I hate to admit it but over 36 years ago I was a graduate student at Boston College. One day, I read in the Boston Globe (we read daily papers in those days) that a prominent middle European banker was speaking at the Harvard Business School later in the week. When the day arrived, I hopped on the train at BC and, after a transfer, arrived in Cambridge.
It was a cinch to sneak into the session and within seconds all of us in the audience were enthralled by this sophisticated Swiss national who spoke better English than any of us. He warned of inflation coming to the United States and suggested that all Americans put 10% of their money in gold (at that time, in early 1973, Americans could not own gold but gold shares and numismatic coins were legal). When some money managers in the crowd pressured him on the yellow metal recommendation he said "Put 10% of your money in gold and hope that it goes down." A few older people in the audience nodded but all of us kids looked at each other. Finally, a young fellow asked what we were all thinking. "Mr. X, why buy something and hope that it goes down in value."
A bemused smile came on the speaker's face. He explained how Europeans were used to turmoil in politics and markets and gold was the ultimate hedge against uncertainty. If you did not live through two world wars on your home turf, the nightmare German hyperflation of the Weimar Republic in the 1920's, and endless governments in France and especially Italy, you did not understand the need to hedge. He said if you put 10% in gold and the markets tanked, gold would soar and your entire portfolio would be protected. The smooth gentlemen was right on the money as the Dow Jones halved over the next few years and gold jumped from $70 to $870 an ounce before pulling back. I certainly learned a lesson that day that has stuck with me.
Whenever I speak with advertisers about using new media, they are interested but are afraid that some of the alternative media tests will not pay out. They do not want failures. Well, as we have said before in this space, most of these new wave tests will fail. But you still need to do them!!!
Some say that our economic world is entering a replay of the 1970's. Maybe it is and maybe it is not. But the concept of hedging that the urbane banker spoke of then is valid now. If you stick with conventional media exclusively, you will surely get burned as fragmentation and commercial avoidance continues to gallop. And, there is no question that some new media tests will be stunning failures. But, if you sit tight and do the same thing that you have always done, failure is assured.
While not life threatening as what Europe suffered under Napoleon, Hitler, World War I and other disasters, the current media climate is very unsettling and can easily be described as a revolution.
Consider new media as a hedge. If you use some now, test more. Have you given mobile a fair test yet? What have you done in social media? Hedging is a form of media portfolio insurance. Embrace it and learn how to navigate our rapidly shifting waters.
If you would like to contact Don Cole directly, you may reach him at firstname.lastname@example.org