "at the 8's" which allowed people to get an accurate weather forecast almost at will.
The at-will feature came with Internet growth. Sports, particularly minor sports, were given thorough coverage 24/7. You never had to wait a moment for results. ESPN shined here with all kinds of chat rooms and special features and, of course, streaming video in recent times. Weather was available from several excellent sources online.
Another issue that is hard to quantify is the content of the news. People got sick of the drumbeat of murders, fires, child abuctions, and overall sensationalism of the local product. Also, did you need four stations providing the news often simultaneously? There is only so much going in Podunk and so much beautiful weather in San Diego.
So who is the core of the local news audience? Early news is usually a 50+ vehicle skewing female and, if you do special tabulations via Nielsen, you will find that it is, in many DMA's, downscale, ethnic, and old. After all, if you are watching news at 5 or 5:30 pm the odds are not great that you have a fast track career. You should still be in the office then or perhaps, on Friday night, starting your commute.
Why does early news show up as 15% of some broadcast buys. It appears that many planners and broadcast buyers are lazy. Nielsen says it still may deliver a 2 rating against Adults 18-49 so it helps bring buys in . During a trip to the midwest last year, I sampled early news (5pm) in my hotel room prior to dinner with a station sales manager. I noticed spots for both Jaquar and Mercedes-Benz. My initial response was "what the hell is going on?" Early news cannot be a good vehicle for either brand in virtually any DMA. It appeared a buyer got very lazy or was totally inept and did not think beyond age and gender and bought the news even though 98% of the audience watching at that hour could not possibly afford either advertised vehicle.
It amazes me that local cable sales have not picked up on this issue a lot more. If you are selling detergent, toothpaste (but more denture adhesive!), or certain foods or health products, then early news is fine and often efficient. But cable has a fistful of channels that surely can provide a better demographic for many products and services than you see in early news in almost any market.
Late news was a stalking horse for Prime years ago both in audience size and demography. Not so any longer! And the Local People Meter (LPM) data have driven that point home even more strongly with long time late news goliaths suddenly slain when a new and improved measurement technique came to down. While more appealing than early news, it is simply not what it used to be as a media vehicle.
My point here is that all TV is suffering and is less effective than it once was due to rating distintegration on over the air channels, digital growth, and, of course, DVR growth. But leaving a heavy news component in many buys smacks of the late 1970's not the first decade of the 21st century. When it comes to news, CAVEAT EMPTOR!
To contact Don Cole directly, e-mail him at doncolemedia@gmail.com
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