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Tuesday, December 21, 2010

Go East, Young People!

In 1841, a minister named J.B.L. Soule allegedly drafted an editorial in the Terre Haute Express that included the term “Go West, Young Man and Grow Up with The Country”. Urban legend has it that 14 years later, Horace Greeley of The New York Tribune stole that line which served as a rallying cry for the emergence of the American West.

As we approach 2011, perhaps the line for the genuinely ambitious and adventurous would be “Go East, Young People.” In about three years, the Asia Pacific region will be billing more in advertising than North America (U.S., Canada, and Mexico). And, looking forward given demographic and business trends, the Asia Pacific area will soon become the new global advertising hub by 2020.

What is the Asia Pacific region? Most demographers, financial analysts, and political theorists define it as the following 12 countries: China, Indonesia, Hong Kong, India, Australia, South Korea, Philippines, Thailand, Malaysia, New Zealand, Singapore and Taiwan. Some day soon Vietnam and New Guinea will be part of the list.

As we write, the annualized advertising expenditures are tracking at about $37.1 billion for 2010. Newspaper advertising has declined for the first time but TV, magazine, outdoor, internet and especially mobile are off the charts in terms of growth.

More telling is from a recent Nielsen release on consumer confidence. Looking at the whole world the leading 10 nations in terms of an upbeat outlook are from the Asia Pacific cadre with the only exceptions being Saudi Arabia and little Denmark. In tune with confidence, people in the Asia Pacific are future oriented. When asked what they would do with spare cash, Nielsen reports that 37% in the Asia Pacific countries would invest in stocks or mutual funds. The rest of the world lags way behind at 21% (perhaps they would pay down debt?).

Over the last year, media billings in some of the countries were very high compared to the previous 12 months. Nielsen tracks it at Indonesia +15%, Hong Kong +16%, India +15%, and Taiwan an eye-popping 19%. No nation in the group delivered less than +6% year to year.

The other thing about the region is that it is not monolithic in media usage. This is particularly true of internet activity. The Japanese and Koreans spend a lot of time blogging (can’t be all bad!), while, in Vietnam, mobile is the preferred method of internet access. The Australians and Chinese tend to use standard internet portals for their on line action.

These days many of my students and young people ask me what is the one thing that they can do to help their careers get off to a fast start. I answer with a straight face, “Leave the United States.” After they get over the shock, I tell them that I would like splendid young people like them to remain Americans forever. But, spending a few years overseas will pay very rich dividends over the next few decades in their careers. People who live overseas for a time come back with a perspective that their home bound colleagues lack. They may not be fluent in Mandarin but they can greet Chinese businessmen in their native tongue forever and understand better where their visitors are coming from in negotiations. If you live abroad for a while, you see America as it is and usually appreciate our freedoms more when you come home. Not all traveling businesspeople eventually get into the corner office. They do, however, have a certain self confidence and assurance that most of us do not have. They have seen more and experienced more. In a global economy, they can be invaluable to many firms and are simply more interesting people to be around.

I wish you and your families a very Merry Christmas.

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

Friday, December 17, 2010

Not Your Grandfather's Economy

This year, in the opening statement to his annual report to shareholders, J.P. Morgan Chase bank chief Jamie Dimon wrote “this is not your grandfather’s economy.” Whether you like big bank executives or not, Dimon’s statement was right on the money. I admit a grudging respect for him compared to all other money moguls.

The theme is an important one as we look at today’s economy and the mood of the people. For perhaps the first time in our long history, the majority of Americans do not look to the future with optimism. In a way when you look at the statistics, you can see why people are discouraged.

As we write:

1) Nearly one in five Americans is out of work or underemployed. Sure, the official unemployment rate is 9.8% but just as many work part time or in lesser jobs than they are capable of doing.
2) One in nine cannot make a minimum payment on their credit card balance
3) One in eight is in default or foreclosure on their home
4) One in eight is on food stamps
5) And, most damning of all, real average hourly wages now stand at 1974 levels!

No wonder people are discouraged. My favorite European commentator, the late Italian Luigi Barzini, once wrote of us—“America is alarmingly optimistic, compassionate and incredibly generous. It is a spiritual wind that drove Americans irresistibly ahead from the beginning.” Today, the American dream seems like a nightmare. Some 29 million households live on under $27,000 per year. Exactly one half of women 70 years old live only on Social Security payments.

To me, the American Dream never meant two cars in the garage and a college education for all. I was brought up to see it as each generation doing better than the previous one. For my children those hopes are still very much alive. Sadly, they are in a real minority. For over 100 years, America had greater upward mobility than any other nation of size. Now, there is far more upward mobility in Canada and all of Scandinavia than the U.S. Data is not available for Asia, but one would think, given their explosive economic growth, some nations there have surpassed us smartly.

Some say we need another leader. Many hark back to the sunny optimism of Ronald Reagan as the prescription for our current ills. He was a wonderful speaker, came off as a real leader, and made us feel good about being Americans. But, the problems now are more structural than in our heads.

Right after his inauguration, President Obama commented that we needed to maintain a vibrant middle class as they were “the class that made the twentieth century the American century.” It is hard to argue with that no matter what your politics are.

What is going on? To me, we have lost our economic mojo. We had it good, maybe too good for way too long. Those of us in advertising, publishing and broadcasting let the good times roll. As long as people were borrowing and spending, people advertised and we had one hell of a ride. In 2008, reality set in and we may not all feel the pain but we definitely see it.

Everyone has heard the boring statistics that in 1950, some 30% of non-farm employment was in manufacturing. By 2009, it had dropped to 10%. So, our industrial base has eroded. To me, the middle class erosion is totally tied in to this. The INDUSTRIAL middle class is shrinking. Some data from the labor department released recently made the point chillingly.

From 1999-2009, some 45,000 factories or plants have closed in the U.S. Think about that for a moment, please. Another way to look at it is 84 per week or a dozen a day! The average plant employed about 200 workers. This is horrible but think of the collateral damage of small businesses servicing the workers of such enterprises that were also sharply affected.

So, if we are going to get out of this mess, we need to rebuild our industrial base. Everyone cannot work in Silicon Valley or financial services. The president’s proposal of transferring industrial workers to green jobs is well intentioned but will take decades and not make a huge dent in unemployment.

Here is the root problem to me and it is not a pretty one to talk about. Imagine if you were an executive of a foreign firm or an entrepreneur from outside the U.S. considering locating a plant in the U.S. Would you really want to come here? The Federal Corporate Tax Rate is 35% which is higher than any other major country except Japan. We will hit newcomers with terrible regulation and a workforce not as skilled or eager as it once was. Also, we are the most litigious society on earth. When traveling abroad you learn that they get by with far fewer lawyers and lawsuits. In Paris, lawyers are rare, almost exotic. The Japanese always tell U.S. attorneys who land on their fair shores that they would like “less lawyering and more conscience” from them. Interestingly, Japan has both one twentieth of the lawyers and crime of America. Hmm.

We need to start making things again. And, using what we have. Arguably, we have the world’s biggest reserves of natural gas in the world. Yet, the government order hundreds of thousands of gasoline fired vehicles each year. And, billions leave our shores each week to pay for oil bolstering up the regimes of countries that despise the American way of life. We can get out of this mess if we made America attractive to capital again. Especially global capital, regardless of its passport.

Winston Churchill once said that “Americans can be counted on to do the right thing after they have exhausted all other possibilities.” Most of us see what is unfolding. Let us hope the New Year brings a desire to do something about it.

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

Sunday, December 12, 2010

Netflix, Cable plus ESPN

Netflix is a great American success story. Almost every day the trade press mentions their latest surge in subscriptions and what a threat that they are to other media entities. Netflix stock has quadrupled in the last year which is vastly better performance compared to all other media or tech companies. And, it is given much of the credit for taking down the Blockbuster franchise.

Lately, a lot of buzz has been made of the Netflix/Epix deal where Netflix will carry their movies and really juice up the Epix subscriber base. As a result, Netflix increasingly will be viewed as far stronger competitor to premium cable channels that are movie oriented. In a recent interview, Ted Sarankos, the chief content officer of Netflix, said “our product is more complimentary to cable than specifically competitive to any channel”. Perhaps he is being a bit disingenuous. Lots of us see Netflix as a modest but growing competitor to cable.

Anyone who has an internet enabled TV or is anywhere where they have access to an internet connection may watch films or many of their favorite shows on Netflix. Couple that with Hulu.com and a little help from You Tube and many young people are beginning to question the need for cable or satellite. Young adults strapped for funds question spending $100 a month for TV is a major expense. On line options have great appeal to some, particularly the upscale and well educated light viewers. The idea of 100,000 films plus many TV properties when you want and, on an unlimited basis, generate lots of appeal. Netflix also appeals to both the high tech and the no tech. Many people in their seventies cheerfully subscribe and get a new film every several days via their mailbox. The young exploit the streaming video options that Netflix offers.

Cable has an ace in the hole, however. Sports. If you like ESPN, NFL Channel, Fox Sports, or the Big Ten Network, there is no substitute for cable or satellite. But even there, a chink may appear in cable’s armor.

In the middle of researching this post, I sent out questions to many readers, friends, and some Media Realism panel members about Netflix. Something very interesting happened. Several readers under 30 wrote and told me that if ESPN would put all of their channels on streaming video, they would cancel cable and get by with Netflix, Hulu.com, You Tube and their ESPN subscription. When I wrote back, they basically said that approximately $100 a month was a lot to pay for cable and that they would be happy to shell out $15 to receive ESPN on a streaming subscription.

This is heady stuff. While it is clearly not going to happen, it makes you think about what an incredible job that ESPN has done in branding themselves. More than one young reader basically told me that, to them, ESPN WAS cable. The cable industry will always have challenges with churn. They have done a marvelous job in improving viewer options and providing a wide range of services to subscribers. But ESPN stands apart and alone from all other players. They will not likely offer a non-cable option to viewers as they could jeopardize their amazingly successful cable presence and their lucrative advertising revenues.

Leading cable players are aware of all that Netflix is doing. Several are launching Vutopia, which is a souped up movie service with far more choices than current offerings. Several other ideas are in the works. And, perhaps they will re-structure their tiers a bit as time goes on. But, Netflix is not the last challenge that they will face in the years to come. I think that cable is up to the challenge but things will get harder not easier for them over the intermediate term.

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

Friday, November 26, 2010

Bought and Paid For

Charlie Gasparino is a tough guy. He is easily the most pugnacious financial journalist that I have ever seen or read. Yet he is also the most unpretentious, dogged in pursuit of a story and ever loyal to his blue collar roots. As he has risen from the New York Post to Newsweek to the Wall Street Journal to CNBC and now Fox Business Network and the Huffington Post, he never seems to have been sucked in to the lifestyle of the major league success that he is. He has lost none of his outspokenness or sense of fair play.

Mr. Gasparino has a strong new book out entitled, “Bought and Paid For” (Sentinel, 2010). The subtitle is “the unholy alliance between Barrack Obama and Wall Street”. The book turns a lot of conventional wisdom completely upside down. Most people view Wall Street as full of Republicans who lobby hard for lower taxes and deregulation of the financial industry. At the same time, Democrats are the main street little guys who detest the financial leaders and all that they do. Slowly and convincingly, Gasparino builds the case that such assumptions are way off base.

The book starts off simply a listing of financial contributions by Wall Street executives to political campaigns since 2008. Surprise! They gave $20.1 million to Democrats and just under $14 million to Republicans.

The major thesis of the volume is that the Wall Street boys benefit from an increasingly larger government. When Bill Clinton set a goal for 70% home ownership, Wall Street obliged with new mortgage products that made it easier to bundle and re-package mortgages. They made a tidy sum in the process. And now, with the economy still moribund, and the middle class struggling just to hold steady, Wall Street is on a tear again. But, the average taxpayer will pay for Wall Street’s mortgage mistakes for decades. And, as we pile on more debt and still more debt, Wall Street gets a cut of that as well. So, Wall Street is not too adverse to a Democratic president despite the folklore.

There is also a fascinating portrait of Senator John McCain as presidential candidate McCain in 2008. He never was able to muster much support on Wall Street while the leading commercial bankers and investment bankers saw Obama as a moderate who would support them. McCain, a former POW who was tortured by the North Vietnamese “couldn’t stand being in the same room with guys who compared trading bonds for a living with warfare. As a man who had survived the brutality of war in the most literal sense, he found their talk unbearable.” Being from Arizona did not help either. Financial services were not an industry that he had to cater to in his House and Senate races over the years.

Now, Gasparino indicates that the tide may be turning. Wall Streeters are seeing that the president is not really oriented towards business at all. He stops just short of saying what some people suspect and it is this—no matter who gets elected Wall Street really runs things. Jim Carville, Bill Clinton’s enormously entertaining and engaging former aide, said back in the ‘90’s, that “when I grow up, I want to be the bond market” as they can stop anything. It appears that in the battle between Main Street and Wall Street, Wall Street has won and won easily.

I highly recommend “Bought and Paid For”. You may, like I, agree with parts of it. But Charlie Gasparino does not mince words and gives you a refreshing viewpoint that you are unlikely to see anywhere else. And, importantly, he, like most of us, is an ardent believer in free markets. He just wants to see the game played fairly.

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

Sunday, November 21, 2010

Aging (Media) Brands

It is quite clear that times change, our culture in is in constant flux, and above all consumer interests change. Often I discuss with people how their brand or more often media brand is no longer in tune with the times. Some agree, while others disagree with great vehemence. Here are some of the questions I ask of all players. It may come in handy for you some day.

1) Has you market changed? Do you face new or stronger competition? How well does your experience stand up to the people with whom you are competing?
2) Have new market solutions (like the internet) or customer preferences caused consumers to lose interest in your brand? Does your brand promise still hold water?
3) How is your brand identity? Do your logos or taglines seem out of step with cultural trends or current design looks?
4) What of your brand message? Is it in sync with current consumer tastes?

What I often suggest is that people do a brand audit. If one is unusually honest, this process can be done internally. Nine times out of ten, however, you need an outsider to smoke out the current strengths and weaknesses of your brand.

Is your USP (Unique Selling Proposition) or the distinguishing characteristics of your brand of increasing or lessening interest to the consuming public? Does your brand attract the people you aspire to reach or is it business as usual?

Sometimes entities such as cable channels can erase previously established value and start all over and actually grow stronger. To have such a transformation you need to have energy, total commitment and be very focused. Few do it well.

In a world where we all have to change or be left behind there are several caveats that sadly most still ignore. They would include:

1) Listen to your customers. Most don’t so you will have a tremendous leg up if you do.
2) Change and adapt as your customers need change. This is subtle and hard but pays incredibly rich dividends.
3) Many brands fail due to death by a thousand tiny cuts. By the time they realize that things are bad, they are too weak to change. Small mistakes add up. Protect your brand image jealously. Watch the details relentlessly.

If all this sounds like basic fundamentals, so be it. I was talking to a broadcaster the other day that was very enthusiastic about these ideas. He called 48 hours later to say that he was starting all over. The solution was that he was hiring a new weatherman!

Well. I wish him all the best but he seems to have missed the point. The real issue is whether he should still be doing news, period. His market is not large and he is in fourth place in a daypart that attracts an increasingly old and downscale audience. The addition of a new meteorologist does not strike me as the silver bullet that the station needs to turn things around.

Do you need a brand audit? Will your brand be better off in ten years? Will it still be around? As the Coast Guard’s motto says, you need to be “semper paratus” (always ready).

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

Sunday, November 14, 2010

Fado, Fatima, and Futbol

Antonio Oliveira Salazar is usually described as Portugal’s dictator from 1932-1968. Often considered to be a clone of his neighbor in Spain, Francisco Franco, Salazar was quite different. He was an economics professor at the ancient University of Coimbra. When asked in 1926 to help the military junta in sorting out the economy, Salazar stayed in Lisbon, the capital, and studied the situation. After a few weeks, he said he would only work for the government if given complete control of revenue and expenditures. The generals said no so Salazar calmly retreated to his economics chair at Coimbra.

By 1928, with the economy facing bankruptcy, the military gave Salazar the power that he wanted. Things turned around fast under his leadership and in 1932 he was named prime minister. During his entire term, the country lived as a military dictatorship with Professor Salazar the civil administrator. He was not your dictator from central casting. A lifelong bachelor, he was a quiet introvert and a serious scholar. The main similarity with Franco was that he shamefully encouraged the police to use informers and he censored the press.

Many observers said that Salazar kept on top with a cynical credo distracting the masses known as the three F’s: “Fado, Fatima, and Futbol”.
1) Fado is the oldest urban folk music in the world. It is often described as the soul music of Portugal. Salazar did not like it but it became a national craze and he went along with it.
2) Fatima is a religious shrine in central Portugal where in 1917 the Virgin Mary is said to have appeared to three peasant children. While widely followed in Portugal, Fatima is what is known in Catholicism as a private revelation. No one is required to believe it or take it seriously. Most popes since Pius XI have been devoted to Fatima but many priests dismiss it and I have never seen a poll among the Catholic populace on how many accept it. Salazar’s “regime” played it to the hilt, however, with some officials claiming that the Virgin Mary kept Portugal out of World War II.
3) Futbol—this is simply soccer. The Portuguese love the game beyond all bounds and the regime encouraged clubs and participation everywhere. The press was said to be encouraged to extend futbol coverage even though they needed little. At the same time, Salazar, a brilliant and serious scholar himself did nothing to improve education. By some measures, literacy rates fell during his era.

Long before 20th century Portugal, regimes had their own distractions. In ancient Rome, the poet Juvenal wrote that the way that emperors retained power and control of the people was to get them involved in self indulgence and trivialities. As the empire tottered toward collapse the people seemed to hope for two things—free bread and circuses. Things reached a low point when there were nearly 100 holidays per year.

Sometimes, lately, as we face a difficult future, I wonder if we in America are getting so involved with the trivial that we lose sight of what is going on. Sports are a great pastime but for many they are now bordering on obsession. It is not unusual for an adult American male to watch 8-12 hours of football (not futbol) on a fall weekend. People have a right to do what they want during their free time but it is almost as if many live vicariously through what others do in a stadium on a weekend afternoon. Their happiness is not with what they have personally accomplished. We in the media have only encouraged this by pouring larger and large amounts of advertising dollars into sports programming.

We had what many feel was an important election on Tuesday, November 2nd. Many Americans did not bother to vote. In many European countries they vote on Sunday so that more people can get to the polls. Can you imagine U.S. turnout if we held elections on November Sundays? I think many lazy boys would curl up on their La-Z-Boys, pop open still another beer, and vote for football.

Actually, the day after the election something happened that struck me as vastly more important than the mid-term voting results. The Federal Reserve introduced QE2 which injected $600 billion more dollars into the economy. QE stands for Quantitative Easing which is employed when all other avenues are exhausted in an economy (QE1 occurred during the financial crisis when over $1 trillion was created to prop up the economy). Usually the Fed lowers overnight interest rates to stimulate economic activity but it cannot do that any longer as the rates are nearly at zero. Financial writer David Dittman put it this way: “It does not involve the printing of money. The central bank (the Fed) will, with the simple stroke of a computer key, increase the credit in its own bank account. This newly formed money will buy whatever the Fed pleases—government bonds, equities, houses or corporate bonds from banks.”

Well, I agree that there is no printing press in the basement of the Federal Reserve building where a few fellows are stamping out $600 billion in new currency. But the effect is the same. And, immediately the dollar tanked giving us a backdoor devaluation of our currency.

I was upset about the QE2 event and spoke and e-mailed with a number of people about it. The next day a friend e-mailed me that, according to Google tabulations, the number of people who Googled QE2 or the Federal Reserve on November 3rd were only a small fraction of those who checked to see the availability of the McRib at their local McDonalds restaurants. Are we maybe getting just a bit wrapped up in the trivial?

Better hurry, folks. The McRib promotion will be gone in most McDonalds by December 5th. QE2? Not to worry. If it does not work as I think it won’t, Fed chairman Ben Bernanke is sure to give us QE3, QE4, and QE5.

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

Sunday, November 7, 2010

Women on the Rise

Across the western world, women are getting better educated, having more economic clout, and are far more prominent in top management in business and politics. Over the long term it is increasingly clear that the 21st century economy is a place where women will often be holding the cards.

This does not appear to be a short term trend to me. Demographically, things are in place in the United States for women to increasingly gain more economic power going forward. The first and most telling place to look is in our colleges and universities.

Figures vary slightly but it appears that women are approximately 58% of the enrollment in U.S. colleges and universities. And, women have significantly higher graduation rates than men. Some 60% of students in masters degree programs are women, and law schools and medical schools currently have an even split between the genders. MBA programs are 40% women today. In 2010, we had a first where there were 28,962 newly minted women PhD’s in America and 28,468 males with new doctoral degrees.

Why is this happening? Some sociologists claim that schools are more geared toward women these days and they value the self control and focus along with verbal skills that seem to come earlier to girls rather than boys. Maturity certainly plays a role as well. Virtually all educators agree that women seem better at time management than men of the same age. Culturally, there have been shifts as well. Today’s women are taking advantage of opportunities that earlier generations did not have. They work harder at an earlier age as many still believe that to succeed they have to be more focused and more productive than their male counterparts.

Men, on the other hand, seem kind of stuck. Jobs that used to attract high school educated men here in the states and provide lifetime employment are but a memory. Increasingly, boys are dropping out of high schools and colleges. Forty years ago, 34% of men went into industrial jobs; now it is 11% and dropping. Men are not adjusting to the knowledge based economy while women, on a relative basis, are thriving. Young men seem to be the last casualities of the end of the era of US manufacturing. There are declining male voting rates in the U.S. No one seems to be encouraging, motivating, or preparing men for their now inescapable future. As more boys fall to the wayside, what can be done?

Colleges are very sensitive about gender imbalance. Few administrators or admissions officers want to talk on the record. While the truly great schools will likely have gender parity as they can pick the best of the best, lesser schools have a real issue. If they move toward parity, are they really engaging in “affirmative action” toward men? Off the record, administrators sometimes confirm that they fear academic standards will be lowered if each new class is approximately 50% male.

Now, let us fast forward about 10 years. In 2010, 51% of people in the US with managerial titles are now women. That number has to be higher in 2020 given the emerging education gap between men and women.

On a social basis, the education gap will cause some discomfort as well. Traditionally, most of us date and eventually marry people who have approximately the same level of education or intellectual curiosity. The common statement from young adults generally is “I want to meet someone on my level.” If, in a few years, 10%+ more women will be vastly better educated than men of their age, how will many women find a soul mate? Today, many successful women say that it is often hard for them to find men who are not threatened by their intellect, impressive jobs, or lofty income. What happens when there are millions more of these women and the available men of the same age seem way behind?

Demographically, people are marrying later than they did 40 years ago and fewer are marrying period. It would seem that fewer professional women will marry as time goes on in the U.S. And, those who do may face some unique problems. Can fragile male egos deal with a wife who earns two or three times what they do? Right now, in two earner households, the wife usually stays home when a child gets sick. That will not happen going forward if the wife is the member of the couple with the high powered job. Big earners will have husbands who will work part time or not at all in some cases.

Interestingly, in countries such as Denmark and Norway where the state provides extensive day care as well as maternity and paternity leave, men seem to help out a lot more in the household. And, they are having larger families than countries like Italy where men do little household chores after work. So, something will have to give in lots of households in the U.S. It is very unlikely given our financial stress and center right political tendencies in the U.S. that America will move toward a Northern European style provider state. Men, then, will have to get more involved in the homely aspects of family life if things are to run smoothly.

Have you thought about these changes that are in motion and cannot be turned around for at least a generation? Can young men become academically competitive with women? Importantly, how this will affect the advertising business? Messaging will have to be different. Right now, a great deal of advertising is aimed at housewives even though relatively few still exist. If men start doing the laundry far more often than now, will Tide start advertising on ESPN aggressively and maybe during the day as millions more men may be at home? Financial advertising will shift as they will aim more at women. If she is earning the money, she will want a huge say in where it should be deployed. It is likely that auto advertising will likely change significantly as well.

Demographics are destiny so these changes are set in motion and will occur. Be ready for them and if you have a son, give him a little extra encouragement and preparation.

If you would like to read more about the topic, there are two recent sources that you might find interesting:

1) “The End of Men”, from Atlantic Magazine, July/August, 2010
2) Influence by Maddy Dychtwald, Voice Publishing, 2010


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

Tuesday, October 26, 2010

Mid-Sized Malaise--Part Four

This is the final post in a series about the current issues facing mid-sized Advertising Agencies.


Bucking the Trend

So far, we have focused on the problems that struggling mid-sized Agencies have been facing. In my sample, two executives at mid-sized firms told me that they were doing very well, thank you, but they were sensitive to the challenges that others were facing. I know both of these gentlemen quite well. One I knew as young man. He was extremely well organized, interested in every aspect of the business, and highly ethical. The other is a creative dynamo who works well across all media types and digital platforms. We correspond regularly.

Why are they and their firms doing so well? Both firms have not forgotten that excellent creative has to be the very soul of any advertising agency. High standards are maintained. My creative director friend does not segregate digital from the rest of his creative team. They work in squads with a conventional writer and art director paired with a digital player. This cuts turf issues and they can play off one another in development of the message. Also, he makes an important point to those who speak somewhat breathlessly about Facebook. “Most people do not want to be marketed to, especially in social media. We do Facebook and other digital work as part of a campaign for visibility. Games are developed with pretty good participation but no hard selling. The goal is for creative buzz, not to sell. We make this clear to clients upfront.” The leaky barrel due to marketing director turnover could affect them at some point but in the last year they have picked up significant new business.

My other upbeat contributor says his company was fortunate to have entered the digital arena years ago due to key client acquisition. They developed the necessary skills early on and, in my opinion, probably before some of the mega-shops. Social media is still a challenge as it is for everyone but they are working on it.

I also had wonderful sessions with two old friends who have downsized their companies in recent years and are thriving and happy. Their modesty was refreshing as well.

One ran a fairly good sized shop some years back but now has a very well thought of boutique in a large U.S. city. He says that “our market has been backsliding as an advertising center for years. Right now, we are viewed as a big player in town and we are nothing”. How many chiefs would say that? “Management has shifted frequently at some of our clients but so far we have been able to hang on to the business. Our approach is starkly different than others out there. We have no huge overhead. When we have a project, we gather in senior people that we trust. They only work when we have an assignment. There is “no twelve people to screw in a light bulb” nonsense that you see even at mid-sized shops. Every time you put a layer of people on a job it costs you money. We never do that.”

Another friend downsized before the 2008 crunch and is based in a small Northeast city. Now he works mostly on a project basis. His approach is similar to my old colleague a few thousand miles away. “I have people that I can go to for TV or radio production on a short fuse. We have worked together for years.” Also, he says that the turnover is great with some clients. “Sometimes, I feel as if I am doing a new business pitch for every assignment that we want.”

I told them both that their approach is analogous to what Clint Eastwood has done at Warner Brothers for decades. He has a “boutique” studio within Warners and for film after film he pulls in the same cameramen, lighting specialists, set designers, and often actors among other disciplines. The result is films shot both on time and under budget. It has been described as a family that is very functional. Both loved being compared to the great Eastwood but said the analogy is dead on. One added “I try to explain this concept to prospects. Sometimes I am halfway through it and if I see their eyes glaze, I know that my team is toast and the prospect wants to go the conventional route.” He also is a big believer that larger shops could do well if they approached certain smaller clients with this boutique approach. The issue would be whether the team in the mid-sized or large shop could turn on a dime as he does.

My friend in the Northeast says he never worries about getting assignments. “If you are smart, good and are willing to work very hard, you can always find work even in a tough environment such as this”.

These are two great people who never whine and can teach us all something.

Conclusions

Are mid-sized shops finished or will they come roaring back when the economy someday rebounds smartly? I would say neither. There are always going to be agencies such as the two mid-sized profiled above who keep turning out first class work and keep their teams fresh and motivated. Someone will break out and become the next Crispin Porter, I am certain. But the success stories will be less frequent.

Everyone admits that we are going through a revolution as we move to the digital world. Yet some exhibit remarkable selectivity about how it will affect their firm or their jobs. To me, what is going on at mid-sized shops in simply one more case of Creative Destruction. This is a concept popularized by Joseph Schumpeter of Harvard back in the 1940’s. (For a more detailed explanation see “Schumpeter Lives in 2009 Media, Media Realism, January 30, 2009.)

Creative Destruction in a nutshell states that a new idea enters the marketplace and makes existing capital relatively worthless. The new idea tends to be innovative and radically so. Radical innovators (read digital and media fragmentation) cause some real hardship to those involved with the existing status quo companies. Layoffs rise in the obsolete companies and many suffer in the short term. Others suffer long term as they are unable or unwilling to be retrained in the new emerging world.

The mid-sized players with no niche but promised service are not long for this world. Those who have embraced the change and developed skills consistent with the new reality may outlive us all. I wish them the very best.

Finally, I wish to thank the dozens of people who gave me countless hours of often precious time to put this series together. Your honesty and passion for your business is inspiring.

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

Sunday, October 24, 2010

Mid-Sized Malaise--Part Three

This is the third installment of a series that I am writing about the current state of mid-sized advertising agencies.


Marketing Research, Strategic Planning, and Account Planning

I lump these three disciplines together because in both good times and in bad this tends to be the Achilles heel of a mid-sized agency. Most do not have the resources to buy or conduct top quality research. And the people in those positions at mid-sized shops are usually not formally trained. Their knowledge of statistics is sketchy at best in many cases. Some want to look bigger so they take an account supervisor and dub him or her a strategic or account planner. It often ends badly.

Generally, the CEO, Account Service Chief, or the Creative Director drives the bus on strategy. I have met a number who have a very good intuitive feel for what will work or not. Some get to the point where they tell the “researcher” or “planner” to write the research report to back up the creative executions that they want to present. Don’t tell me it doesn’t go on—if you are honest and kept your eyes open, you have seen it too. Maybe you still do.

Often researchers or strategists at a mid-sized shop are strapped for cash. So, they have someone in media do reams of MRI or Simmons cross-tabulations. They built a massive power-point with it, highlighted by way too many bullet points on each page. Some people have a knack for building a logic flow out of it that sounds convincing (I used to be rather good at it myself).

A friend of mine has sold research services for 30 years. He says “agencies today want research that is quick and cheap. If it is very vital new business pitch, they pay just enough to get a few bullet points for the main presentation. A few very large shops do custom work but most of it comes from big companies”. Even the media giants do surprisingly little. The two exceptions are MTV and ESPN. He described ESPN as a gem that knows the profile of everyone using each of their burgeoning platforms and cross-usage of them as well. Perhaps that is why they keep growing and get a huge premium over the competition for all aspects of their sales inventory.

Account Planning is another area that is often an absurd fiction at mid-sized shops. In my long years in the game, I have met two authentic account planners (See Media Realism, 10/13/09 "Is It Really Account Planning" for a detailed discussion of account planning).

Putting people in jobs and dubbing then strategists or planners leads to some funny situations. Not long ago, I was at a meeting where the Sr.VP, Account Planning kept scrunching her face when I spoke of Brand Development Index (BDI) and Category Development Index (CDI). Finally, she blurted out “Don, what is this BDI stuff.” For once in my life I was speechless. The CEO put his palms up in resignation and told me to explain it. The client was not amused and collared me afterwards. It was a very uncomfortable conversation to put it mildly.

So, marketing research and strategic planning are areas where the mid-sized shops fall way short in most cases. They can use smoke and mirrors plus good instincts and common sense with small or mid-level advertisers. They are, however, naked in front of major corporations who have in house teams that would not consider hiring the strategic planner of the agency.

There are a few exceptions to this out there in the mid-sized world. And I mean FEW.

Media

This is where I spent much of my career so you might expect me to obey the 11th commandment and not speak ill of my media brethren. I actually will not attack them but there are some structural issues that put them at a real disadvantage in many cases.

The biggest thing that I notice from media people these days across the U.S. is very simple—fear. Here are some comments from sales executives widely scattered across the country that I have known for years and respect deeply:

“The operative term is scared to death. I can see the fear in their eyes at many mid-sized shops. The smallest are more often morphing into specialty/niche outfits as they are more successful focusing on the best burger in town, instead of banging out an entire menu…..It’s the mid-sizers who are not big enough to truly be all things to all people, and that grew too large, too fast that are indeed suffering. They swallowed hard and down-sized themselves over the last two years (like everyone else) but are now trying to super-serve clients with a skeleton staff. One by one the shingles are disappearing from above the office doors and good people are calling weekly asking “do you know anybody who needs an experienced media planner.””

When I asked a sales director in a major market if people are frightened, the response was “my observation is that many in media in mid-sized agencies are still fearful of the potential SECOND WAVE which could result in yet another downsizing at the agency level. People are guarded, cautious; playing everything close to the vest. Many in media have experienced the unthinkable—the larger than life Media Maven (boss) let go due to downsizing….the slash and burn of some entire media departments which has put many experienced media people on the street. No one wants to go out of his/her way and take chances on anything out of the norm. It is all SO MUCH about the post—now more than ever. I also get the feeling that no one wants to ask the boss to hire on new workers—even if there has been a big pick up with new account work. The attitude out there is that I have got to do more to keep my job.

A charismatic media research salesman whom I often find hilarious in private soberly weighs in: “What I am hearing at mid-sized shops is that larger agencies have cut fees or commissions and it is harder for medium sized shops to hold accounts or even stay in business. So to be competitive for less revenue means less money to pay top quality employees, less perks, less of everything. So the medium sized shops which once had a warmer feel to them and were attractive to the seasoned executive are now becoming places to avoid because the pay and resources are becoming too scarce….I don’t believe that the medium sized shop will evaporate all together but you will see consolidation and unfortunately some will go away. It is just a fact of contracting markets.”

Another media researcher sales maven says that the media teams are nervous but keep plugging along. They are overworked and not paid enough but seem happy to have jobs. He did add grimly that “there are no stars left in media departments. These people do not teach me anything I don’t know.”

A very thoughtful cable executive tells me:" I believe that the media buying community at all levels is scared to death for their jobs. A friend who is a buyer started looking for a job when she did not post on one of 13 markets last quarter. This is symptomatic of being overworked; she needs to understand that she is a much needed commodity….NO ONE IS HAPPY OR OPTIMISTIC RIGHT NOW".

From the world of sports, a seasoned pro says that the overwork is affecting the back office. He told me of a game being cancelled by rain and he had to move 18 advertisers. Immediately his team sent out an e-mail telling people that their schedule had been re-allocated. Two got back to him and one took a credit as the new spots were out of flight. He asked “is anybody checking anything but matching dollars. Twenty years ago, I would have had a dozen calls arguing about the make goods. Admittedly, the ratings are smaller today, but I think good people may be cutting corners”. This man has the ethics of a St. Thomas More but what if he did not?

The big problem facing the mid-level media teams over the next year or two will be the integration of digital and traditional media. Some make them separate mini-departments which can cause a knife fight for budget dollars. It is better for one Solomon to digest both recommendations, allocate the funds, and let each group optimize. Working together as a team is even better! Many, as we have mentioned in an earlier post in this series, fake digital. They buy ad networks and claim to have worked out an integrated on line strategy that optimizes delivery. “The publishers hate ad networks as it diminishes their product”, says a leading media researcher but if you have a digital team of one 27 year old, you play the game.

There are still a few people out there who do as little new media as possible. Most admit that they are having a hard time with social media especially for brands with mature customers. This is okay as all thinking people are struggling with it these days. You know that you need it but in what proportion of total dollars? With each passing year digital will earn a larger place in media plans. To those dinosaurs that resist it, there is no way that they can survive the crunch.

Some media people are not being trained well at all due to overwork of the senior team. Young planners are not learning about marketing like they used to. Some are scrappy negotiators by instinct but do not know the mechanics of where the Nielsen/Arbitron and now digital research comes from. Media planning disciplines don’t come up much as no one has the time to instruct. The proportions of each medium in the overall mix is key issue that gets little attention these days. Youngsters appear to guess at it as they have never learned the benchmarks or quantitative guidelines for it. When the old people go, a lot will be lost.

This should be the most exciting time since 1953 to work in media? Why 1953? That was when over 50% of America had a TV and television became a truly viable national medium. Today, another revolution is going on and smart youngsters should be able to ride the wave into brilliant careers via digital. At mid-sized shops, the financial squeeze will make that difficult.

Finance

Several people harked back to the good old days of the 1980’s when interest rates where high and agencies made a bundle on the “float.” The client paid you and you deposited the money, and paid it out to the media later, pocketing a tidy sum of interest. Well, others disputed that saying that the mega-shops were real sharks with cash management but the mid-sized guys never really made a lot out of it or were that great at it. The question is getting moot today as many advertisers pay networks, stations, cable players and publications directly. Also, the clients are smarter. Why should they give their agency an interest free loan?

To be continued in about 48 hours.

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

Friday, October 22, 2010

Mid-Sized Malaise--Part Two

This is the second installment of a series that I am writing on Mid-Sized Advertising Agencies.

Staffing and Compensation

Here is an area that may get less press than other agency issues but, to me, appears to be the biggest source of frustration.

A longtime agency CEO put it bluntly—“including me we have four senior people left and about 45 kids. There are a few old clerks in accounting but almost everyone else is under 30. Those of us who are senior are really stretched. The kids are eager and some have great potential. But one of us graybeards has to be at virtually every meeting. We are tired and too old for this stuff.”

The idea of having a handful of old pros and a large roster of rookies percolates through many conversations with agency chiefs. Advertising has always been a young person’s game but now many shops do not have the next generation of top managers waiting in the wings as they cannot afford to keep them on staff. A few admitted that there is not going to be a next generation unless things change and quickly.

With money tight, raises are getting really scarce except for those at the very bottom of the pyramid. One chief said “Raises? Forget about them. I haven’t had one in years and all senior people have been frozen for several years as well. This may sound cynical but where can they go? We are virtually the only game in town and our competition, if you want to call them that, is in worse shape than we are. I would like to give increases but we are barely breaking even these days”. A few others told me that they and their partners have all taken pay cuts but kept the employees salaries flat.

The feeling of being trapped is very real. A copywriter in his 30’s told me “my boss is a liar. He tells new employees, interviewees, and school groups that he has never cut anyone’s salary. That is not the whole story. Four years ago I had a $60,000 salary and a $15,000 bonus. He told me that I had a bright future. So, with pressure from my wife and in-laws, I bought a nice house. The next year my bonus was $5,000 and I have not had one since. There is no other place in town that I can work and get my current salary. I can’t move as I am under water by $100-120K on my mortgage. So he has me right where he wants me. I know he is not totally to blame but I feel as if I am in prison”.

The feeling of indentured servitude is surprisingly widespread. A radio rep with whom I am quite friendly may be the dean of all salespeople nationally. He told that when he started over 50 years ago in newspaper sales, there were dozens of agencies in his fairly large city with meaningful billing. Today, he says, there are only five left standing and only one media director who knows what she is doing. Others echoed similar comments particularly those from the Midwest. One cable executive called it “The Incredible Shrinking Agency Base.”

Hiring youngsters makes sense from another perspective. “We don’t pay re-location expenses anymore for anyone. Maybe I would for someone I hand picked to replace me”, said a CEO. “Taking on young kids is great. They fill their car full of stuff and maybe have a U-Haul attached. I pay for their gas. They get a small apartment and if they get a chance somewhere else, they leave. Or, if it doesn’t work out, they do not have to worry about a mortgage. Our local talent pool is pretty slim, but there is no shortage of people wanting that first break with us”. Many people echoed this sentiment.

Salaries are interesting. A few recruiters and CEO’s told me that some jobs are paying 65-70% of what they did several years ago. And, there is no shortage of applicants. The problem said one is that “you get a kid who is not ready for the job, someone with a family who is desperate but bitter about the low pay, or someone on the skids who cannot possibly work out.”

Another whom I have known for years told me that the quality of candidates is declining. “Too many young people have not fully embraced their discipline. They are bitter that they cannot move up the ladder and, along with their seniors, have adopted a hunker down mentality. They have lost any sense of vision that I saw in people years ago. If you want to staff an agency properly you need to get into peoples' hearts and heads. Today, many candidates know enough buzzwords to fool the H.R. person and sometimes the CEO. This is especially true in digital. Out of 100 people that I speak with, only 3-5 really know the nuances of new media”.

With several people I raised the issue that has bothered me for the last five years. Young people come for informational interviews or are my students at the two universities where I am an adjunct professor. They ask me about a future in advertising. It is a tricky issue. How do you answer an earnest young person honestly? They almost definitely cannot have the kind of career that many of us have had nor is it likely they will have anywhere near the fun that I and many of you have experienced. So, I have been guarded and say that starting in advertising will teach you a lot about sales, marketing, being able to handle pressure and to stand on your own two feet. But, I never talk of the long term.

I posed this issue during an interview with someone who I admire tremendously. He gave the best answer that I heard and an honest and practical one at that. “I would tell them to go to work for a mid-sized agency. If you are any good, they will get you in the mix fast and in front of the best clients they have. You will learn a great deal. After a few years, I would encourage them to go client side where things are really happening these days.”

A few people admitted that they could lose some great people if the economy bounces back and bigger shops will raid them and offer a great deal more money. But the consensus was “I don’t see that happening for several years.”

All of this is typical of America today. Teachers, police, fireman, civil servants, bankers, and scores of fields have seen wages stuck for the last few years. Advertising was always different. Talent and achievement were rewarded early and often. Not so any longer.

For those of us with a long term view, it is clear that the people in advertising have changed. During the Mad Men era, many of the best and brightest went in to the ad game. When I started in the early ‘70’s, management at many shops was full of Ivy Leaguers or those from the top NESCAC schools (Amherst, Williams, Colby, and Bowdoin). Copywriters were erudite and quietly working on novels on weekends. Advertising was very lucrative, sexy, fun, and considered important. Today, the cream of the crop goes into investment banking or law.

To be continued—look for the next installment in about 48 hours

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

Wednesday, October 20, 2010

Mid-Sized Malaise

The agency world is changing faster than ever before. Some people are adapting to it beautifully and are thriving. Many are not. This begins a series of posts that will cover current issues with mid-sized ad agencies. We define mid-sized roughly as 40-120 employees and independently owned. Some of what we say will apply to companies that are smaller and somewhat larger.

Over the last several weeks, I have interviewed 43 professionals. They included agency CEO’s, creative directors, writers/art directors and media directors. On the sales side, I spoke with cable, TV and radio salespeople as well as several media research sales executives who call on mid-sized and mega agencies. Finally, I talked to executive recruiters, consultants, former CEO’s, and a few clients. The cooperation rate was over 90% and people tended to be VERY candid. I covered my tracks quite well and I doubt if you can figure out who said what. Here are my findings:

Overview

In broad terms, there are three types of advertising agencies:

1) Mega-shops (giant holding companies)
2) Mid-sized agencies
3) Boutiques


Almost everyone agrees that the mega-shops and the boutiques will always be with us. The giants are beautifully positioned for the future. If you agree with me that there will be a massive relative wealth shift from the West to the East over the next decade, the holding companies are in great shape. Most already have beachheads throughout Asia, and a major study released two weeks ago projects that Asian advertising spending will surpass that of North America by 2014.

Boutiques will always bubble up. Disgruntled writers and artists will hang out a shingle and form a firm and some people with entrepreneurial zeal just have to be their own bosses. Many small players are specialty shops that are helping greatly as we move in to a digital age. Others can grind out work quickly. It may be a bit down and dirty at times but they are experienced pros who are dependable and capable of turning out very workmanlike creative on a moment’s notice. For many small advertisers and for special projects by larger ones, these firms are essential.

Agencies in the middle are in a very different place. These shops, largely regional in nature, had several things going for them for a long time. They did not have the resources of the giants but they could give more hands on service. Clients got a lot of attention from the mid-sized players. The CEO was not someone with whom you played golf once a year, shook hands with at an agency visit, or dined with every holiday season after a new contract was signed. He or she was someone who was actively involved in your business, guided strategy, and showed up for all big meetings. If you were not a large advertiser, he might actually serve as your de facto marketing chief.

Their creative was often fresh and fit your needs. A good media team at a mid-sized shop would take the time to craft a plan that took into account your unique needs and geographic coverage.

In recent years and especially since the financial crisis, things have gone south for scores of mid-sized shops. This post and a few to follow will delve into these issues in great detail.

Let us start by looking at the situation analysis from some existing and former mid-sized agency CEO’s. Here are some remarkably candid verbatim comments from several people whom I know and respect:

“Guys in the middle with no niche in our new world have no way to stand out. They can no longer afford to hire really good people. Over the years I have learned that strong people do not like to work on crap business. If you bring someone in really good, he/she will not stay as he sees that little progress can be made. The result is that the agency business is in for a very hard time for many years to come.”

“I built this agency from nothing. For over 30 years, it has been my baby. Fifteen years ago, I dreamed of selling out to Omnicom by now, collecting big dividends and dabbling a bit here and there. Today, I am working harder than ever just to keep even. I cannot sell the place to a major shop and my staffers cannot afford to buy it. And these days, they can never get a loan from a bank to buy me out. If I let them take over and give me a note, I know that I will never get my money back. This may sound arrogant but I remain the glue that holds this place together. If I get out, the place will likely break into a few boutiques and some out of town shops will grab my two remaining big accounts. It breaks my heart.”

“I can last maybe four more years. Each year, I cut my compensation sometimes by deep five figures. A few staffers get nominal raises but most have been frozen for the last several years. I feel a bit guilty because some are trapped here. There really is no other place in this city where they can work. Several are getting past the age where relocation is a good idea. We pitch less new business of any meaningful size as the cost of pitching is getting way too high for us. And, our existing business is not growing much. We had a nice bank that was sold a few years back and our auto business has bounced back a little but is still weak. I have never been more discouraged, but I am comfortable financially. None of my staff is.”

“For years, package goods were the lifeblood of mid-sized shops. Now, most are sold to big household products companies or food processors who take the business to a New York giant. My attitude is to believe that our salvation is in maintaining great relationships with clients. That can keep you going along with never stop learning new things” (I mentioned the average marketing director lasts approximately 19-22 months and he sadly nodded. One has to re-pitch a lot of existing business and you are always struggling to build a relationship with a new player). He added that there is growing tension between digital and conventional media people. Neither knows the other's discipline so plans are often badly integrated.

“We are totally faking our digital capability. A young enthusiastic kid in media comes in to meetings and says a few buzzwords and we have a halfway decent designer whom we call our digital creative director. It is nonsense. Our clients are not all that sophisticated so, for the moment, we get away with it. We are hundreds of miles away from an advertising hub so our people do not talk with anyone. I know we need to address this soon. But say “Facebook” in a meeting and everyone smiles and nods.”

A consultant and very astute observer says: “all the mid-sized agencies say the same thing—we are media agnostic, have insights into social platforms, our team has specific skills in digital, and we do not sell. We create a conversation with the consumer”.

He goes on to say: “there was a time when agency people were the key to consumer insight. That is not true today. Insight rests almost completely with the client. The people entering advertising today are not as good as those we saw years ago. They have little business training; there is little understanding of financial structure and even operating income.” He conjured a great quote often attributed to Keith Reinhard of Needham—“At one time the agency was the architect, now they are the carpenters.”

Another chief says “Everyone thinks that they are a great negotiator. So they squeeze us on fees. Some young kid is a newly minted marketing director. He is worried for his own hide (average tenure of 19-22 months) so he puts the account into review. If we are to truly look at a fully integrated plan blending conventional and digital we need more money and more people. But someone that we are competing against drops his pants and offers to do the work for $250,000 less than we are willing to take. They get the business and the young hotshot tells his boss he saved him a quarter of a million. A year later the kid is gone and so is the new agency. We told the truth and still are out of a nice account. It is so unfair. We have tried incentive based compensation which worked well once. With private firms, they can fudge numbers and say that you did not quite hit the agreed upon guidelines for a bonus. It is hard to prove and we have been burned a few times.”


To be continued. Look for the next installment in about 48 hours.

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

Sunday, October 3, 2010

Broke, USA--A Review and Some Comments

Today, I just finished a new book by Gary Rivlin. It is called "Broke, USA, From Pawnshops to Poverty, Inc.: How the Working Poor Became Big Business" (Harper Business, 2010). The book is an interesting and at times rather disturbing read.

Rivlin gives a stark description of how the underclass is provided with financial service. Most of us in advertising, media sales, or marketing lead comfortable lives. Certainly we would like to earn more but we do not live a life of constant strain bordering on desperation that the players in Rivlin’s narrative do. Many of us study and work with demographics from a computer printout. This book humanizes that data and brings it to life. A lot of his examples take place in towns such as Toledo, Ohio and much of Michigan which were in Rust Belt decline for years and are now in a depression.

Using the umbrella term “Poverty, Inc.” as a catch all term, Rivlin takes us through an array of products such as sub-prime mortgages with huge hidden fees that are hidden in the fine print of the loan agreement. There are instant tax rebates that hit the cash strapped and very impatient for 30% of their actual tax return check, and payday loans that have interest rates as high as several hundred percent. There is not much new here except for two things:

1) Major financial companies are getting in to the act of serving the financial needs of the underclass and their rates are not lower that what we used to refer to as loan sharks.
2) The business is booming as millions struggle to hang on to being members of the middle class. Many are not succeeding.

Now, please do not misunderstand me. I am a capitalist and will very likely die one. People who are credit risks should pay a higher interest rate than those with a pristine track record. And, government should not protect people from themselves. Interest rates as high as 500% on a payday loan are excessive, however. Will the new financial reform bill featuring the Consumer Financial Protection Bureau put an end to such predatory practices? A noted journalist said that financial institutions are dealing with it “like mosquitoes adapting to a new bug spray.” And the longer unemployment remains stubbornly high and real estate values continue to buckle or bump along at the bottom, the more people will have to use these non-traditional banks.

What does this mean to us as marketers? Most of us live miles away from those dreary strip malls with pawn shops, consumer loan offices, or specialists in pay day loans. But we do have to sell to consumers in places like Rhode Island, Ohio, Michigan, Florida, Illinois, Nevada, Arizona, and California that will be suffering for some time to come. Advertising on a TV/Radio station or cable system will not work as well in these states as in the past as each month more and more people fall in to the underclass to whom conventional avenues of credit are no longer available.

So set realistic expectations and choose spot markets to support very carefully. There are structural difficulties in some Nielsen DMA’s that will remain in place for the forseeable future.

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

Thursday, September 30, 2010

We Have the Best People

In recent weeks, I have been working on a major project regarding the future of advertising agencies with the primary emphasis on mid-sized shops. I will be interviewing a large number of people via e-mail, on the phone and as many as possible in person. My plan is to distill the findings of the full report into two or three Media Realism posts. The really granular data will be kept proprietary and no one who participates will be identified.

One thing is quite striking as I talk to people all over the country. Not a single agency principal denies that their shop and peer group of mid-sized agencies faces major challenges ahead. But many dismiss the structural problems that they need to address with a comment such as: “we are going to be okay no matter what happens because we have the best people”.

Now, I think that it is important for leaders to be proud of their teams. But many strike me as completely unrealistic. The other day someone told me that his digital media supervisor was the best in the U.S. Gently, I probed, “do you mean the best here in Louisville?” (the market was NOT Louisville) He said no, simply the best anywhere.

The young fellow was wildly enthusiastic about what he was doing but he basically worked alone. His CEO had never sent him to any media conferences or symposiums on digital issues. He read everything that he could get his hands on and he even told me that my blog was interesting but would be obsolete in a few years as traditional media declined. I had to agree with that and thought he had strong potential. But it seems obvious that others in major markets who work with more peers will pass him by unless his efforts are absolutely Herculean.

In the digital space in New York, Dallas, Chicago, and Los Angeles people often get together and share ideas, e-mails, and blogs. When they stumble across new venues or ways to work with them, they talk across agency lines. When they get together, these kids are on fire. The enthusiasm is akin to fans going to a Star Trek convention. Many may come off as geeks but they are totally engaged and in love with their jobs. My new friend in “Louisville” will have little of that if he stays put.

Others tell me that they are going to be okay because the senior team has been together for years and they all get along. That is very helpful for new business presentations where people can finish each other’s sentences, help a colleague who is having a bad day presenting, or just illustrating that there is real chemistry among people who genuinely like each other. And, the workplace has less tension if no one is abrasive. But, I have worked at places where people were very effective and created great advertising who did not like each other at all. Also, friction sometimes helps a group change and get stronger. Every now and then a new injection or two into the management gene pool can shake things up and usually it is for the better.

For decades, we have all heard the old cliché that an agency’s assets go up and down on the elevator each day. Just because it is a cliché does not mean that it is not true. And, great work is being done especially in creative in places such as Lincoln, Nebraska, Milwaukee, Salt Lake City, and Portland, Or. The climate is changing fast and becoming more challenging for the mid-sized players. Regional accounts are drying up and every week it seems that some national business that a mid-sized shop has and cherishes goes away as a major multi-national firm buys their client. Another growing problem is that agencies in the hinterlands do not pay as well as they used to and the best minds often go elsewhere when choosing a career.

There are remarkable talents out there in the land of mid-sized shops. But can these outstanding young men and women morph into renaissance players in our industry if they stay in a 50-100 person shop with little outside contact?

Many people are kidding themselves. They do not have the best people. Not even close.

Much more to come on mid-sized shops.

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

Wednesday, September 22, 2010

Guidelines for Managers

Several readers paid me a very meaningful compliment recently. They asked me to compose a post about what qualities a good manager needs to be effective. So, here is my list. None of the items are probably original in your eyes but you may not have seen this mix of attributes before. Here goes:

1) Provide constant encouragement—this to me has to be the number one attribute that a strong manager must exhibit every day. All of us need encouragement and most of us do not get anywhere near enough in our private lives or on the job. I once worked for and with a man who was wonderful with entry level people. He told them what bright futures both they and the industry had. But his senior team never received the slightest hint of encouragement. I asked him about it and his response was that if he was paying someone $100,000+ per year they did not need encouragement. Smiling, I countered with something like “aren’t the senior team people, too.” He truly did not get it. I made it a point to encourage him especially after new business losses (he had many as all of us do). He really seemed to appreciate my pep talks but could never seem to do it to many who needed it the most. Encourage everyone above and below you. We all crave it and need it.

2) Manage by walking around—I always did this well. For nearly 30 years, I made it a point to talk to every team member every day. I did not meddle but I tried to get the pulse of what was happening. After a while, people would come to me for help or suggestions. Too many managers hid behind e-mail and do not communicate well. E-mail is wonderful but face to face meetings especially informal, ad hoc ones are far more valuable. So, get off your butt, leave your comfortable office and talk to the team. You will learn a lot.

3) Hire people who read—Ask people whom you interview what they have been reading lately. Often the best hires are those who are well read and continue to stay current. They stay up to date on the fast moving trends in our business and will feed you articles and film clips that you need to see. It is like having a private research service down the hall. You also have people to talk to. It can get very lonely being a manager of people who merely do the letter of the job but have no real interest in what is going on outside their tiny corner of the world. Staffers who read a lot make for a more interesting workplace and you will get some great ideas from them. Be very wary of people who say that they are too busy to read material that you ask them to review. If it is a single mom with three kids, cut her some slack. She may be a living saint. Anybody else, not having time often means that they are watching too damn much television or addicted to Facebook.

4) Hang on to the best people—stand on your head to keep the key staffers. They make you look good and hold things together and give the whole firm a chance to grow. These days not many can hold you up for more dollars as they have few places to go but if you create a good environment they will want to stay.

5) Don’t ask people to do things that you will not—I had a few bad experiences as a youngster in the business. One jerk would come to my desk around 4pm with a pile of assignments. He would say “have this completed by 9:30 tomorrow morning” (that was when he showed up). Another would call me from a golf outing asking me why I had not put more money with the media vehicle that had taken him to Florida or simply given him a Wednesday off at posh country club. I vowed that I would never behave that way and never did.
If my team was busy, I was busy too. It cost me some late nights and too many Sundays at the office but I don’t think that anyone resented me for the amount of work that they did relative to me. Years ago, in Texas, I ran into our Chairman on Friday night as we were both leaving the office. He asked about my weekend plans. I told him that I was coming in with several media staffers to work on a plan that was due Tuesday. At noon Saturday, he showed up and talked to everyone and people were thrilled. He then took off and we continued to grind. An hour later he returned with a gourmet Chinese spread for all of us. He thanked everyone for giving up their weekend and stayed to help collate copies with the weary team later in the day. The man was a leader and a thoroughly decent human being. He could not write a media plan if his life depended on it but he won everyone’s respect that day and still has mine.

6) Listen—when a staff member is talking with you look up from your keyboard, put down the phone, look them straight in the eye and listen! People are trying to tell you something. Give them your attention. It will pay you rich dividends.

7) Praise in public; reprimand in private—sadly, I have seen too many senior executives humiliate someone in front of others. Save the dressing downs for a private session. They may deserve it but you do not have to undercut them in front of their peers.

8) Hire the best—keep interviewing people even if you have no openings. You will have people leave and you always need to upgrade if you are to grow stronger as an organization. If a new person will not make your organization stronger, why bother?

9) Be very nice to nerds—the odds are overwhelming that you will end up working for one some day!

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

Thursday, September 16, 2010

America's Discount Culture and the Future of Brands

We Americans love to shop and we love to buy things on the cheap. In recent years this has become an integral part of the fabric of life in the United States. Back in 1956, only about 6% of merchandise was purchased on sale. A lot has changed since then.

To look at our discount culture clearly, a good angle to view it from may be by taking a careful look at outlet malls. These out of the way entities are growing globally; you see them popping up in Europe, Japan, even Hong Kong. But, it is in the United States where the approximately 300 outlet malls are having the biggest impact.

You might be surprised to learn that they are not a fairly recent phenomenon. The earliest outlet location that I could find goes back to 1936 which was right in the middle of the Great Depression. In my home region of Southern New England, Anderson-Little, a mid-ranged purveyor of men’s suits opened the first outlet store. It was located a long distance from existing stores and they sold “seconds” which were items that were slightly defective in some way. Back in 1936, there were no interstate highways and not nearly as many people drove so there was little danger that their outlet location would cannibalize sales from their mainstream stores.

Today, outlet malls are a destination venue for 55 million + Americans each year. What they lack in convenience is a perceived big trade off in price. Most are bare bones in appearance and are full of serious shoppers. Conventional malls have issues with teenage “mall rats” who spend little money to speak of put roam around often in large groups on weekends. Seniors, too, haunt malls. It is not unusual to see them doing measured walks around malls in groups. This is especially prevalent in the South and Southwest. The outlet mall patrons, on the other hand, appear to be 100% shoppers.

Out west going to an outlet mall can be a major event. Busses often take a fair proportion of the citizens of small towns to an outlet mall 200-300 miles away. The group shops till they drop, meet for dinner in a large private room, stay in a local motel, shop the next morning and sleep on the long ride home. Most data that I have indicates that shoppers at outlet malls spend 80% more at a bare bones outlet mall than at a fully loaded regional mall.

Whenever one visits an outlet mall, you can get the vibes of a quasi Vegas mentality if you listen a bit to the shoppers. Invariably, somehow will say how she “beat the house” on a spectacular deal on some expensive brand name products. Well, you do not have to be particularly savvy to know that in Las Vegas the house always wins over time. I would say the same is true with outlet malls.

Originally, outlet stores were like the earliest example from 1936. The products were perfectly serviceable but slightly defective in some way. A great example was Coach. The owner sent his children out to Long Island to run their first outlet store. They had big problems early on as they almost always sold out 100% of the stock very quickly even though none of the outlet merchandise was perfect. As time went on they and many other players shifted gears on the nature of outlet store merchandise.

Today, many retailers sell merchandise at their outlet stores that is explicitly produced for exclusive sale at the outlet locations. The list includes Ann Taylor, Brooks Brothers, Coach, Donna Karan, The Gap, and many more. A very clever young shopper observed to me that if you look closely you can often tell the difference quickly. She commented that some items are from the actual retail store and of the highest quality but the goods are a few years out of style. Or, the colors are a bit different even zany. And, the sizes are either tiny or huge. The rest of the stuff that 85% of the people would want is of lower quality and specifically manufactured for the outlet store.

I have noticed different tags. Until recently, the outlet manufactured goods often had an “F” for factory outlet on them. Today, price tags are usually far more discreet.

Also, look out for “reference pricing”. That suit listed at $900 and now selling for $250 may have been produced exclusively for the outlet mall. It was never offered anywhere at $900 but your perception is that you are getting a world class bargain.

Even mainstream discounters are getting in to the act. Wal-Mart and Target often have electronic gear, lawnmowers, grills, etc. with brand names but a comment on the tag says made to “Wal-Mart” specifications. You are not getting a Webber you are getting a Wal-Mart grill. The brand name has really lost all meaning in cases like that.

So what is going on here? All of us have spent our careers either selling to or working with people who ferociously defend their brands against competitors. And, they bore you to tears talking about the integrity of their brands.

And, what of the customers who love going to the outlets and spend a lot there?

Here are my theories which are largely personal as it is hard to find a lot of data on this topic:

1) The outlet mall customers get a lot of pleasure from buying there. Going to the outlet mall is an event and a major event for many in the Rocky Mountain and Central time zones. Even the smartest shoppers feel that they are getting something close to major brands and the accompanying quality when they shop there.
2) The major players are not stupid and they have to study income data and demographic data as much as all of us in communications. The blue collar work force has not really received a raise in 30 years when you adjust incomes for inflation. The middle class, as we know it, is shrinking. Since 2007, it is safe to say that maybe 7-10 million have slipped out of the middle class. And poverty levels released today from the Census Bureau put us at the highest level in 40 years.

So are the retailers just facing facts? They merely sell the dream. The merchandise is not nearly as good as their conventional stores but people perceive that they are getting the original brand or something close to it. One retailer gets as much as 80% of their sales and I would assume most of its profits from its outlet store base.

Long term, this would seem to dilute the value of the brands significantly. But, if our wealth as a nation is slipping relative to the emerging eastern powers perhaps the outlet gambit is a clever way to keep the music going in people’s minds for a bit longer. If “most people truly lead lives of quiet desperation” as Thoreau put it, then the façade of gentility at outlet malls could have quite a long run.

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

Thursday, September 9, 2010

Apple, Google, The Elite, and the Future of TV

In the last week or so, both Apple and Google have introduced their new TV products. Briefly, they seem to be making the step we have all talked about for years—your TV and your computer will tend to merge. Both promise the ability to call up statistical data from your computer about a player or a team while you watch a football game on conventional TV, for example. There are hundreds of applications some of which are quite sophisticated. My only surprise is that Google has said that they currently have no plans to develop their own programming. Google TV is a new platform that appears to meld the Internet almost seamlessly with TV. You will be able to search by name for a specific movie or a TV show and you can watch it on cable or the web. You will be able to customize your own home screen for a specific web series, programs, or cable channel. Apple says that they will charge $99 for their version; Google has not gotten specific yet. It is hard to tell a clear difference between the two but early on it seems that Google has fewer restrictions and is more of an open source platform than Apple or other smaller players in that space.

Prior to these announcements, I was noticing a trend. Yes, fragmentation of audience was still continuing. Several writers talked about how young upscales often were not subscribing to cable or a satellite service. They got by with Hulu.com, streaming video online, and a heavily used Netflix subscription. I have pursued this and found that it is absolutely true but only for a VERY small number of people. They tend to be young urban dwellers who graduated from elite schools. They are very busy with their careers and social life and do not watch enough TV to justify a $100 monthly subscription fee. Last year, I joined them for a few months and found that 90% of my needs were covered with a similar approach. Students at the best schools are also often TV free but not video starved.

Within a larger group of young affluents, some of the young men said that ESPN (and Fox Sports) were the only thing that really kept them with cable or satellite. If they could buy select games a la carte, the subscription service would get the heave ho. Also, many say that they are buying plugs at Radio Shack that allow them to take Hulu and other on-line content and view it on their larger screen TV sets. A few people have approached me about a la carte purchases. They would gladly pay a few dollars an episode for a favorite show or a specific game but have zero interest in a subscription given their very low level of viewing.

My point here is that many of the young people writing these alternative viewing reports and those actually living that way are a VERY small group. Most people in their 20’s do not live in Manhattan or San Francisco, get very well paid, work long hours, and are socially hyperactive. Every person who chooses a virtual non-TV life hurts advertiser supported TV and cable but there are probably only a few hundred thousand of them at best. And, with the emergence of Apple and Google TV the press will focus on the dogfight between the two titans. What you need to keep your eye on how many people that Apple TV and Google TV pick off and how many cut their viewing of advertiser supported broadcast and cable sharply as a result.

As I said several weeks ago regarding the future of cable, there is a great deal of inertia out there among the mature. They want to kick back in their LA-Z-Boys with a cold beer and they want instant access. Young people are a lot more open. They will toggle back and forth from TV to computer and will wait a moment or two to call something up. To save a $100 a month they will do a lot more especially when they are not heavy users of TV as we know it.

The cable and broadcast people have to be careful. Newspaper people a generation ago said that young people would endorse their product once they owned a home. They would want the daily paper on the front porch just as their parents did. It did not happen. Then they said they would give away the paper for free online and once readers hit a certain age, they would want the hard copy delivered daily. That did not happen either and many newspapers are fighting for their lives.

So, here is how I see it playing out. Both Apple and Google TV will make inroads across the board but do especially well with the young and particularly among the well educated. Some of the elite will stay away as now but will likely flirt with the free aspects of the Google product for a while. And, if you have lived a life without TV, will you suddenly get cable or satellite when you turn 30 or get married? Become a parent? Maybe, but I am willing to bet that an annoying number will not which will make advertising media planning and advertising sales more difficult.

The fragmentation in TV viewing that started 30 years ago will continue relentlessly as we go forward. But it will not destroy the broadcast advertising model overnight. The Apple and Google entries will however, speed up the process. Going into fall, 2011 planning media strategists may need to shift more weight out of traditional TV options that they had planned even a few short months ago.

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

Sunday, August 29, 2010

Hostile Brands

From day one in courses in Marketing, Branding, New Product Development, Advertising, or Consumer Behavior students are always taught that a marketer must separate their product from the competition. Before launching a brand at a company, the old pros instruct the rookies that above all you must be able to differentiate yourself from other entries in your category. A new book, “Different”, subtitled “Escaping the Competitive Herd” (Crown Business, 2010) puts a whole new and important spin on that old marketing saw. The author, Professor Youngme Moon, teaches at the Harvard Business School.

Professor Moon’s thesis is that if you only make direct comparisons on features you may have the “perverse effect of making you just like everyone else”. It reminded me of John Hartford’s lyric from the late ‘60’s—“What’s the difference being different when it’s different now that looks alike”. Professor Moon suggests that we hop off the competitive treadmill and do something that is MEANINGFULLY different. Lots of people promise that with every campaign but the author gives a good roadmap for doing it.

The book cruises along pleasantly with simple logic and some nice examples. Then the reader encounters a chapter simply entitled “Hostility” which hit me like a freight train. Her argument is that some brands differentiate themselves meaningfully by admitting that they are not for everyone but rather for a small minority. Their advertising deliberately tries to polarize people as do their products. Some people love them but an equal or larger group hates them. She states that they do not lay out the welcome mat. “Hostile brands don’t market in the classic sense of the term; they anti-market.” She gives several great examples with my favorites being Marmite, Red Bull, and Mini Cooper.

Marmite is a sticky brown food paste that has been around the United Kingdom for a while. You either hate it or are a true aficionado. I vividly remember staying at a British B&B some years back and watched people in the dining room slathering it on their “bits of toast.” I had to try it although it reminded of me of oil that had been sitting in the crankcase way too long. The stuff was dreadful or as the Brits would say “bloody awful.” But others in the breakfast nook scarfed it up with abandon. Their theme line is “Love it or hate it” and a TV spot of recent vintage has a blob of Marmite terrorizing a British town. As a boy in New England, there was a soft drink called Moxie which triggered similar polarized reactions. The great Ted Williams endorsed it so whenever we went to Fenway Park to see the Red Sox, I always ordered one and could never finish it as it struck me as having an awful medicinal taste. Finally, at the ripe age of ten, my father stepped in and stopped me from getting one saying “how about coffee milk (a great Southern New England tradition) or a Pepsi, Don? You know you won’t finish the Moxie.” Later that day, Ted Williams hit one of his last home runs which was thrilling and, to my father’s joy, he did not have to finish my Moxie for me. Moxie would have been a perfect candidate for a hostile brand. Instead, they took the high road and used New England’s greatest hero as spokesman.

Red Bull is well known to all of us. But the story behind the story may not be. Austrian entrepreneur Dietrich Mateschitz did his due diligence prior to launch and tested Red Bull extensively. Research results stated that the products coloring, sticky mouth feel, and taste were “disgusting.” One researcher wrote that “no other product has failed this convincingly.” Mateschitz’s response was a simple “great.”

He was not one to pander and as Dr. Moon put it refused to “even consider the possibility of modifying the product to sand away the rough edges.” Somehow the product caught on in clubs and select bars and was nicknamed “liquid cocaine”, “speed in a can” and “liquid viagra.” This spawned a consumer boycott by some worried about its health effects. Red Bull did no counter advertising. Their tone was “if Red Bull makes you nervous, don’t drink it”. The product has succeeded and has a hard core of devotees. To date, they have never flinched.

The final example is kind of a soft ball relative to the previous two UNLESS you saw their initial advertising. The Mini Cooper is a cult favorite which appeal to a certain class of driver. Early on they were strident. Initial ads were “The SUV backlash starts here”. To people who were worried about the small dimensions of the car, they simply stressed it especially on billboards. They were blunt and brazen with a very direct message.

What excites me about this discussion of hostile brands is that there is a world of media options available these days to allow a hostile brand to obtain awareness even if your budget is modest by traditional launch standards. Imagine a rollout into a few test markets. You could put together a package of cable channels with your local interconnect that would be a nice fit to the in your face or irreverent message that you were using. On line, the possibilities are endless. There are thousands of sites with an audience who might be turned on to your product and would not be offended by a “take it or leave it” positioning. New video options abound and would be inexpensive but nicely targeted. It almost makes me want to be a 28 year old media planner again.

Some brands are obviously too vanilla to be hostile brands. But, there are many like the Moxie of my youth that would be excellent candidates. Dr. Moon has done us all a great favor. Going forward her message of meaningful differentiation is sound but her defining the hostile brand and its applications is inspired.

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

Friday, August 20, 2010

A New Twist on Good To Great

In 2001, Jim Collins wrote a great business best seller entitled “Good to Great: Why Some Companies Make the Leap…and Others Don’t.” In general he defines “great” largely on financial performance several times better than the market norm over a fairly long period of time. Some of the companies that he singled out who made the transition from good to great were: Abbott Labs, Kimberly –Clark, Nucor (steel and industrial conglomerate), Gillette (now a division of Procter & Gamble), Walgreen’s, and Wells Fargo.

He described several characteristics of these winning firms:

1) Humble leaders who do what is best for the long term.
2) First thing is to get the right people on your bus and then decide where to go.
3) Always confront the brutal facts regarding your industry but do not give up.
4) Be disciplined in all things at all times.
5) Remember that small initiatives are additive; they act on each other like the wonder of compound interest.

The book made a lot of us think. I remember vividly at the time if I had the right people on my bus. Last week, I was speaking at length with a general manager of a TV station in a mid-sized market. He told me that things were much better than last year but lamented—“this used to be a great business.” It certainly was. Many years his predecessor in the job had profit margins of 40-50%. The station changed ownership several times in the 70’s and 80’s as financiers felt that TV station ownership was a sure thing. Buy it and flip it several years later for a nice profit was the mantra.

Well, times have changed. In many markets, it is no longer a great business. But, as I stressed to my friend, it is still a VERY good business. And, with a manager such as he who trains his staff well and is fair with them, has close ties to the local community and hustles like hell, it should stay that way for some time to come.

All conventional media are going through this but the stage of downward evolution varies significantly medium to medium. Newspaper was a great business thirty years ago and a good one 15 years ago. Now, with few exceptions, it is a tough battle for survival unless some new technology can bail them out and bring in younger users. Magazines are a really mixed bag with a blend of successes and failures each year with new titles and they all struggle to monetize their online product. Radio could become very good or even great again in some cases if the corporate bean counters go away and local ownership comes back strongly. Outdoor, the last true mass media type, may have a big resurgence as TV continues to fragment and digital options for video multiply over the next several years.

But TV can still do well in the right hands. My friend is a very decent fellow and a hard headed realist. He laughs about his station site which gets into many advertising packages although he cheerfully admits that he feels many of the site visitors are nervous 60 year olds worried about traffic or snow for their evening drive home. Still, he soldiers on, makes a nice living, and does his best to provide value for those to whom he and his staff sell advertising. The days of dropping huge sacks of gold back at headquarters are over. But his station remains solidly profitable for his company which has owned the property for more than 20 years.

The great to good concept is sneaking into other traditionally solid businesses. Someone who fancies himself a securities analyst told me that Coca-Cola and Pepsico have gone from great to good in recent years. My attitude is that there is some truth in his thesis if he is referring to their US business for cola which is quite mature and where the margins are paper thin. But overseas they are just getting started. Indonesia, which some pundits say will be the next BRIC country (Brazil, Russia, India, China) of dynamic economic growth, has a per capita Coke consumption similar to the US in 1910. So, growth overseas for these beverage companies and McDonald’s, among others, should be quite robust as a middle class emerges in what were third world nations only yesterday. The US is only about 5% of the world and we need to keep that in mind.

Finally, I stressed to my broadcaster friend that there is nothing wrong with running and optimizing a good business. The easy money days are over for a lot of us but there is no need to be depressed. If TV truly is doomed a decade or more from now, I bet my plucky friend and his station will be one of the last to fall.

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